As our neighbors to the southeast pick up the pieces following the devastating impacts of Hurricane Ian, we now look ahead to a period of recovery. This region is certainly no stranger to resilience. We have witnessed its communities pull together in the face of catastrophe before; we have witnessed the nation pull together to support and uplift those in similar crises, and this situation will be no different.
With the storm itself now in our rearview, businesses across the country are streamlining efforts to combat the widespread effects that this natural disaster threatens across the nation’s supply chain. Here are some key insights into the sectors and networks that will bear the brunt of resulting supply chain disruptions.
Outlook for AutomotiveProduct and commodity consumption across Southwest Florida will plummet across a variety of categories, and the automotive sector will be impacted in this regard. While Florida and the Carolinas are not hotbeds for automotive parts and components, finished vehicles will be directly affected with dealerships closed and residents rebuilding their lives and communities. Automakers will need to account for this lack of consistent consumption on a regional basis in their supply chain networks.
On a macro level, trucking companies will also endure significant challenges with the impact on finished vehicle consumption. This fragile market has already dealt with disruptions and issues in recent years, and OEMs and remarketers will need to supplement capacity in different regions to counteract the ripple of effect of this catastrophe on their suppliers and carriers.
Building Materials: Cost and CapacityAccording to economic data from the Federal Reserve, the Producer Price Index for building materials has fallen since its peak in March 2022. Looking ahead to the future, however, rising interest rates coupled with the Hurricane Ian fallout has the potential to reverse these effects.
While bright spots are few and far between, it is important to note that prices of certain building materials have plunged significantly from their Covid peaks. The Wall Street Journal reports that lumber futures have fallen about one-third compared to this time last year, with steel prices trending similarly. While we may witness an uptick in prices, the fallout of this event from a financial perspective is nowhere close to the calamity of the pandemic.
In addition to material costs, the sheer level of consumption of building materials necessary to rebuild homes and infrastructure will impact capacity for carriers across the supply chain. There will be an uptick in demand for flatbed and open deck capacity to rapidly transport building materials, which will have a domino effect across supply chain networks that carriers will need to prepare for.
Southeast impactIn the short term, truckers and short sea vessels need to rapidly adapt to continue to move products in the region and avoid dreaded warehouse bottlenecks. Businesses have rerouted deliveries to nearby unaffected cities like Orlando and Atlanta, so products will be close by when ports and rail networks in the region rebound and reopen.
From a long-term perspective, Hurricane Ian has torn through a main shipping artery of the United States, and the region’s exports and supply chain hubs will alter the course of logistics networks nationwide. Groves and farms that have served as some of the country’s top exporters of produce and beef have been destroyed; U.S. consumers that have already experienced rising grocery prices will witness even more fluctuations. Travel and tourism will take a direct hit. Heavy and electronic machinery exports, some of the region’s top exports outside of agriculture, will fall and suppliers will need to supplement production elsewhere to meet demand.
The Bottom LineFor individuals and businesses across the impacted areas, the above list goes on. Hurricane Ian will have immediate and prolonged consequences on port and rail networks across the United States. Thus, now is the time to lean heavily on technological innovation to streamline solutions and prepare for the inevitable strains that this disaster will cause.
The need for supply chain players to rapidly adapt through a collective effort is dire. But our country has overcome greater challenges and will surely not falter in its continued resilience to keep our supply chain in function, even as challenges resulting from this natural disaster continue to arise in the years to come.
John Perkovich is chief operating officer of RPM, an end-to-end transportation service provider that utilizes vehicle or freight, LTL or FTL to support all modes of transportation across all industries. Perkovich leads RPM's customer and capacity teams and oversees onboarding, planning, forecasting and budgeting efforts. In addition to outlining and executing strategies backed by actionable data, he supports developing new reporting tools and establishing plans focused on developing and reinforcing critical operational competencies and best practices. Perkovich is currently steering RPM toward digitization and automation to increase efficiencies and reduce non-revenue generating tasks. Before joining RPM, the Michigan State alum and Crain’s 40 Under 40 award winner spent 12 years at Chicago-based Coyote Logistics as its vice president of Carrier Sales and Operations.