Natural disasters usually have an enormous impact on humans and organizations or businesses. The disasters usually disrupt all aspects of human life and business resulting in loss of property and life. Both humans and their businesses continue to suffer losses long after the disaster due to the disruption of important infrastructure, social arrangements, and supply chains. For instance, in the wake of Hurricane Katarina, a lot of property got destroyed and lives lost. However, the lingering effect on the supply chains in New Orleans was far worse than had been anticipated. The disruption of the supply chains was a nightmare even for companies far away from the storm. This research will explore how the hurricane affected transportation into and out of New Orleans
Every supply chain with a presence in New Orleans got affected by the disruption in the wake of Hurricane Katrina. According to the University of Delaware (n.d.) Katrina destroyed most of the infrastructure in the Mississippi Delta and Southern Louisiana. With such destruction of infrastructure, no transportation activities could take place, and therefore, there was no movement on all the supply chains in the area. While it took about five days for the National Guard to get to the scene and for the human life rescue initiatives to get fully operational, it took longer for the transport infrastructure to become operational. Throughout all this time businesses were unable to ship their product or to receive new supplies from their suppliers. Some shipment terminals got hit leading to loss of goods worth billions of dollars. Some of the goods got destroyed due to flooding while those that were on higher grounds had to remain in the warehouses longer due to blockage of access routes by the flooding and debris (Global Logistics & Supply Chain Strategies, n.d.).
Delegate your assignment to our experts and they will do the rest.
Many companies had to change their supply chain routes in order to continue their business operations. They had to use alternative ports and transportation means to either get their supplies or ship their commodities (Katz, 2005). The main ports in the area the Ports of New Orleans and South Louisiana (the nation’s fourth and second-largest ports respectively) were devastated and could not support shipping for several weeks. No goods got in or out and due to the resulting loss of profits, many companies could not wait for these ports to return to their functionality, and thus, rerouted large volumes of their exports and imports to other ports.
The supply chain costs also increased in the wake of the disaster. Although some companies manage to continue business by rerouting their supply chains thus avoiding more losses, they still had to incur additional costs due to new shipping arrangements. According to Katz (2005) companies usually select direct routes supply chains that are efficient, and reliable with minimal costs. Shipping through New Orleans was strategic and less costly for the companies that had traditionally preferred using this route. Therefore, being forced to use alternative routes resulted in longer shipment durations and additional costs for these companies.
On the other hand, some companies did not find changing their supply chain routes to be a viable alternative. For instance, Cargill Inc. a Minneapolis-based grain supplier that purchases corn, soybeans, and wheat from farmers in the Midwestern and ship the products to four Louisiana export facilities had its hubs destroyed by the hurricane (Hilsenrath, 2005). The company found it impractical to ship its goods by rail to other ports. Such a move was very costly. As a result, the company went out commission for several weeks before it could restore its hubs.
Some business lost their suppliers and could, therefore, not continue their production activities due to the lack of supplies. For instance, the chemical industries in the region that heavily rely on petroleum products were had hit since their supplier could not ship in their supplies through the ports. For instance, DO Chemical Co.’s ST Charles, which supplies polypropylene was hit and could not supply the product to its customers within and away from New Orleans (Katz, 2005). Furthermore, it could also not ship in its own supplies. Like many companies in the region, Dow had to declare itself free of blame for the failure to supply its polypropylene products due to the action of a “force majeure.”
Supply chain and logistics management challenges were not limited to business alone. According to the University of Arkansas (2005), rescue operations also encountered logistics and transportation challenges. It was very challenging to get food and clean water to victims of the disaster. Rescue teams also experienced challenges reaching the victim mainly due to the cut off access routes. Certainly, the inaccessibility of victims reduced the ability of the rescue teams to save lives.
Although it occurred ten years ago, the lesson learned from the hurricane Katarina are still critical for supply chain planning. The Hurricane disrupted transportation of goods into and out of New Orleans. This is mainly because the main ports use to access New Orleans got destroyed by the disaster. Also, inland access routes were unusable for transportation of goods in and out of New Orleans since they had either been destroyed or cut off by debris and flooding. Companies that relied on New Orleans infrastructures from transport and running of their supply chains had to halt their activities or find alternative transportation routes. Companies within New Orleans like Dow had no alternative other than to halt their activities since could not ship in their inputs, or produce their products. The companies could also not ship out their finished products. Companies that chose to change their shipment routes had to incur additional freight cost and increased shipment durations. Certainly, the effect of the disruption pointed out the need for companies to always invest in contingency measures when designing supply chains.
References
Global Logistics & Supply Chain Strategies. (n.d.). P&G, After Devastation of Hurricane Katrina, Shows the Value of Best-Laid Plans. Supply Chain Brain. Retrieved from http://www.supplychainbrain.com/content/research-analysis/supply-chain-innovation-awards/single-article-page/article/pg-after-devastation-of-hurricane-katrina-shows-the-value-of-best-laid-plans-1/
Hilsenrath, J. E. (2005, August 31). Energy Network Is Further Strained. Wall Street Journal. Retrieved from http://www.wsj.com/articles/SB112545213437027441
Katz, D. M. (2005, September 22). Supply Chains in Katrina’s Wake . Retrieved from http://ww2.cfo.com/accounting-tax/2005/09/supply-chains-in-katrinas-wake/
University of Arkansas. (2005, October 6). Hurricane Katrina Showed Critical Importance of Logistics and Supply-Chain Management . Retrieved from http://news.uark.edu/articles/10148/hurricane-katrina-showed-critical-importance-of-logistics-and-supply-chain-management
University of Delaware. (2005, September 7). Katrina’s effects on shipping analyzed . Retrieved from http://www1.udel.edu/PR/UDaily/2005/mar/katrina090705.html
