Authors: Joaquin Blaum, Federico Esposito, and Sebastian Heise
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Staff Reports
Input Sourcing Under Supply Chain Risk: Evidence from U.S. Manufacturing Firms
Number 1141
February 2025
February 2025
JEL classification: F10, F15, Q54
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.
Author Disclosure Statement(s)
Joaquin Blaum
I declare that I have no relevant or material financial interests that relate to the research described in the paper "Input Sourcing Under Supply Chain Risk: Evidence from US Manufacturing Firms.”
Federico Esposito
The author declares that he has no relevant or material financial interests that relate to the research described in the paper “Input Sourcing under Supply Chain Risk: Evidence from U.S. Manufacturing Firms.”
Sebastian Heise
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
I declare that I have no relevant or material financial interests that relate to the research described in the paper "Input Sourcing Under Supply Chain Risk: Evidence from US Manufacturing Firms.”
Federico Esposito
The author declares that he has no relevant or material financial interests that relate to the research described in the paper “Input Sourcing under Supply Chain Risk: Evidence from U.S. Manufacturing Firms.”
Sebastian Heise
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Suggested Citation:
Blaum, Joaquin, Federico Esposito, and Sebastian Heise. 2025. “Input Sourcing Under Supply Chain Risk: Evidence from U.S. Manufacturing Firms.” Federal Reserve Bank of New York Staff Reports, no. 1141, February. https://doi.org/10.59576/sr.1141
Blaum, Joaquin, Federico Esposito, and Sebastian Heise. 2025. “Input Sourcing Under Supply Chain Risk: Evidence from U.S. Manufacturing Firms.” Federal Reserve Bank of New York Staff Reports, no. 1141, February. https://doi.org/10.59576/sr.1141
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