As volunteers, first-responders and residents begin the long process of recovering from Hurricane Ian, a discouraging datapoint has made post-storm headlines: in the nine counties declared disaster areas, only 29 percent of homeowners had flood insurance, according to research by Politico and E&E News. While most homeowners in coastal counties have flood insurance, “almost nobody has flood insurance” in the inland counties where “Ian’s web of damage was unusually widespread [with] river overflows and flash flooding,” according to the news story.
A similar story could be told for manufacturing industries whose supply chains extend into Florida. Florida is a major hub and home to a variety of industries including: aerospace, high tech, healthcare, electronics, pharmaceuticals, life sciences, agriculture, manufacturing, security, and more. According to Resilinc data, more than 4,500 sites responsible for making, packaging, or handling about 74,000 parts across these industries were in the path of the storm.
This is why it’s so important for manufacturers to know where their parts and materials come from.
“Most companies don’t really map their supply chains properly, so they rarely know where their parts are coming from,” Resilinc CEO Bindiya Vakil told Fox Business on Friday. “They are scrambling now and might not find out for weeks that a critical supplier had a factory” that was damaged by Ian.
By contrast, OEMs that had mapped their supply chains on their own or with a supply chain risk management firm such as Resilinc had a much more complete picture of how Ian could affect their supplies and revenues. And they were positioned to take proactive measures such as moving supplies out of hurricane risk areas “even before the hurricane season began,” said Vakil.
On top of the damage and power outages affecting production sites in their Florida-based supply chains, many OEMs will face long-shortages and supply chain challenges due to disruptions in logistics capacity in Florida. “Supply chains need roads, railways, ports and airlines for goods to flow,” said Vakil. Not only will damage to transport infrastructure delay shipments as factories recover, but truck capacity will be diverted to recovery and rebuilding needs.
Fortunately, Port Tampa Bay—Florida’s largest—reopened last Friday, welcoming ships carrying fuel as well as containers and cruise passengers, according to Tampa Bay Business Journal. Additionally, SeaPort Manatee—one of Florida’s fastest-growing ports which saw tonnage grow 32% in the first half of 2022—reopened Saturday. While ports re-opening is good news for supply chains, not all shippers will share the shipping capacity equally. OEMs that had taken proactive measures in response to the developing storm booked up much of the available shipping capacity—amplifying the challenges that less-prepared OEMs will face, Vakil told Fox Business and FreightWaves.
Based on its historical experience with similar weather disasters and real-time reports from suppliers in its database, Resilinc forecasts that it will take an average of nine weeks for Florida suppliers to recover their pre-storm run rates. “Production and shipping ability could be hindered by damage to buildings, equipment or inventory,” added FreightWaves’ Supply Chain and Air Cargo Editor Eric Kulisch. “[And the] length of downtime will be influenced by whether businesses have alternative sites and redundant manufacturing.”
On top of the existing supply chain challenges, the disruptions emanating from Hurricane Ian will ripple throughout U.S. and international manufacturing, according to Vakil, who notes that Florida exports a wide range of components and products. “We’re already seeing some level of constraints and rationing [from suppliers affected by Ian] as well as price increases,” Vakil told Fox Business. “This impact will continue to ripple out over the coming months, and it could take four to six months” to recover. “And we’re not out of hurricane season yet.”
As highlighted in previous Resilinc blogs, some best practices to make supply chains more resilient during hurricane and typhoon season include:
- Analyze past disruption data to identify the links in a supply chain most vulnerable to future weather events.
- Offer incentives to suppliers to invest in creating BCPs and mitigation measures such as backup power generation and satellite telecom capabilities.
- Consider creating standards for suppliers in hurricane zones, offering premium pricing and other favorable terms to suppliers who meet these standards.
Even with the best advanced preparation, some supplier firms and logistics routes will remain vulnerable to extreme storms—as Ian reminds us. So, supply chain managers should tune up their capabilities to respond and adapt to weather disruptions as they unfold using AI-enabled predictive analytics services such as those offered by Resilinc.