Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315924 
Year of Publication: 
2025
Series/Report no.: 
Staff Reports No. 1141
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We study the effect of climate risk on how firms organize their supply chains. We use transaction-level data on U.S. manufacturing imports to construct a novel measure of input sourcing risk based on the historical volatility of ocean shipping times. Our measure isolates the unexpected component of shipping times that is induced by weather conditions along more than 40,000 maritime routes. We first document that unexpected shipping delays induced by weather shocks have significant negative effects on importers' revenues, profits, and employment. We then show that more exposed firms actively diversify the risk of weather delays by using more routes and sourcing from more foreign suppliers, although their total imports decline. To rationalize these findings, we introduce shipping time risk into a general equilibrium model of importing with firm heterogeneity. Our quantitative analysis predicts substantial costs for the U.S. economy associated with different sources of supply chain risk.
Subjects: 
supply chains
climate shocks
shipping time risk
input sourcing
JEL: 
F10
F15
Q54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.