SUSTAINABILITY  /  SME

By FedEx | March 20, 2026

As climate change accelerates extreme weather disruptions across the region and beyond, businesses are encouraged to start building supply chain resilience.

• APAC’s businesses face increasing threats from climate hazards that disrupt supply chains. 
• Businesses need to consider proactive strategies to protect long-term growth. Those that fail to build resilience to climate risks could lose up to 7% of annual earnings by 2035.
• Long-term resilience calls for strategic shifts at every level of a business, from future-proofing infrastructure to enabling agile decision-making.

Climate change is turning once record-breaking weather events into regular occurrences. The past 11 years are considered among the warmest on record, as global temperatures have tended to reach new highs. Climate disasters like floods and bushfires have become more common, with 157 extreme weather events recorded worldwide in 2025.

As extreme weather becomes more prevalent, businesses need to consider rethinking their supply chain resilience strategies. A climate hazard in one region can potentially impact suppliers, delay shipping, and damage logistics infrastructure – which could cause disruptions across global supply chains. Businesses that do not build resilience to climate risks could, in some scenarios, lose up to 7% of their earnings every year by 2035.

This challenge may go beyond operational measures. While some practical steps such as holding buffer stock may help to cushion your supply chain from short-term shocks, true resilience comes from planning for climate risk at every level of your business. From training crisis teams to forming ecosystem partnerships, companies should consider adapting to lay the foundation for a more agile supply chain.

Understanding APAC’s evolving climate disruption

Already the world’s most disaster-prone region, Asia Pacific (APAC) is particularly vulnerable to climate change. Nearly half (47%) of APAC firms are highly exposed to multiple climate hazards, such as cyclones and coastal floods, compared to the global average of 40%.As extreme weather events become more frequent and severe, businesses may need to consider future-proofing their supply chains against risks such as:

• Extreme heat. Asia is reportedly warming twice as fast as the global average. This extreme heat threatens cold chain reliability, impacting temperature-sensitive goods such as fresh produce and healthcare materials.
• Wildfires. Higher temperatures have contributed to more frequent wildfires across regions including Australia and Indonesia. Fires can damage raw materials, road infrastructure, and warehouses, which could disrupt supply chains.
• Flooding. APAC is known to be monsoon-prone, and the climate crisis caused by the burning of fossil fuels may intensify the region’s heavy rainfall. Roads, ports, and warehouses in flood-prone areas could be forced to shut down, resulting in possible logistics bottlenecks.
• Cyclones. Rising sea temperatures due to global warming means that APAC’s tropical cyclones are becoming stronger and longer-lasting. A cyclone may disrupt an entire manufacturing region for an extended period of time, potentially causing production delays and shortages. Severe storms may also ground flights and close ports, which could disrupt supply routes.

How can businesses build long-term supply chain resilience?

In this increasingly volatile landscape, proactive climate risk management may do more than prevent loss – in fact, it could also drive value for your business. Research indicates that an Asian company could see a return of USD 11 for every dollar invested in resilience measures to mitigate physical climate risks. Here are five strategies to build lasting supply chain resilience and help future-proof your business.

1. Conduct scenario planning

Scenario planning can help your business to prepare for uncertainty by exploring various ‘what if’ situations. This approach may help you to visualize the potential effects of climate change on your supply chain and develop contingency plans.

You can start by mapping out possible scenarios based on climate hazard data from local governments or research institutions. For example, Australia has published a breakdown of key hazards by region in its first National Climate Risk Assessment.

Next, consider estimating the financial impact of each scenario on your business, taking into account both direct and indirect costs. For instance, if Company A were to switch suppliers due to flood-related disruptions, this could result in a 15% increase in raw material costs. Passing these costs on to customers may increase revenue per unit, but could also lead to a decrease in sales volumes.

By understanding these potential trade-offs, you can aim to develop contingency plans that are likely to deliver the best outcomes. Consider no-regret actions that strengthen your supply chain across a range of scenarios, such as diversifying your supplier base. Finally, consider defining early warning signals to help identify which scenario is unfolding and activate the appropriate response in time.

2. Invest in future-proof infrastructure

Beyond supplier diversification, many companies may still have limited visibility into climate risks that could potentially disrupt supply routes. It’s advisable to conduct a climate risk assessment of the key infrastructure you rely on, including warehouses, distribution centers, and logistics hubs.

For instance, you might want to evaluate the weather hazards associated with a specific warehouse location. Could the site face a higher risk of flooding or extreme heat in the upcoming years? If so, it’s worth asking about the facility’s contingency plans or risk management protocols.

You can also consider decentralizing your supply chain to reduce reliance on a single location or region. Choose warehouse locations near your key markets and incorporate climate-resilient features, such as reinforced foundations, flood-resistant materials, and backup power sources.

In addition, consider working with a logistics provider that has an extensive network across your target markets, which can help support more flexible rerouting of shipments if a hub or facility faces disruption.

3. Foster agile decision-making

Weather conditions can change rapidly, and companies may need to respond just as quickly. Whether it’s rerouting shipments or tapping alternative suppliers, quick decision-making helps minimize disruptions and keep your supply chain on track.

At such critical moments, rigid hierarchies and lengthy approvals can slow you down. Instead, consider creating a dedicated crisis management team to make judgment calls during weather disruptions. Ensure that each team member has clearly defined responsibilities and receives appropriate training in emergency protocols.

The crisis management team may need access to accurate data to support effective decision-making. Consider investing in climate monitoring tools to forecast potential disruptions, AI-powered analytics to optimize logistics routes, and sensor-based tracking to monitor key shipments in near real time. Such digital solutions can help to build agility into your supply chain processes.

4. Double down on decarbonization

Decarbonization is an important consideration in developing sustainable supply chain strategy. On average, a company’s supply chain generates 80% of its total greenhouse gas emissions. Reducing these emissions can support broader global decarbonization efforts, which are aimed at mitigating long-term climate risks.

Decarbonization will require a global effort, and every small business can also contribute to moving the needle. Integrate net-zero goals into climate resilience decisions to strengthen your supply chain while reducing environmental impact. Sustainable sourcing, for example, can lower both your carbon footprint and your reliance on scarce or volatile resources. Ultimately,  these actions may contribute to long-term supply chain stability.

5. Collaborate with ecosystem partners

Extreme weather events impact everyone: from companies and communities, to entire industries and governments. In the face of widespread disruption, collaboration can build resilient supply chains. Businesses that build alliances may be better positioned to anticipate complex threats and coordinate effective responses.

Start by forging stronger relationships with supply chain partners. This might involve collaborating with suppliers to develop joint risk management strategies, or working closely with logistics specialists to improve shipment visibility. Experienced logistics providers like FedEx may help to provide guidance on adapting to shipping disruptions.

Collaboration across the broader ecosystem can also unlock valuable insights to enhance supply chain resilience. Consider joining industry groups, trade associations, or chambers of commerce that offer shared expertise and guidance on weathering disruption. Government agencies and environmental bodies may provide useful data, such as climate risk assessments and real-time weather alerts.

Preparing your business for tomorrow’s climate risks

With climate risk on the rise, companies must act now to foster long-term, sustainable growth. A strong supply chain resilience strategy not only protects your business, but also prepares you to seize opportunities in a highly unpredictable world.

At FedEx, we combine digital tools – such as near-real-time tracking and shipping emissions reporting for eligible services and markets – with decades of experience to support businesses navigating disruption. As climate change brings new challenges, we aim to support businesses as they navigate increasing uncertainty and work towards building more resilient supply chains.