The Supply Chain and Hurricane Harvey
There are numerous reports on Hurricane Harvey and its effects on the Supply Chain.
Hurricane Harvey may sideline 7% of the trucking industry
Hurricane Harvey will “strongly affect” over 7% of U.S. trucking during the next two weeks, with some portion of that fraction out of operation entirely, according to analysis by freight research firm FTR Transportation Intelligence.
During the first week, almost 10% of all U.S. trucking will be affected, the firm said; a number that jumps near 100% for the Gulf Coast region west of the Mississippi.
After a month, the numbers fall but are still significant, affecting nearly 2% of trucking on a national basis and 25% on a regional level.
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DAT: Supply chain already feeling effects of Hurricane Harvey
As Hurricane Harvey continues to devastate Houston, the shocking images are drawing comparisons to Hurricane Katrina and New Orleans in 2005.
Unfortunately, Houston’s unique location means the supply chain is already feeling Harvey’s effects, even before the rain stops falling, according to executives with DAT load board.
“Katrina was a horrible storm that impacted homes, families, and business,” said Eileen Hart, DAT’s vice president of marketing and corporate communications. “With Houston, you have that, plus all of the freight that normally goes in and out of there. Now that freight has to get where it needs to go through other places.”
Mark Montague, DAT senior industry analyst, noted companies that have distribution centers in Houston are unlikely to have other facilities in nearby metropolitan areas such as Dallas. As a result, they need to ship freight from alternative areas to serve customers in and around Texas.
“That is why this has such a national impact,” he said. “It changes the shipping patterns, it increases the length of haul, and has a ripple effect throughout the supply chain.”
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Oil & Gas –
Hurricane Harvey Disrupts Supply Chains: Resources for Procurement
In addition to the non-quantifiable losses to the affected residents, the storm is estimated to carry an economic cost of tens of billions of dollars. The oil and gas industry will be particularly hard hit, considering that Texas is responsible for half of U.S. petroleum and gas exports.
Harvey has caused 13 refineries to shut down completely or partially, the Washington Post reports, and U.S. gasoline production capacity has thus dropped by 2 million barrels, or 10%.
But according to experts, Harvey is having an even bigger effect on the petrochemicals industry. Texas is responsible for 70% of the nation’s ethylene, a main ingredient in plastics, and 37% of U.S. ethylene production is reported to be disrupted.
Supply chains are seeing major disruptions as the shipping industry scrambles to reroute around Houston, a major transportation hub. The Wall Street Journal reports that Harvey has affected up to 10% of U.S. trucking capacity, and that international trade routes are likely to be affected as well.
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