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Atlantic Storms: Carriers Stuck at Sea

Posted by Tal Porat | September 8, 2017

The Atlantic is brewing up relentless storms that are forecast to ravage all in their path. Hurricane Irma, the most severe storm from the Atlantic, has already left extreme damage to the Caribbean islands, and is expected to make landfall in Florida this weekend. It is clear that Hurricane Irma, and the hurricanes to follow, will impact the flow of cargo and the daily functions of stores, warehouses, and factories.

A well-oiled supply chain isn’t only measured by its day-to-day operations, but rather, on how quickly companies can bring their operations up and running at full speed in the face of disaster. Here are some variables to consider as you figure out the adaptability of your landed network to brave massive disruption.     

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Current Status:

  • Ports at risk: Miami through Charleston.
  • Boats in transit within 50 miles of Miami Port are at risk.
  • It will likely only be decided if vessels are rerouted once the extent of the damage to ports is known. If a vessel must be routed to NY due to unavailable ports on the southeast coast, assume an additional 7 days of transit per container.
  • Get started on an alternate plan focusing on executing Miami lanes from the Port of Savannah. While the Port of Savannah is currently closed, there will be no infrastructure damage and will likely be one of the first ports to reopen for business.
  • Prepare for emergency mode shifts such as sea freight to truck or to rail, to mitigate missed delivery dates.
  • Analyze risk identifiers such as sold inventory on water that will be delayed against relevant inventory you have on hand that’s not yet shipped.
  • Create cost analysis models to weigh your alternative options, taking into consideration situational constraints such as pricing for alternate modes of shipping versus cost of late shipments.
  • Elementum is in close contact with a vast network of carriers and will keep you posted as details arise in real time.

More things to think about:

  • It’s easy to get lost in the chaos. One of the best places to start in times of uncertainty is to identify exactly how much freight is currently at risk to miss scheduled delivery dates, as well as how much money will be lost in relation to missing the shipping window (e.g. do contents have an expiration date and how much would it cost to infuse your network with backup emergency inventory).
  • Before details are known, vessels will likely be stalled at sea until better decisions can be made. At this point of uncertainty, what you can do is plan out a worst case and a best case scenario with regard to deviation from the planned sequence of events. By understanding the different scenarios, your network can have a game plan in place when the time comes to make a call. Already having calculated the implications of adding a certain amount of days to transit times, for example, can help you make the best possible decision in the worst possible conditions.
  • Furthermore, as you begin to consider your plans of response, rally your troops and prepare your support team. Arm your teams with knowledge and with plans of action so that they can hit the ground running no matter the outcome and reduce any overage.
  • Measure the industry reaction to identify areas of opportunity. Talk to the steamship lines and terminals to understand if they are taking any measures to mitigate, and know the infrastructure in place for all-case scenarios (best and worst) to avoid potential bottlenecks.

Things to do in the future:

  • Budget for natural disasters — these events, unfortunately, are not going away. If you budget in advance, taking appropriate ameliorative measures will not be detrimental to your bottom line.
  • Plan emergency routing procedures based on inventory levels and different port availabilities. Ensure that your contingency plans deprioritize high-risk ports so that you have flexibility in times of disaster.  
  • Design your routes based on previous trends. Look back at the procedures you had in place for the Hanjin bankruptcy, the explosion at Tianjin, and the most recent LA port strike. Knowing how you reacted in times of significant disruption can help you tweak your plans to better respond in the future. Leverage data aggregation as you model potential scenarios that can mitigate losses in times of disaster.
  • While there are limits to advance planning, you can still position your operations for “successful losses” in times of crisis. For instance, while you likely can’t come up with every alternate scenario, it is possible to deduce how certain hubs or segments of your supply chain will be impacted by disruptions. Contingency planning is an absolute crucial aspect to running an efficient, agile supply chain, and should be supported with open communication, cross-functional support, and occasional drills to ensure alignment across the entire operation.
  • Use data models to build a diverse and balanced operation so that your network can evenly pick up the slack in times of crisis. Use existing visualization tools to help you fortify your supply chain with plans rather than theories.