By Chris Merritt, Ryder
Natural disasters like Hurricane Sandy are devastating. They impact people’s lives and livelihood. In addition, as we’ve learned from recent years, they can result in significant supply chain disruptions. Following the storm, we are seeing three issues impacting retail supply chains – power, fuel, and people.
Power continues to be a significant challenge. Retail distribution centers in the northeast have been impacted by severe flooding and power outages. Even those with generators are not operating at full capacity. We are also seeing fuel shortages in the Northeast, which are impacting transportation. Ryder’s extensive fuel network does help to mitigate the supply issue for our customers as we are able to bring in fuel from neighboring states. However, shortages will cause third-party carrier rates to increase, impacting retailers’ bottom-lines, at least for the short term. Labor will also be a challenge. In times of disaster, people have personal issues that must be dealt with – everything from childcare while schools are closed, to damaged homes that need to be attended to. Those businesses that do have power and fuel will continue to have a hard time staffing their warehouses with people to do the work.
Shipping delays are also expected. The New York/New Jersey ports are second only to the Long Beach/Los Angeles ports in container volume, and with retailers gearing up for Black Friday, Hurricane Sandy is a major disruption. Most retailers split their distribution networks between east and west coast ports. The ones expecting shipments from the east coast will undoubtedly have goods sitting on ships. While most retailers should have enough inventory for their regular replenishment items, we expect to see out of stock situations up and down the east coast for promotional items retailers have ordered and advertised for Black Friday.
It’s important to also recognize that the impact of a storm like Sandy is greatly affected by what is done before the storm ever hits. We collaborated with many of our retail customers in the days leading up to the storm, repositioning inventory, pulling inventory forward, and even expediting advanced shipments of fast selling goods consumers needed for storm preparedness. Hurricane Sandy is once again a reminder that supply chain planning can play a huge role in mitigating risk and disruption.
Chris Merritt is VP/GM, retail supply chain solutions for Ryder.