Companies depend on reliable transportation to link with the suppliers and make their products accessible to the customers and retailers (Rozenberg et al., 2019). Transportation is a crucial component of the supply and value chain model, and any disruption of the proacess can be costly to the organization. When a natural disaster happens, the supply chain operations are disrupted, implying that the organization cannot access raw materials from the supplier and assure timely delivery to the stakeholders (Verschuur, Koks & Hall, 2020). Natural disaster increases the costs of moving freight between different geographical locations due to the calamities’ high risks. Extreme natural calamities such as hurricanes and floods are more common in the US, while countries like Japan experience frequent earthquakes (Uddin & Huynh, 2019).
Natural disaster reduces the freight capacity causing the business to spend more money in transporting fewer products. Companies reduce production quantity since there are limited transportation resources and equipment that assure safe mobility of input and output (Ghadge, Wurtmann & Seuring, 2020). Natural disaster causes an increase in freight shipping rates. The rate increase because the events render roads impassable, air cargo, and shipping risky. The logistic firms are sometimes forced to use alternative roads, which are lengthy, thereby consuming the drivers’ time and fuel amount. Navigating using lengthy alternative roads increases the transit time causing the driver to spend extra days, weeks, or even months to deliver product s that would have taken hours (Dubey et al., 2017). Natural disasters sometimes cause fuel prices to increase because most refining companies are located near the most probable areas like the shores of oceans. According to Ilbeigi (2019) calamity such as Hurricane Harvey reduced 17% of the US’s refining capacity leading to low supply, driving the fuel prices higher. Higher fuel prices have an impact on transportation costs since it is a direct expense.
Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., Blome, C., & Luo, Z. (2017). Antecedents of resilient supply chains: An empirical study. IEEE Transactions on Engineering Management, 66(1), 8-19.
Ghadge, A., Wurtmann, H., & Seuring, S. (2020). Managing climate change risks in global supply chains: a review and research agenda. International Journal of Production Research, 58(1), 44-64.
Ilbeigi, M. (2019). Statistical process control for analyzing resilience of transportation networks. International journal of disaster risk reduction, 33, 155-161.
Rozenberg, J., Espinet Alegre, X., Avner, P., Fox, C., Hallegatte, S., Koks, E., … & Tariverdi, M. (2019). From A Rocky Road to Smooth Sailing: Building Transport Resilience to Natural Disasters. World Bank.
Uddin, M., & Huynh, N. (2019). Reliable routing of road-rail intermodal freight under uncertainty. Networks and Spatial Economics, 19(3), 929-952.
Verschuur, J., Koks, E. E., & Hall, J. W. (2020). Port disruptions due to natural disasters: Insights into port and logistics resilience. Transportation research part D: transport and environment, 85, 102393.