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Global Category Intelligence

Q2 2025

ALERT: California Burning - Global Supply Chains Under Threat

Updated 13 January 2025

UPDATE: 13 January 2025

As of January 13, 2025, the wildfires in Southern California continue to impact the global supply chain. Economic losses are now estimated between USD 135 billion and USD 150 billion, potentially making this disaster the costliest in US history.

Interstate 5 (I-5) and Other Major Arteries

Interstate 5 (I-5), a critical freight corridor on the West Coast, has experienced intermittent closures due to the wildfires. While some sections have reopened, the situation remains fluid, with closures occurring as fire conditions change.

Other major transportation routes have also been affected, causing significant disruptions in logistics and supply chain operations:

Pacific Coast Highway (southbound at Cross Creek Road, northbound at McClure Tunnel)
- Why Important? This road is vital for goods moving along the coast, especially for industries like tourism, hospitality, and local commerce in Malibu and Santa Monica. Its closure disrupts local and potentially international goods, particularly perishable items like seafood or produce.
Westbound 10 Freeway (diverted at Lincoln Boulevard)
- Why Important? Known as the Santa Monica Freeway, this artery is crucial for east-west traffic across Los Angeles. It also provides access to the ports of Los Angeles and Long Beach, key global supply chain nodes. Diversions here mean longer travel times, leading to delayed shipments and potential congestion at alternative routes.
Westbound 210 Freeway (closed at Roxford Street, with traffic diverted)
- Why Important? This is critical for connecting to the Inland Empire, a major warehousing and distribution hub. The Inland Empire is also a significant point for last-mile delivery operations, so disruptions here have ripple effects on retail and e-commerce supply chains.

Flexport Operations

Flexport's 1.1 million-square-foot e-commerce fulfillment center in San Bernardino was evacuated last week. According to the latest reports, the facility remains closed, and there is no confirmed timeline for reopening. This closure continues to affect order processing and last-mile deliveries, contributing to delays in the supply chain.

Kinder Morgan Pipelines

Kinder Morgan Inc. shut down two fuel pipelines in Los Angeles—the SFPP West and CALNEV pipelines—on January 8 due to power outages caused by the wildfires. As of January 10, these pipelines had resumed operations after power was restored.

The situation remains dynamic, however, and we continue monitoring the challenges posed by the wildfires to infrastructure and industry operations.

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ALERT, Dated 8 January 2025

The ongoing wildfires in Southern California are causing unprecedented destruction, with economic losses already exceeding $52 billion—the largest in Los Angeles' history. As a critical hub for international trade, the region's turmoil is beginning to disrupt logistics and information technology sectors, with potential ripple effects across the global supply chain.

While the crisis continues to evolve, with no signs of abating, here’s a closer look at the impact so far.

Logistics

The fires have severely disrupted operations along Interstate 5 (I-5), one of the most important freight corridors in the United States, amplifying supply chain challenges.

This artery runs parallel to the Pacific Coast, connecting major economic hubs such as San Diego, Los Angeles, and Seattle, while facilitating North American trade between Mexico, the United States, and Canada.
Road closures along I-5 are causing freight delays and forcing rerouting through less efficient pathways, increasing delivery times and costs. These bottlenecks highlight the fragility of supply chains heavily reliant on Southern California's logistics infrastructure.

Technology Sector

Southern California’s thriving tech industry is uniquely vulnerable due to its reliance on stable infrastructure, secure data centers, and uninterrupted power supplies.

Tech campus evacuations and disruptions to data centers threaten operations essential to cloud computing, AI development, and digital services. Companies face challenges maintaining uptime for critical systems supporting global business processes.
Wildfire smoke and ash infiltrate data center cooling systems and clog filters, reducing operational efficiency. Prolonged exposure can damage critical equipment such as backup generators, compounding the risks of power grid instability.

Power Grid and Manufacturing

Power grid instability is compounding the crisis, leading to blackouts that disrupt manufacturing and impede schedule logistics operations.

For companies reliant on Just-in-Time (JIT) manufacturing, power outages delay production, disrupt inventory flows, and complicate procurement timelines.
Reliance on backup power systems causes operational downtimes and increased costs for manufacturing and warehousing operations, particularly those requiring consistent energy input.

Key Logistics Facility Impacts

The evacuation of Flexport’s 1.1 million-square-foot e-commerce fulfillment center in San Bernardino has underscored the cascading risks of localized disruptions.

As a major logistics hub, the facility’s shutdown delayed order processing and last-mile deliveries, which is having ripple effects across international supply chains.
Businesses relying on JIT inventory models are particularly vulnerable, as delays amplify risks to production and delivery schedules worldwide.

Pipeline operator Kinder Morgan Inc. has shut down two of its fuel pipelines in Los Angeles—the 515-mile SFPP West and the 566-mile CALNEV pipelines due to power outages caused by the wildfires.

These pipelines transport fuel to key areas, including Phoenix, Las Vegas, and San Diego.
Companies that rely on these fuels for their operations (e.g., logistics firms, construction, emergency services) might face procurement challenges.

Emerging Opportunities: Fire Technology

Amid the devastation, the wildfires underscore the importance of innovations in fire technology to bolster resilience.

Advanced tools are helping businesses identify and mitigate risks before disruptions occur.
Data centers, logistics hubs, and manufacturers are increasingly adopting enhanced air filtration systems, advanced fireproofing, and real-time air quality monitoring to safeguard operations.

Strategic Takeaways for Indirect Procurement

For supply chain and procurement professionals, the Southern California wildfires are an important reminder of the need to prioritize resilience and diversification:

Expanding supplier networks and exploring geographically diverse sourcing options can mitigate reliance on fire-prone regions.
Robust disaster response strategies, including alternate transportation routes and inventory buffers, are essential for minimizing disruptions.

As this crisis unfolds, its lessons will shape the future of global supply chain management and indirect procurement. Wildfires have notably impacted global supply chains elsewhere, like the 2019-2020 Australian bushfires, which affected beef and wool supplies; the 2021 Canadian wildfires, which disrupted mineral exports; and the 2024 Russian fires, which impacted timber availability.

These events underline the importance of building resilience against such disasters, which should remain a critical priority in the future.