As we pen this Supply Chain Matters commentary on Tuesday morning, it has been four days since Hurricane Harvey impacted the Texas Gulf region of the United States, especially the regions surrounding Corpus Christy and Houston Texas. The heavy rains generated by this epic, long-duration storm is expected to continue for another 2-3 days with upwards of 30-40 inches of rainfall already recorded for some of the impacted regions.  

Already, many are reporting this natural disaster event as unprecedented, and likely one of the more severe natural disaster flood events ever to occur in the United States.  The continual video images of residents having to be rescued by boats, helicopters and heavy vehicles is sobering, and rescue shelters in Houston have now exceeded capacity. The continuing deluge of rainfall makes the situation ever more challenging.

From an industry supply chain perspective, reports indicate that upwards of 15 percent of U.S. petroleum refining capacity has been disrupted. With Harvey now looping back from the Gulf and re-impacting the coastline moving in a southwest trajectory, additional refineries, petrochemical and oil storage facilities could be impacted.  One industry consultant estimate reported by The Wall Street Journal indicates the total amount of offline capacity could rise to as high as 30 percent if Harvey continues to move closer to Louisiana. Such a supply disruption is bound to have some impact on current fuel prices.

With so much extensive flooding, the open question is how long before the large number of flooded roads and highways recede in order to resume travel to and within the impacted areas. From prior history from severe storm events, ocean and harbor navigation, rail beds and highways will all have to be inspected for safety and integrity. Some reports now indicate it could be weeks before floodwaters recede. Another looming concern is the thousands of residents and workers who have lost homes and residences and will need shelter for some time to come. Flooding of this scale can bring after effects of added illness and disease outbreaks.

From an overall transportation and logistics perspective, carriers and operators have had to shut down local facilities because of the severe flooding. The Ports of Corpus Christi and Houston remain closed to most ships, while those vessels destined for the area remain offshore waiting for some word on when ports will open. Parcels and freight, other than those of an emergency nature, destined for the region remain queued in transport facilities throughout the U.S.  The WSJ reports that Houston’s port serves as a key consolidation point for imports of motor vehicles and appliances produced in Mexico as well as foreign produced goods destined for western areas of the United States.

Judging from previous disasters, it will take some time for transportation networks to unravel. The open question is how long? Priority for transport will have to be for emergency relief supplies including medical and safety needs.

Needless to state, for many industry supply chains, the aftermath of Hurricane Harvey may be longer duration until some sense of normalcy returns to this region’s transportation, logistics, services, and production networks.

On a positive note, reports of Wal-Mart, The Home Depot, Lowes Home Improvement, and other retailers, as well as federal state and local emergency response agencies activating their respective response centers and marshalling needed emergency aid shipments to the impacted areas are always heartening.

The charitable foundations of Home Depot, PepsiCo and Wal-Mart have donated $1 million each for relief efforts, while companies such as Caterpillar, Google, Exxon Mobil, Lowes, and others have already donated hundreds of thousands each toward American Red Cross relief efforts.

If readers wish to donate, we provide a web link to the American Red Cross, Hurricane Harvey Relief donation page.


Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.