Harvey’s Impact on Supply Chains
As flood waters begin to recede and citizens begin the process of cleaning up and rebuilding, many industries are at a standstill while petrochemical plants wait to come fully back online in the wake of Hurricane Harvey. More than 80% of the country’s base plastic production is housed in the Gulf Coast region, and energy has a large footprint in the region as well. Floodwaters are keeping shipments stuck at the manufacturing facilities and fuel lines cut off from distributors. So how does the hurricane affect the logistics of these industries?
Refining petroleum is a complex process that requires several different gasses, chemicals and processes. The most glaring gap in supplies for these refineries is crude oil from the Gulf. Reduced supply and flooded shipment paths have forced refineries to rely on reserves or materials from overseas, causing production costs to increase.
Mile after mile of impassible rail lines has forced shipping routes to either reroute or shut down entirely, causing delays and supply shortages to facilities waiting on product. As these supply routes slow down or become exponentially longer, logistics and shipping costs increase.
Refineries and plants that went offline due to Harvey can’t simply return to full production capacity after given the all clear. Each piece of equipment must be thoroughly tested to assure there is no serious damage from the effects of the hurricane. Components must be thoroughly checked for water damage, dried due to natural condensation, and then given time to reach appropriate temperatures to boil, separate, or distill liquids.
After a natural disaster, there is no game plan that will sufficiently handle all affected companies. If one facility experiences no damage or consequences from a storm, its partner refinery or supplier may, causing changes in logistics, supply, and production. While these facilities that rely on Gulf Coast crude production will get back up to full production load soon, the hurricane certainly revealed just how connected and interdependent the segments of a supply chain truly are in the manufacturing industry.
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