Insurer warns ‘super’ El Niño could trigger major supply chain disruption

TT Club is urging global supply chain operators to strengthen risk management and resilience plans as forecasts point to a potential ‘super’ El Niño that could deliver a significant systemic shock to global trade.

The transport and logistics insurer said the world was now officially in an El Niño climate pattern, with forecasts suggesting it could develop into one of the strongest events on record. According to the European Commission’s Joint Research Centre, the outlook is “potentially historic”, raising the prospect of widespread climate disruption across multiple regions.

TT Club said businesses should view a super El Niño as a risk multiplier rather than an isolated weather event, warning that climate impacts could compound existing geopolitical pressures and expose vulnerabilities across transport, energy, and commodity markets.

The insurer highlighted several areas of concern, including reduced water levels affecting key shipping routes such as the Panama Canal; intensified Pacific storms; increased energy demand leading to operational disruption in manufacturing hubs; and indirect impacts such as supplier disruption, higher freight costs, energy market volatility, and working capital pressures.

Neil Dalus, Risk Assessment Manager at TT Club, said: “The trajectory of this El Niño event demands that the logistics and supply chain community takes a proactive rather than reactive approach. The question is not whether disruption will occur, but how prepared organisations are to anticipate and respond to it. Those with greater supply chain visibility, diversified sourcing strategies, and robust crisis management frameworks will be far better positioned to weather what could be a very challenging period.”

TT Club is encouraging organisations to enhance scenario planning, diversify supply chains, improve supplier mapping, and incorporate seasonal climate intelligence into decision-making.