When you think of your best defenses against disaster, the weather guy is probably not the first thing that comes to mind. But maybe he should. Threats to your operations can come from all venues—terrorists, fires, chemical spills—but an awful lot of them seem to involve weather: tornadoes, blizzards and ice storms, hurricanes and floods.
Though any one of these weather events could completely disrupt the supply chain, they're rare enough that they may only rate mention in, say, Section 19-G of the corporate disaster plan. That's a risky way to do business. "You wouldn't think of operating a distribution center without a fire alarm," says Michael R. Smith, CEO and founder of WeatherData of Wichita, Kan., "but it's amazing how many companies try to operate their weathersensitive businesses without some kind of weather alarm system."
In fact, it seems that many companies are trying to run their businesses without much in the way of a disaster preparedness plan at all. According to a recent survey, the 2003 Protecting Value Study conducted by commercial and industrial property insurer FM Global, the Financial Executives Research Foundation and the National Association of Corporate Treasurers, 88 percent of financial executives and 83 percent of risk managers admitted that their companies were not entirely prepared to recover from a major disruption to a top revenue source. That same study singled out property-related hazards, such as fire and natural disasters, as the greatest threat to revenue sources.
There's not a thing you can do to prevent a natural disaster, of course. But there are many matters you can think through in advance when it comes to recovery: Who's responsible when a tornado rips through your loading dock and damages a carrier's trucks? What happens to the urgent shipment that requires pickup in Alabama when your fleet is snowed in somewhere on Michigan's Upper Peninsula? How can you protect your delicate robotic loading equipment from lightning strikes?
You may never have to answer these questions. But then again, you might. For those who aren't taking any chances, we offer five tips on preparing your supply chain for stormy weather:
Back up all your systems – not just your computer systems. Too many people figure that because their IT specialists have devised a recovery strategy for their data center, they've made a good start to their disaster planning, says Mike Morganti, customer training manager for FM Global of Johnston, R.I. The problem is, there's more to the distribution of goods than just the data.
Take the private fleet, for example. "Having your own fleet and drivers gives you a lot of control, but it doesn't preclude something's interrupting the flow," Morganti says. His advice: "Identify strategies to make sure there will be an uninterrupted flow of products from the distribution center to the customer. This could be as simple as making flexible arrangements with outside carriers."
Another option is to pre-position product in certain locations if the weather looks threatening, says Michael J. Fagel, Ph.D. , emergency management director for meat packer Aurora Packing Co. of North Aurora, Ill., and emergency manager for the village of Sugar Grove, Ill. Arrange for some alternative warehousing around the country and get your product closer to the "end game." Then rotate your stock. "For example, a lot of companies placed food and other perishables on trailers and had them pre-positioned throughout the country just prior to Y2K in case there were problems," he recalls. "If you're anticipating, say, a winter storm or other disaster, this is something to consider."
Review your insurance coverage. A seemingly minor point, but one that may save you a lot of money: "If you have other companies' inventory in your center, you must be sure you are properly insured for it, "warns John Kauffman, director of loss control training for the Connecticut-based Hartford Financial Services Group.
Of course, somewhere down the road, most—if not all—inventory becomes cargo. That cargo should be insured as well. "Make sure third-party carriers are adequately insured, "advises Kauffman, "and get copies of proofs of insurance. "Then meet with your insurance agent to discuss what your exposures and responsibilities are with third-party carriers in disaster situations. For example, if the carrier's trucks are on your premises during a disaster and are damaged ,who's responsible for the damage to those trucks? "Create up-front agreements with the carriers so everyone knows who's responsible for what du ring a disaster, such as alternate means of transportation," he urges. Then make sure the carriers have disaster plans in place and be prepared to coordinate your plans with their plans.
Forget the NWS. Many companies rely on reports from the National Weather Service (NWS) for advance notice of weather-related problems. But those NWS reports often fall short, argues Smith of WeatherData, a service that helps clients identify their weather-related risks and create plans to mitigate those risks.
For example, the NWS does not issue any kind of lightning warnings. "However, if you have a highly automated distribution center that relies on robotic loading equipment or computers that run the operations, a power surge can be disastrous," he says. If that's the case, you need a lightning warning system so you have time to shift to your generators and isolate your power sources from commercial power before lightning arrives.
The NWS doesn't do much better with tornadoes. The Weather Service only issues tornado warnings by county, which gives you no real indication whether your facility is directly in the tornado's path. "It is possible, using the improved technology that has been developed over the last decade, to be very specific about whether a given site is within the path of a tornado or not," Smith reports. That's important to know: "If you're in the path, you want to do an orderly shutdown and shelter your people," he says."If you're not in the path, though, there is no reason to take what could be a very expensive hit in terms of productivity by shutting down operations."
Hurricanes present a different kind of problem: Ever since Hurricane Andrew devastated parts of Florida, the NWS has been prone to overwarning, stressing the worstcase scenarios. The problem is that the overwarnings are becoming very costly to businesses. You can't do much about an approaching hurricane, of course, but by working with a business-focused weather consultant,it is possible to anticipate and be proactive in these circumstances, and figure out the potential risk to your sp ecific site.
Take off the blinders. Many times DC managers underestimate how vulnerable they are to significant weather events at distant points in the supply chain."I can't tell you how many times over the years I've heard of people running out of parts or experiencing other supply disruptions when the weather was clear at the distribution center and clear at the customer's or supplier's location, but there was an ice storm, snowstorm or flood in between," says Smith.
If your business depends on your ability to receive raw materials or ship finished products, you'll want to keep an eye on the weather along the entire supply chain. As soon as you hear of a potential disruption along your supply route, you can begin to coordinate with your customers."You can't wait until there are 15 inches of snow on the ground to decide what you're going to do," Smith says. You need to ask customers how they want to plan for the event before it happens. For example: Do they want additional parts or inventory sent early? Do they want a contingency plan put into effect to use air freight?
Hope for the best, but prepare for the worst. One mistake many managers make—particularly when building a new facility—is gauging hazards from statistics drawn from an inadequate time period, according to Smith. In some cases, companies look at averages over as few as three to 10 years, he says, which can be very misleading.
"For example, if you had used data taken from the last three to 10 years on the potential threat for roof loading due to heavy snow in Denver, you wouldn't get much useful information because the last 10 years have been relatively snow-free," says Smith. Yet after a decade of winters that featured a relatively light accumulation,on Wednesday, March 19, almost seven feet of snow fell in the Denver area, making it the worst blizzard in almost a century and the second worst in Denver's history. Fire officials reported that roofs caved in on approximately 100 homes, businesses and other buildings.
Smith recommends that businesses review at least 30 years' worth of records, and preferably 50 to 100 years' worth (which are also available), to get a true idea of just how bad things could get. And, no surprise here, he also points out that using a weather risk management service can provide crucial advance warning ("Though no one expected the Denver roof collapses," he reports, "the information we put out to our clients did mention this possibility").
Could early warning have helped avert a disaster? It's hard to know. But one thing seems clear enough: With advance information, you could at least break out the snow melters and roof rakes. And maybe call up and thank the weather guy.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."