The expectation of two-day or less shipping in America is being challenged by the threat of climate change.

• Big-box retailers, including Walmart, are employing AI and predictive modeling to analyze the effects of extreme weather on crucial warehouse and delivery routes.
• In addition to being retail outlets, stores like Targets are increasingly serving as delivery hubs, particularly for pre-positioning inventory such as food, water, batteries, and other essentials in regions forecasted for impending storms.
• In 2023, Amazon and partners made adjustments to their delivery routes based on extreme heat, resulting in over 96.9 million minutes of changes.

Fast delivery is a standard expectation for online orders, but with the rise of adverse weather events like Houston's heatwaves and Florida's hurricanes, it's becoming more challenging to guarantee timely delivery.

The logistics industry is bracing for shipping delays due to extreme weather, which is estimated to cost the industry $100 billion in 2024, according to Freight Waves. Breakthrough, a freight solutions company that focuses on sustainable transportation, found extreme weather to be the top transportation challenge in a survey of 500 shippers and carriers this year.

"Jenny Zanden, the chief operating officer of Breakthrough, stated that shippers and carriers are currently facing numerous disruptions. Last year, transportation professionals prioritized reducing costs to address volatile diesel prices. However, this year, sustainability and climate-related disruptions are prompting a focus on fuel efficiency and modifications to transportation strategies."

Drought conditions are affecting key global transportation conduits, such as the Panama Canal, and are also becoming increasingly challenging for the biggest retailers in the U.S. as they struggle to deliver goods to customers and maintain stocked warehouses and stores.

In March, a snowstorm hit Sparks, Nevada, causing the closure of Donner Pass, a popular route for drivers traversing the northern Sierra mountain range. As a result, Walmart's grocery delivery from its Sparks center was unable to reach its customers. To optimize its last-mile strategies, Walmart turned to predictive analytics and artificial intelligence. "With this technology at our disposal, we can ensure that we continue to serve our customers in the best possible way, run those scenarios, and have those recommendations ready so that we can take action quickly, rather than waiting for the event to happen and then reacting," said Walmart senior vice president Parvez Musani.

Walmart utilized its AI-powered simulation platform to create a digital replica of its entire network. Predictive modeling enables the company to anticipate how to respond to an adverse weather event, including identifying stores or warehouses in the path that need to be shut down and locating alternative fulfillment centers. During the Sparks storm, Walmart identified 85 stores across Nevada, California, and Oregon that could be quickly realigned to handle deliveries from the Sparks center. The system identified four specific distribution centers that could handle the workload and offered alternate driving routes to customers.

"Our objective is to ensure that our customers experience a seamless experience despite unforeseen events, through the use of technology and AI. We will reroute trucks and realign warehouses to continue serving customers in affected areas."

Target adjusts its logistics network to address any delays caused by storms or adverse weather, ensuring its supply chain runs smoothly. It has also adapted its models to ensure it stays stocked in areas where supplies may be in demand, pre-positioning inventory like food, water, batteries, and other essential items in areas where predicted storms will hit. Instead of relying on large warehouses, Target uses its stores as hubs, which allows it to change delivery fulfillment quickly. "We can quickly shift delivery origins across markets to ensure our stores are stocked," said a Target spokesman. "And our various fulfillment options, including Target Circle 360 same-day delivery, Drive-up, and next-day delivery, provide multiple ways for guests to get products quickly."

The rise in temperatures has become a significant problem for retailers, including Amazon, as it affects warehouse operations and deliveries. A union organizer in New Jersey reported temperatures as high as 92 degrees in July in areas where workers lift heavy boxes, according to the Daily Beast. Similarly, facilities in California have also raised concerns about working conditions during heat waves in recent years.

In 2023, Amazon used algorithms to adjust delivery worker routes based on heat, resulting in over 96.9 million minutes of route adjustments. Additionally, the company spent $59 million to insulate vans, including a rapid cooling system, to help drivers stay hydrated and cool during extreme weather conditions.

The company provides its delivery associates with electrolyte powder, a cooler for each vehicle, a 64-ounce insulated tumbler, cooling bandanas, and sunscreen, and is currently testing additional cooling mechanisms. Its buildings have heat mitigation above federal standards, including climate-controlled North American warehouses. The company requires mandatory additional indoor breaks for delivery workers in extremely cold temperatures and has invested $8.5 million in cold weather supplies for its delivery team.

Despite the adjustments, the company maintained its shipping speeds through predictive analytics and strategizing. In the first three months of 2024, it set new shipping speed records for Prime delivery, with over two billion items arriving within two days globally.

Our supply chain modeling enables us to quickly adapt to extreme weather conditions, ensuring that in-demand products are placed in areas that are not affected, while closely monitoring inventory levels for essential items, such as bottled water, to meet the needs of people most affected by the weather.

Honoring shipping time promises and mitigating adverse weather during deliveries can be costly for companies, but it ultimately leads to customer loyalty and a sustainable business, Musani said. With the help of technology, this can be done at a lower cost than ever before.

"Musani stated that the company wants to achieve the fastest network possible for customers while keeping costs low. By leveraging technology and AI-based platforms, the company can efficiently manage both its top and bottom lines."