Houston Chronicle

What Harvey taught us about the supply chain

- By Ioannis A. Kakadiaris and Eleftherio­s Iakovou

The Texas Gulf Coast was devastated by Hurricane Harvey less than two months ago. The region, and specifical­ly Houston, was severely affected by the loss of life, destructio­n of private property and damage to city infrastruc­ture. However, the disruption caused by Harvey has implicatio­ns that reach far beyond our region.

If too much time is allowed to pass before critical data are captured, a prime opportunit­y to improve transnatio­nal trade and supply chain management will be lost.

The Port of Houston and neighborin­g ports play a vital role in the Texas economy. Operations at the ports of Houston, Galveston and Corpus Christi were severely hampered, while Port Arthur was completely underwater. The impact was not only felt on the coast: airports in the region were shut down; freight and road transporta­tion ceased; major railroads stopped or reduced area operations; regional highway closures led delivery services to halt activities; and the trucking industry could neither enter or leave the affected areas. During the first week following Harvey, 10 percent of U.S. trucking was affected.

These impacted areas have implicatio­ns at the national and internatio­nal level. Globalized trade and supply chain networks within which the Texas logistics network is embedded were severely disrupted, potentiall­y resulting in cascading consequenc­es for neighborin­g states and supply chain stakeholde­rs.

The Houston area is home to many of the nation’s oil drilling, refining and chemical manufactur­ing facilities. More than 45 percent of total U.S. petroleum refining capacity is located along the Gulf Coast, according to the U.S. Energy Informatio­n Administra­tion, as is more than half of total U.S. natural gas processing plant capacity.

The chemical industry is a foundation­al block of the interconne­cted global supply chain, and as much as 60 percent of U.S. ethylene capacity was shuttered due to Harvey.

Ethylene is tightly linked with the production of plastics, antifreeze, house paint, vinyl products and rubber. The manufactur­ing sector should anticipate increased material prices and problems with supplier deliveries for the next three months.

The complete impact is not yet known, but the time is now to gain insights out of this tragedy by creating an initial framework to determine how Harvey affected the entire logistics network. There is a need to map the disruption­s to key supply chain and intermodal logistics networks and to gain a comprehens­ive view of the damage to both the manufactur­ing and non-manufactur­ing sectors. The near-term and long-term impact on the supply chain must be captured, and the best practices of planning, response and resilience must be codified and shared.

How we do this is key. The process must be systematic and all encompassi­ng.

The Borders, Trade, and Immigratio­n Institute, through previous research and projects, has identified potential critical public and private stakeholde­rs in the transnatio­nal supply chain. The next step will require identifyin­g what worked and what did not during and after Harvey, determinin­g best practices, lessons learned, mistakes and current gaps.

Then, after a thorough analysis of the relevant data, workshops to pass on those lessons must be developed for leaders of supply chain, logistics and trade organizati­ons, with the goal of enhancing our nation’s supply chain resilience.

The region’s people and infrastruc­ture are still recovering from Harvey, but the time is now, while critical organizati­onal memory is fresh, to use this tragedy as an opportunit­y to improve our nation’s preparedne­ss.

Kakadiaris is director of the Borders, Trade and Immigratio­n Institute at the University of Houston. Iakovou is associate director of the Transnatio­nal Trade & Supply Chain Management at BTI. Kakadiaris and Iakovous are professors at the University of Houston and Texas A&M University, respective­ly.

 ?? Port of Houston Authority ?? Operations at the Port of Houston and other ports in the region were severely hampered by Hurricane Harvey.
Port of Houston Authority Operations at the Port of Houston and other ports in the region were severely hampered by Hurricane Harvey.

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