Prepare your business for the stormy seas of the 2024 hurricane season. Discover why experts predict robust storms and how to safeguard your supply chain.
Outlook for hurricane season 2024
This year, hurricane season starts June 1, 2024, and ends November 30, 2024, and will primarily affect the Atlantic Ocean, the Gulf of Mexico, and the Caribbean Sea.
What sets this year’s hurricane season apart? If these forecasts are correct, 2024 will shake out to be the third most active hurricane season on record. The 2024 hurricane season is expected to be extremely active, with multiple forecasts predicting above-average activity, increasing the potential for supply chain disruptions. Colorado State University (CSU) forecasts 23 storms, 11 hurricanes, and 5 major hurricanes—the highest prediction they have ever issued.
Climate change and its impact on hurricanes
Two main factors driving the high forecast are warmer ocean surface temperatures (driven by climate change) and the anticipated transition from El Niño to La Niña.
Warmer ocean surface temperatures
2023 was the warmest year on record, and 2024 is predicted to follow suit. As air and ocean surface temperatures rise, the likelihood of extreme weather events increases. Resilinc’s data reflects this change. Over the last decade, Resilinc’s 24/7 supply chain monitoring system EventWatchAI has reported an increase in climate change supply chain disruptions like hurricanes year-over-year. From 2022 to 2023, extreme weather events grew 4.5%—a sharp decline in growth compared to 36% from 2021 to 2022. So far in 2024, Resilinc has tracked 198 extreme weather events, 65 flood events, 29 hurricane/typhoon events, and 11 tornado events.
Learn more about the most significant extreme weather and climate-related risks procurement professionals should pay attention to in 2024: How Will Climate Change Impact Supply Chains in 2024?
The return of La Niña
La Niña is the second driving force set to make hurricanes more severe this year. La Niña is a pattern of cooler waters along the equator in the Pacific Ocean, which occurs on average every two to seven years. Climate change is expected to increase the frequency of La Niña events in the coming decades. La Niña frequently results in more active hurricane seasons. Forecasts predict a 75% chance that La Niña will arrive during the heart of hurricane season, allowing storms to develop and intensify more easily.
How hurricanes affect supply chains
If it becomes a record-breaking hurricane season, it could lead to more substantial climate change supply chain disruptions. Hurricanes can significantly disrupt supply chains in several ways.
#1 Production delays
Manufacturing facilities in the hurricane’s path may be damaged or forced to close, leading to production delays or stoppages. Suppliers located in the affected area might be unable to provide necessary parts, leading to shortages further up the supply chain.
#2 Transportation and distribution issues
Damage to transportation like roads, ports, and airports can disrupt the movement of goods, causing delays and distribution challenges. Flooded or closed roadways, bridges, and overpasses can delay freight, rail, and even air cargo. Significant flooding and damage can force logistics companies to find new and longer routes.
#3 Higher freight rates
Hurricanes can reduce truck capacity as carriers divert resources to aid relief efforts. For example, during Hurricane Harvey in 2017, the total trucking freight load fell by 10%. This can lead to increased freight rates. Other factors, such as longer routes due to damaged roads and increased gas prices, can also increase the cost of freight.
#4 Fuel shortages
Hurricanes can have a notable effect on both the production and refining of crude oil in the United States. When these storms hit regions crucial for natural gas production, such as the Gulf of Mexico ports, they can create disruptions in fuel distribution networks, resulting in nationwide spikes in gas prices. In the impacted regions, there is often a surge in demand, leading to lengthy lines at gas stations to refill both vehicles and generators. Additionally, hurricanes may interfere with power plants, causing a reduction in electricity supply. The combination of diminished supply and fluctuating demand typically results in heightened price volatility for both natural gas and electricity.
#5 Demand surges
During hurricanes, demand surges for crucial commodities such as home repair supplies and essential goods, amplifying inventory challenges as supply strives to match the heightened demand. The aftermath of hurricanes often triggers a surge in demand for materials and labor, leading to escalated costs in replacing damaged property. Increased demand can persist for weeks or even months as affected areas undergo recovery and reconstruction efforts.
#6 Power outages and infrastructure impacts
In addition to structural damage to buildings and housing, which can take months or even years to repair, major hurricanes frequently knock out power to millions of people, sometimes for weeks. In fact, nine out of ten major power outages in the U.S. have been caused by hurricanes. Flooding and high winds from hurricanes can destroy power poles, transmission towers, and even underground cables. Hurricanes can also pollute drinking water systems and damage sewers. Power outages and infrastructure damage during hurricanes can have cascading effects on the supply chain, such as disruptions to manufacturing and distribution.
Hurricane supply chain disruption examples
Let’s take a look at some real-life examples of how hurricanes have disrupted the supply chain.
Hurricane Katrina’s impact on supply chain (2005)
Hurricane Katrina was a devastating Category 5 hurricane that caused catastrophic damage and loss of life along the U.S. Gulf Coast in August 2005. When the storm struck, it knocked out power and transportation routes. Flooding from storm surges damaged roads, bridges, and railways. The Port of South Louisiana, known for petroleum refining, grain, and petrochemicals, was severely damaged. As a result, Gulf Coast oil product was slashed by over 88%—decreasing national refining capabilities by nearly 10%—and causing gas prices to surge overnight.
Hurricane Ian’s impact on supply chain (2022)
Hurricane Ian was a challenging Category 4 hurricane that led to supply chain disruptions across Florida and North Carolina, with property damage estimated at $60 billion. The storm damaged over 4,500 manufacturing facilities, warehouses, and distribution centers across industries, including manufacturing, agriculture, aerospace, and automotive. Major ports—such as The Port of Savannah—were temporarily closed, disrupting the delivery of gasoline and other goods.
Hurricane preparedness for businesses
As we brace ourselves for the challenges that the 2024 hurricane season may bring, it’s crucial for businesses to take proactive measures to protect their supply chains. With the looming threat of extreme hurricane disruptions, having visibility into where your suppliers, products, and parts come from is critical.
Don’t wait until the storm hits—equip yourself with the knowledge and tools needed to weather the upcoming challenges of this year’s hurricane season. Download our Special Report: How the 2024 Hurricane Season Will Impact Global Supply Chains now to safeguard your business and maintain operational continuity amidst the turbulence of the season ahead.
