CPG Shippers: Prepare Supply Chains to Weather Active Hurricane Season

Whether you purchase insurance, leverage drop trailers, or whip up a master logistics strategy with your provider this hurricane season, stay safe and keep those supply chains moving.

Satoshi Kina Adobe Stock 171085788
Satoshi Kina AdobeStock_171085788

As we approach the 2024 hurricane season, which experts predict to be extremely active with 20-plus named storms and 10-plus hurricanes, the potential disruptions to consumer packaged goods (CPG) supply chains are a pressing concern.

Fierce hurricane winds and flooding can often force manufacturers and shipping facilities to halt operations to protect employees and assets. On the carrier side, drivers will avoid high-risk markets during storms or demand higher rates to do so. While managing a supply chain through hurricane season is no easy feat, setting yourself up for smooth sailing during tumultuous times is essential to avoid costly losses.

Why are CPG supply chains especially at risk?

Remember Hurricane Katrina? This massive storm affected 100,000 truckloads on the road in 2005, requiring one of the largest relief and recovery supply deployments in U.S. history. And then in 2017, one of the most massive truck capacity crunches in recent history was caused by Hurricane Harvey.

Like most natural disasters, hurricanes can wreak havoc on any infrastructure they touch. While no shippers are safe from the delays and backup in traffic this can cause, CPG shippers are especially at risk because their delivery stakes are much higher than other types of shippers.

Anyone in the CPG community knows how strict retail receivers are about shipments arriving on-time in-full. Even in the midst of a Category 5 hurricane, not getting product where it needs to be when it needs to be there is a great way to compromise retail relationships and chances of dominating the shelf.

In fact, 66% of retail buyers report they have ended relationships with suppliers over delivery issues.

What can CPG shippers do to shield their supply chain from hurricanes?

Keep in mind, no two supply chains are exactly alike. Shippers with operations on the East Coast and Southern coastal areas are likely to be most impacted by storms that make landfall. But supply chain disruptions anywhere have ripple effects to other parts of the country. How you prepare as a CPG shipper depends on your own unique business needs and the type of product you are shipping.

First things first: you must know your business inside out. If a hurricane affects an area you operate in, will your customers panic-buy? Will parts of your business be forced to scale back to avoid storm damage?

Accurately forecasting consumer patterns isn’t easy, but it’s a critical step in understanding how your order volume and velocity may change. Look at past events to gauge how your operations historically shifted during similar circumstances. Gauging how your order volume may change will allow for production and supply chain procedures to follow suit.

Will warehousing stay online or will workers be impacted by big storms? Are your facilities likely to be pummeled by a hurricane? If parts of your supply chain are unfavorably affected, how will this impact production and inventory?

Once you know what you’re up against, it’s time to take proactive measures to make sure your supply chain can weather any storm. Purchasing insurance is a basic best practice for all CPG shippers, but will be especially valuable for high-value (HVL) shippers, which are shippers moving truckloads worth over $100,000.

Flood or hurricane insurance can help restore damaged supply chain assets if a severe storm causes issues. As an added protection, purchase business interruption coverage, which covers lost sales during a disruption. Proactively insuring products gives not only peace of mind, but also covers your back and saves money if an expected hurricane hijacks your shipment.

A more strategic route shippers can take is leveraging drop trailers. This refers to a shipping strategy in which a carrier drops a trailer at a facility to be picked up in the future. This strategy can be especially helpful if you have supply chain partners outside the natural disaster path.

Regardless of which strategy you choose, keep a close eye on your freight as it moves to its destination. In an emergency, having real-time access to tracking information, carriers, suppliers, and inventory counts will help you stay on top of issues that arise and minimize the damages.

There are many track-and-trace technologies available in the marketplace that can help you do this. This software gives fantastic visibility into overall operations, allows you to visualize and measure supply chain performance, and helps you make informed strategic business decisions as well. Most quality third-party logistics (3PL) partners give their customers access to technology like this, free of charge. What’s more, working with a third party in general is the best way to stay prepared for the uncertainty hurricane season brings.

No detail about your operation is too small to share with logistics partners when services are disrupted. Let partners know when you receive orders, where they are going, and when they are due. These details should be communicated as early and as often as possible to give supply chain partners enough lead time to deal with anything that falls outside the typical order cadence.

This principle becomes even more important if orders are going to a retail customer with a scorecard or strict appointment guidelines. Whether you purchase insurance, leverage drop trailers, or whip up a master logistics strategy with your provider this hurricane season, stay safe and keep those supply chains moving.