When Disaster Strikes, Transportation Capacity Tightens
A manufacturer unable to ship components from a disaster zone on the East Coast causes production delays on the West Coast. A warehouse hit by a disaster in the Southwest faces significant downtime before getting back up and running, which leads to inventory shortages throughout the country. The unpredictability of natural disasters can cause countless negative outcomes for businesses operating in disasters zones and their extended supply chain. No matter what the situation is, when disaster strikes, the fallout on transportation and logistics can have far reaching effects well beyond the impacted area.
The most significant impact that natural disasters have on transportation is creating shortages in carrier capacity. After a natural disaster hits, typically there aren’t any outbound loads available coming out of the disaster recovery areas. The Federal Emergency Management Agency (FEMA) steps in and offers carriers above market rates to ship goods to the affected locations. Resources get pulled away and capacity going directly into the affected area or surrounding areas becomes extremely limited. Disaster relief shipments become the highest priority. The few trucks that are available to move in and out of the affected area may increase their rates to meet the demand. These carriers will likely face delays from detours and road closures. Some carriers with availability may not be willing to risk going into the disaster zone, creating service disruptions.
Depending on the type of natural disaster, there may be some time to prepare for service disruptions. While there will always be an unpredictability to the severity of disasters, the worst-case scenario should always be taken into consideration. Most recently, hurricanes have caused the significant issues with transportation and logistics. Even though hurricanes are tracked in advanced, the true impact of the storm isn’t known until it makes landfall. Even if you aren’t located in the eye of the storm, don’t underestimate the far-reaching repercussions that one of these events can have on your business.
To ensure that natural disasters have the least impact on your business, make sure that a risk management (or business continuity plan) plan is in place. Communicate frequently with your employees, your service providers and your customers leading up to the storm. Prior to the storm, consider shipping out to your customers early. After the storm, contact your customers to ensure that they are ready to receive shipments. If you need any assistance ensuring that you have transportation coverage in the event of a natural disaster, contact our transportation operation, Continental Logistics today to discuss your options.