Climate Change in the Context of Kuehne + Nagel Inc - Coursework Example

CLIMATE CHANGE IN THE CONTEXT OF KUEHNE + NAGEL INC Contents Executive Summary 3 Introduction 4 Definition of Terms 5 Background of Kuehne + Nagel Inc. 5 Services provided by Kuehne + Nagel Inc. 6 Evidence of Past Changes in Climate and Future Projects 7 Temperature, Sea Level and Precipitation 7 Extreme Events 10 Climate Change and its influence on Kuehne + Nagel Inc 12 Climatic Challenges Facing Kuehne + Nagel Inc. 12 Opportunities for Kuehne + Nagel Inc. Created by the change in Climatic Conditions 14 Recommendations 15 Conclusion 15 Reference List 17 Executive Summary The report presents a wide-ranging coverage of the effects of climate change on the German-based logistics company Kuehne + Nagel Inc. Climate change is the alteration in the statistical distribution of weather patterns when the adjustment lasts for a long time for instance decades or millions of years. Logistics is the flow of items or goods between a given point of origin to a place of consumption to gratify the needs of the corporations and customers. Kuehne + Nagel Inc. indulge in the transportation of goods through sea and land. Reports indicate that the trends in climatic changes are worsening with the increase in the occurrence of the unpredictable extreme events. Hence, the activities of Kuehne + Nagel Inc. are extremely affected by the negative change. Alongside, the adverse impacts trails of opportunities exist to market the firm due to its stability, and this increases the client bases. With the practical implementation of the recommendations, Kuehne + Nagel Inc. will overcome the inevitable catastrophes presented by the weather condition. Keywords: climate change, Logistics Introduction The current climate trends depict a long-term increasing inclination of the average temperature of the air. Precipitation is also in a dynamic pattern. However, it varies in a complicated manner. Climatologists predict that the trends will significantly pick up the pace in the future. A severely damaging concern caused by an elevation of temperature rates is the continually rising levels of the sea. From the year 1860, the level has increased by 0.2 meters as affirmed by satellite information (Ploberger, 2011). Scientists project that the temperature at the end of the 21st-century ranges between 1.0 to 3.7 degrees Celsius. Under the same temperature levels, contemporary studies also predict that the sea level will vary from 0.26-0.82 meters as noted by Ploberger (2011). Additionally, the alteration in the conditions of climate may result in changes in duration, intensity, frequency, timing and spatial coverage of climate and weather extremes. These in turn can modify future climatic situations. Extreme happenings such as heat waves, droughts, floods, storm surges, storms and the changes in the patterns of systems of climate may have severe impacts on the network of transport. When this takes place, the affected transport systems will disturb the companies that depend on it. Additionally, an acute increase in the intensity of heat waves and the prolonged drought periods may have more impacts that are significant to the businesses in eastern and central Europe. The report seeks to analyze some of the challenges and opportunities that changes in climatic conditions pose to a German-based logistics company, Kuehne + Nagel. Definition of Terms Climate Change Brown (2013) defines Climate change as the alteration in the statistical distribution of weather patterns when the adjustment lasts for a long time for instance decades or millions of years. It denotes a change in the average conditions of weather. Logistics It is the flow of items or goods between a given point of origin to a place of consumption to mollify the needs of the corporations and customers (Mamalis, Spentzas and Mamali, 2013). Sea Freight and Air Freight According to Mamalis, Spentzas and Mamali (2013) sea freight is the transportation of goods over the major waterways while airfreight utilizes the airlines. The definition may apply for a dedicated air cargo plane and or am air cargo. While logistic companies are commonly using sea freight, the airfreight is a prime mode of transportation that has gained popularity so quickly. Background of Kuehne + Nagel Inc. Founded in 1890, the German company Kuehne + Nagel Inc. boasts of widespread international presence. It has grown to become one of the leading logistics company. The group has more than 1000 offices located in more than 100 countries with close to 63000 personnel (Kuehne + Nagel Inc., 2015). The business activities and sturdy position in the marketplace arise from the global class capabilities. Services provided by Kuehne + Nagel Inc. The company has clienteles from all over the world. It carries out several services as mentioned below. 1. Sea freight Kuehne + Nagel group has grown to the extent of becoming the number one global sea freight forwarder (Kuehne + Nagel Inc., 2015). It has sustained a successive double-digit growth in every year in managed transportation. It maintains solid partnerships with a broad range of preferred sea carriers. 2. Air Freight The group is second in ranking globally in the sector of air cargo forwarding. It leads to innovative concepts of cargo management and has the Global Cargo 2000 Phase two certification. 3. Contract Logistics and Integrated Logistics The logistics firm comes second in the provision of global contract logistics services. Also, it has a worldwide network of warehouses and facilities for distribution of their cargo. 4. Overland On land as well, the firm does not lag behind its competitors. It performs well as it falls in the top three of the best service providers on land (Watson, 2015). It has pan-African overland transportation capacity and capabilities, which includes individual delivery services and dedicated options. In this sector too, it collaborates with some of the best-in-class carriers to ensure that it meets the large demand of their clients. It is also vital to remark that the corporation provides logistic services to most of the key industries in several sectors. Some of the common individual and personal clients fall in the following fields. 1. Aerospace 2. Automotive 3. FMCG 4. High Tech 5. Industries 6. Oil and Gas 7. Retail Industry and 8. Pharma and Healthcare According to Watson (2015), Kuehne + Nagel group is financially robust, independent and stable. Its global logistics network, in-house expertise, cutting-edge IT systems and high caliber customer service is an adequate proof of the dedication of becoming a world market leader. The attributes place them at the forefront in the industry, and their strategic positioning contribute to the increment of the scope of customer services and solutions. Evidence of Past Changes in Climate and Future Projects Temperature, Sea Level and Precipitation Heat inflows, outflows, and its storage dynamics in various constituents in the Earth system such as land, atmosphere and ocean control climate. Most heat storage occurs in the water bodies. Therefore, the alteration in the ocean temperatures is an apparent indication that climatic conditions are ever dynamic. Recently, there has been evidence of significant levels of warming of the ocean at an estimated rate of 0.64W per square meter from 1993 to 2008 (Stegehuis et al., 2013). The variation does not depend on the temporal variability that occurs due to the significant climatic modulation and the cycles of the sunspot. Figure 1: Average Global Sea Surface Temperature, 1880-2014. Data Source: NOAA, 2015 (Online) Figure 1 indicates how the average surface temperature of the world’s water masses such as the oceans has changed from 1880. It uses the 1971 to 2000 mean as a reference point for depicting change. However, selecting a different baseline period will not alter the shape of the data over a given duration. The shaded band describes the range of uncertainty in the data based on a numerous number of measurement gathered and the level of precision of the approaches used. Figure 2: Sea Level Rise Rates and Global Temperature, Source; TOPEX and Jason satellite, UAH. (Online) Figure 2 indicates the correlations between the global average temperature and sea level. The sea level rise rates are obtained from TOPEX and Jason satellite from the University of Colorado. While the global temperatures are from UAH. Figure 3: Change in Sea Surface Temperatures. Source: IPCC, 2013; NOAA, 2015 (Online) The map in Figure 3 shows the mean surface temperatures around the globe and its variations between 1901 and 2012. It relies on a combination of measurements and results from satellite measurement. The white areas do not have sufficient data to calculate reliable trends in the long-term. The atmospheric air temperature will also increase as depicted in the forecast reports. In the ocean, the surficial waters tend to have the highest effect of warming with the upper section, 75 meters depth, warming by 0.11 degree Celsius every decade in the period 1971 -2010 (Climate change: Hot and hotter in Europe, 2015). On the other hand, the temperature projections at the current century will increase by a margin of 100 and 3.7 degrees Celsius (Stegehuis et al., 2013). The rise result from the possible high ranges of Greenhouse Gas accumulation scenarios. Climate does not vary uniformly. The temperatures across the poles rise faster than the ones at the equator. Elsewhere, precipitation is changing in a more complicated manner with some areas becoming drier and wetter. In the Eastern Mediterranean, the mean rainfall will decrease by 25 percent in the next decade 2020-2029, compared to the decade that commenced on 1990 and ended on 1999 (Tol and Wagner, 2009). Additionally, the snow cover in the northern hemisphere also indicates a declining trend. However, there is a lack of uniformity in the changes with certain places such as the Alps depicting a constant decrease in the snow cover depth at low altitudes but hikes at high elevations (Vanham, 2012). Finally, recent studies indicate that the duration of periods of droughts will also decrease in southern Europe. Extreme Events The alternation in the average climate may lead to variations in the intensity, spatial coverage, frequency and the timing of the climate and weather extremes. Therefore, the situation could result to unprecedented heights. The extreme events include monsoon winds, floods, storms, and heat waves. Even though, the extreme weather conditions do not occur commonly, their effects on their victims is very substantial (Healey, 2012). They have more severe effects or natural disasters than the usual continuous changes in the mean variables. The worst aspect is that the society is usually unprepared to face the extreme weather conditions, as they are very dependent on the long-term, predictable weather and climate patterns. Figure 4: Natural Calamities in European Environment Agency (EEA) States (1980-2011). Source ARTEMIS, (2013)-(Online) According to the data from EEA shown in the graph above, the incidences of natural disasters, are on the rise. It indicates that the primary types of calamities that are rampant are the climatological and meteorological events as well as flooding. Between the years 1980 and 2011, the economic toll of the natural disaster in Europe as a whole approached 445 billion pounds in the values of 2011. Almost half of the losses resulted from European Windstorm such as the Lothar in 1999, Xynthia of 2010 and Kyrill of 2007 (Brown, 2012). The significant flooding occurrences in central Europe and the UK also contributed a fraction of these losses. Climate Change and its influence on Kuehne + Nagel Inc Climatic Challenges Facing Kuehne + Nagel Inc. The logistics company will face diverse challenges. The section explains some of the potential challenges that Kuehne + Nagel Inc. will meet in the event of change in climate. 1. Disruption of the Service Operation Kuehne + Nagel Inc. being one of the leading logistics companies in the world will face a significant extent of disturbance should there be adverse changes in the weather condition. Weather events such as changes in temperature, the rising sea level can interfere with the assets of the supplier. It could, therefore, lead to delays in service or momentary shutdowns. The occurrence can result in loss of customers, contracts and business (Hihara, 2011). The suppliers of critical manufacturing facilities located near the highly vulnerable areas stand a higher risk of facing the physical impacts of such climatic alterations. Kuehne + Nagel Inc. as a firm that deals with the transportation of cargo will experience the effect as the suppliers faced with the challenge of the weather will not run their businesses frequently. The logistics firm will run low of clients seeking their services, as they will have to suspend supply of goods. Also, Hihara (2011) confirms that the amount of profit that the company accrues will substantially decline leading to the reduction in the supply or distribution of materials. 2. Threats to Assets and Infrastructure The region, infrastructure, and equipment that the transport firm or logistics company depend upon need adaptive investment. It is important to improve the existing networks and to safeguard against change in climate. The facilities used in transportation are for a specific duration of 10 years or more. Strategic investments are critical to ensuring that transportation and logistics services remain secure and resilient to climate (Mitsakis et al., 2013). Airplanes, rail lines, modules and some equipment that are prone to weather influence are more vulnerable to risks of malfunctioning or damage. Kuehne + Nagel Inc. will have to construct more robust transportation facilities that can withstand the harsh and unpredictable weather condition. Some of the major infrastructures that are part of the network are prone to increased levels of the sea, the extreme weather events, storms, and others (Mitsakis et al., 2013). Therefore, the process of strengthening the transportation systems may require resources and time. In this period of coordinating reinforcement work, Kuehne + Nagel Inc. may halt its duties of sea freight and inland transportation services that depend on the infrastructure under maintenance. The coastal airports face particular site risks of the severe storms that need immediate assessment, safeguarding to protect the operations and proper strategic planning (Ploberger, 2011). All these initiatives will ensure that the structures situated in the coastal regions attain a state of stability in every weather condition including the increase in hurricanes. 3. Changes to Underlying Markets A logistics companies such as Kuehne + Nagel Inc. heavily rely on many businesses that climate change affects. These companies include the energy firms, insurance firms, as well as tourism. Even though it may provide new potential services to individual sectors, Kuehne + Nagel Inc. barely realize any benefit concerning the occurrence of any climatic calamity. Ploberger (2011) notes that the insurance coverage will withdraw their services to the firms located in areas where climatic events are likely to occur. Therefore, the offices or transportation networks of the companies that are within the risk areas are expected to go without insurance cover. Opportunities for Kuehne + Nagel Inc. Created by the change in Climatic Conditions Though climate change presents several challenges to the firms in the logistics industry, there are chains of benefits that it offers to some of the well-established organizations such as Kuehne + Nagel Inc. The fact that the firm is a stable service provider in the transportation field or logistics sector makes customers have a spirit that occurrence of climate change may affect it slightly (Semenov and Stratonovitch, 2015). Therefore, consumers will tend to prefer contracting it in most instances as they want their services to continue normally even in the occurrence of fatal weather events. Kuehne + Nagel Inc. also have a vast network across Europe and the world. Therefore, its extensive presence in diverse places in the world makes it less vulnerable to the impacts of Mother Nature. If weather events affect one of its terminals, it will only shift to the use of other terminals. Semenov and Stratonovitch (2015) note that the presence of robust technology makes it have an upper hand in the delivery of logistic services. Their state of infrastructure makes them be a better choice for customers in the instance of calamities of various kinds. Clients tend to shift their attention to the most reliable firm that can deliver services to them immediately. Additionally, the company has various alternative means of transportation. As mentioned above, it uses inland transportation means, air transport, channels and shipping. Based on probability, it is quite hard to find all the means of transportation affected by the harsh climate. The availability of alternative means of transportation serves to encourage the firm to continue with service delivery even in a moment of calamity. The potential also add to their customer base a significant number of clients. However, climate change hinders the progress of various logistic firms at some point, for the Kuehne + Nagel Inc. it leads to the expansion of the customer base. Recommendations Climate change is a serious issue that demands appropriate attention. Therefore, the following recommendations may be suitable for application by the Kuehne + Nagel Inc. to ensure that it establishes a proper climate adaptation strategy. 1. The firm should engage in active climate change improvement and risk assessment at the seaports of any other vulnerable network terminals (Mamalis, Spentzas and Mamali, 2013). 2. It should incorporate risks of climate change into new technology. 3. Kuehne + Nagel Inc. should review insurance coverage and plan for any existing gaps. The logistics firms are already experiencing retractions especially with highly expensive equipment in vulnerable regions such as coastlines (Brown, 2013). Therefore, being proactive in the assessment of risks areas and integrating them in insurance policy covers will assist in protecting the company’s assets in the future. Conclusion The climate trends depict a long-term increasing inclination of the average temperature of the air. Precipitation patterns are also dynamic. Climatologists predict that the trends will significantly pick up the pace in the future. A severely damaging concern caused by the elevation of temperature rates is the continually rising levels of the sea. Besides, there exist some of the extreme weather events that have repercussions that are more devastating on businesses. They include floods, hurricanes, and monsoons. The German company Kuehne + Nagel Inc. that boasts of widespread international presence stand a higher chance of feeling the effects of the varying climatic conditions. The changes affect it both negatively and positively to some extent. While climate change interrupts its operations in handling of goods, storage, vehicle movements, infrastructure maintenance, it also contributes to increasing the customer base of the company. Indeed, the company should strive to implement some of the recommendations mentioned above to safeguard itself from the inevitable calamities of Mother Nature. 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