Disasters

Disasters

While the grim and weary survivors of the worst hurricane to hit the United States in two generations were facing an epic disaster in the aftermath of Hurricane Katrina, the transportation and shipping industry was beginning its own kind of assessment.

With many parts of the U.S. Gulf Coast region still unreachable, carriers of all modes and their shipping customers were still looking for a road map to recovery.  But it may be that any prospects for imminent relief were probably lost long before Katrina hit land. What does a shipper do now?

"It many ways, now is too late," Yossi Sheffi, the director of the MIT Center for Transportation and Logistics and author of the forthcoming book "The Resilient Enterprise," told us.

"Those who made preparations beforehand, who had the critical route alternatives identified and in place, would have had the best chance of recovering from this with the least amount of damage," Sheffi said as the scale of the disaster was still unfolding.

Preparing for such an unimaginable disaster requires a leap of faith, of course - imagining the unimaginable.

Yet New Orleans has had the big hurricane in mind for a long time and Katrina, as devastating as it was, didn't even hit the city head-on. There was a calculated risk in not taking the necessary precautions and this year, at least, the city has paid the price of that risk.

"It was even worse than we had expected," said John Doyle, a lobbyist with Jones Walker, a New Orleans-based law firm that represents the waterways industry. "Everyone is wondering just exactly what the future holds."

Risk assessment is a growing field in the logistics arena and when Sheffi and others talk about making supply chains more resilient they aren't talking about creating multiple channels filled with safety stock. The shipper with 10 TEUs a month or a single warehouse with a couple of weeks worth of inventory hardly can afford to maintain redundant channels in case of a natural disaster every 10 or 20 years.

What shippers, even small shippers, can do is have some of those alternate channels in mind. Says Sheffi, "Have arrangements with forwarders who operate in other locations so that they can bring in alternatives for you. If you only have enough scale for one port, you should still get familiar with other ports and at least give yourself the capacity to move to other ports."

Sheffi, who has studied the impact of several disasters on supply chains, takes a realistic view of the long-term impact of Hurricane Katrina.

"There will be extra cost for diverted shipments, which then entail new inland transport arrangements, yes," he says. "But it will be nothing like the West Coast port strikes or delays of last year. There, you had an ongoing situation with supply chains tied up for long periods of time with nowhere else to go.

"In this case, whatever freight was coming in is being diverted and so the disruptions should be minimal."

It's a perspective to keep in mind in the search for higher ground.