Hurricane Harvey Disrupts Supply Chains: Resources for Procurement

supply chain disruption Photobank/Adobe Stock

Hurricane Harvey, now a tropical storm, continues to make headlines as it slowly moved from southeast Texas into southwest Louisiana. The New York Times reports that the storm has dumped a record 51.88 inches of rain on Cedar Bayou, Texas, and that the state’s flood-related death toll has reached 31.

In addition to the non-quantifiable losses to the affected residents, the storm is estimated to carry an economic cost of tens of billions of dollars. The oil and gas industry will be particularly hard hit, considering that Texas is responsible for half of U.S. petroleum and gas exports.

Harvey has caused 13 refineries to shut down completely or partially, the Washington Post reports, and U.S. gasoline production capacity has thus dropped by 2 million barrels, or 10%.

But according to experts, Harvey is having an even bigger effect on the petrochemicals industry. Texas is responsible for 70% of the nation’s ethylene, a main ingredient in plastics, and 37% of U.S. ethylene production is reported to be disrupted.

Supply chains are seeing major disruptions as the shipping industry scrambles to reroute around Houston, a major transportation hub. The Wall Street Journal reports that Harvey has affected up to 10% of U.S. trucking capacity, and that international trade routes are likely to be affected as well.

Spend Matters will be talking to experts and providing more in-depth coverage in the coming days on what supply chain professionals should know and do in the aftermath of Harvey. In the meantime, check out the below research papers and Spend Matters articles on natural disasters and risk management:

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