- Hurricane Ida’s damage will pile on to an already overwhelmed supply chain.
- The storm temporarily shut down several ports. Recovery efforts will also strain the trucking industry.
- The storm will impact the availability of products from oil to food, electronics, toys and furniture.
- See more stories on Insider’s business page.
The aftermath of Hurricane Ida will only pile onto the multitude of supply chain issues.
The storm wreaked havoc across the Gulf Coast and East Coast last month, killing at least 40 people and causing tornadoes and historic flooding. Current estimates place the damage from Ida at over $US95 ($AU129) billion.
The fallout is far from over. From increased shipping delays and shortages to pushing prices even higher, Insider spoke with five supply chain experts that broke down the impact the hurricane will have on the ongoing supply chain crisis.
“Every additional hit is amplified,” Gad Allon, Director of University of Pennsylvania’s Jerome Fisher Program in Management & Technology, told Insider. “All supply chains are so strained that Ida could have a bigger long term impact than Hurricane Katrina.”
Since the onset of the coronavirus pandemic, a boom in demand has overwhelmed the supply chain. Transportation has struggled to keep up as rising demand met COVID-19 shutdowns, causing shortages of shipping containers and price hikes. Judah Levine, the Head of Research at Freightos, told Insider shipping prices between Asia and the US have hit a new record, jumping 500% from this time last year.
Hurricane Ida caused damage at several US ports
Hurricane Ida forced the Port of New Orleans to close for several days. While the port was since able to reopen, others, including Port of South Louisiana and Port Fourchon sustained damage.
Chris Tomas, the Lead Intelligence Analyst at BSI, told Insider port delays could impact grain and oil shipments, though the ports are only responsible for a fraction of US imports. But the damage and temporary closures in Louisiana come at the same time as key ports in Southern California are facing record backlogs.
Hurricane Ida has had the most significant impact on US oil production
The storm’s 150 miles (241km)-per-hour winds in the Gulf of Mexico cut most offshore oil and gas production for over a week, while also damaging onshore support facilities and causing some of the oil to leak into the Gulf. Reuters reported that the oil losses ranked among the worst in 16 years. Today, the aftermath of the storm has kept about 12% of US oil production at a standstill, The New York Times reported.
The disruption in oil flow will have a reverberating impact on many US industries, Douglas Kent, the Executive Vice President of Strategy and Alliances at the Association for Supply Chain Management (ASCM), told Insider.
“Constraints on one raw material compound themselves across the industry,” Kent said, pointing to companies like paint and specialty coatings giant PPG Industries. Earlier this week, the company warned raw materials costs would rise due to Hurricane Ida.
Shipping concerns are minor compared to the impact on ground transportation
Trucking companies will be responsible for bringing in new supplies to areas recovering from the storm.
“The trucking industry already has two major issues: long port delays, as well as a labor shortage,” Allon said. “Now we’re triple-straining the systems by requiring them to go into areas that will be difficult to access, where they will be bogged down.”
Kent warned the supply chain issues will continue to felt by customers, both through a lack of supply of imported items like electronics, toys, and furniture, as well as price hikes.
“When we see these massive increases in transportation costs, it’s clear somebody will have to pay for it,” Kent said. “One more disruption could send it [the global supply chain] into complete chaos.”
Experts have warned that the supply chain crisis will continue into 2023.