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Supply Chain Resilience and the 2017 Hurricane Season

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Supply Chain Resilience and the 2017 Hurricane Season Supply Chain Resilience and the 2017 Hurricane Season A collection of case studies about Hurricanes Harvey, Irma, and Maria and their impact on supply chain resilience Authors: Philip J. Palin, Lars S. Hanson, Delilah Barton, Ashley Frohwein Contributors: Jamie Biglow, Ann Casey, Kim Fletcher, Victoria Johnson, Leslie (Lily) Robin, Joel Silverman, Dawn Thomas, Ben Nieves October 2018 IRM-2018-U-018098 Abstract The 2017 Atlantic Hurricane Season (particularly Hurricanes Harvey, Irma, and Maria) was remarkable This document represents the best opinion of CNA at for its power and the extent of damage to communities the time of issue. in the path of its storms. The ability to deliver lifeline commodities (food, fuel, public water supply, medical goods) to affected communities is a core capability of the public sector “relief channel.” The larger and more Distribution isolated the population, the more dependent affected communities are on private sector supply chains to Unlimited distribution. deliver sufficient quantities of these commodities in a Request additional copies of this document through timely manner. This study consists of case studies [email protected]. which examine the resilience of, challenges to, and interactions among private sector supply chains and the relief channel in Texas, Florida, Puerto Rico and the US Virgin Islands. The evidence presented in these case This work was performed under Subcontract Agreement No. studies reveals new insights and opportunities for 2000009358 to the National Academies of Sciences, intervention which may help speed the restoration of Engineering, and Medicine in completing Federal lifeline supply chains during and after disasters – to Government Contract No. HSHQDC-17-A- prevent catastrophe. B0001/70FB7018F00000167. Approved by: Oct 2018 Acknowledgements Benjamin Nieves, ISP, Inc. for contributions to the Hurricane Maria Case Studies David Kaufman Safety and Security Division Image Credit: NASA Institute for Public Research Preface: Engaging Reality. Avoiding Catastrophe. The 2017 Atlantic Hurricane Season demonstrated that when extreme events impact large, densely concentrated populations, survival is dependent on the ability to quickly reestablish and, as necessary, redirect preexisting demand and supply networks. This is especially true for critical lifeline supply chains such as fuel, water, and food. The more extreme the event, the more dense the population, and the more distant the location from sources of supply – the greater the dependence on the preexisting network for human survival. Although the scope and scale of the 2017 Hurricane Season was in many ways extraordinary, this reality had already been revealed by prior disasters, including Hurricane Katrina, the 2011 Triple Disaster in Japan, and Superstorm Sandy. As this report was finalized, Hurricanes Lane and Florence provided further evidence. And yet, Harvey, Irma, and Maria – in what they share and how they differ – offer especially helpful lessons-to-be-learned. Federal, state, and local government supplies for water, food, pharmaceuticals, medical goods, fuel, transportation assets, back-up power generation, emergency telecommunications and more can be crucial gap-fillers. But public sector emergency relief channels are simply incapable of fully replacing the existing networks. The only sources of supply sufficient to fulfill “dense” demand — especially over an extended period—are those sources, systems, and networks (i.e., supply chains) that were operational the day before the extreme event. Moreover, federal, state, and local actions can unintentionally suppress recovery of these crucial capacities. They can also intentionally accelerate their restoration. Intentional acceleration is highly preferred. Harvey, Irma, and Maria can teach us how demand and supply networks behave under duress, and how public and private entities can enhance shared understanding, reduce complications and act in concert to target needs and help speed restoration, redirection, and surge. They also illuminate opportunities for strategic interventions that can alleviate bottlenecks in private demand and supply networks, providing better outcomes for disaster survivors, speeding supply chain restoration, and reducing the demand for public relief supplies. This report consists primarily of case studies. These are evidence-based stories that can advance our understanding of how complex adaptive systems of humans, infrastructure, information, and the natural world interact. There are positive cases where informed understanding of these interactions led to creative and effective interventions. But there are also examples from 2017 where misunderstanding pushed the entire system closer to catastrophe. In an increasingly urbanized and interconnected world, learning and applying the lessons from 2017 will be critical to enhancing the resilience of lifeline supply chains, and the dense populations they support. CNA Research Memorandum | i Many elements of this report are based on interviews and research undertaken by CNA on behalf of the National Academies of Sciences, Engineering, and Medicine to support the Academies’ own analysis of the 2017 hurricane season. This report and related recommendations are, however, distinct from the Academies’ purposes. The Institute for Public Research at CNA is alone responsible for the quality, organization, and presentation of information herein. These findings represent the best opinion of CNA at the time of issue. CNA is a not-for-profit research organization that serves the public interest. Contents Introduction .................................................................................................................................................. 1 Supply Chains for Lifelines – Fuel, Food, and Water............................................................................. 2 The Storms: Harvey, Irma and Maria .......................................................................................................... 7 Case studies to Explore the Effects of Harvey, Irma and Maria..................................................... 18 Case Study 1: Retail Resilience in Puerto Rico ............................................................................... 21 Findings related to the surprising strength and adaptability of fuel, grocery, and other private sector supply networks after Hurricane Maria. Case Study 2: Static on the Relief Channel ....................................................................................... 47 Findings related to public sector efforts to feed and fuel survivors and the disconnect with private sector resilience in Puerto Rico after Hurricane Maria. Case Study 3: Fuel and Food—Resupplying Metro Miami .......................................................... 63 Findings related to hidden interdependencies, distance, and the value of well- established protocols for fuel systems and retail distribution as Florida dealt with Hurricane Irma from evacuation through recovery. Case Study 4: Harvey Turns on (and Then Turns Off) the Tap ................................................. 89 Findings related to risk and resilience of public water systems after Harvey, associated interdependencies, and key resource needs for recovery. Case Study 5: Constraints in Optimized Networks ..................................................................... 113 Findings related to a number of types of strategic bottlenecks — or hourglass structures— that emerge during disasters with examples from four very different supply chains Synthesis and Strategic Recommendations ................................................................................. 135 References ................................................................................................................................................ 141 CNA Research Memorandum | iii Introduction While the phenomena that cause natural disasters are largely outside of human control, the effects of disasters can be reduced through preparedness, mitigation, and response. The first concern is protecting human life. Even as natural disasters have increased over time in both frequency and cumulative magnitude, mortality has declined substantially. [1] The second concern is protecting property. Disasters have enormous power to cause damage to infrastructure (e.g., buildings, engineered systems). Fortunately, considerable advancements have been made in engineering and planning to build more resilient infrastructure and communities. Aside from threatening lives and causing damage, disasters also disrupt the normal order of society. Utility systems that are normally taken for granted can fail and the delivery of supplies needed for survival and the basic functioning of society (e.g., food, fuel, medicine) can be interrupted. The success or failure of lifelines to continue operations during disasters often depends on the ability of supply chains to deliver needed goods. More broadly, the effects of disasters can extend far beyond the declared disaster areas when the disaster causes damage or disruption to key nodes in national or global supply chains. Understanding these supply chains and their importance to disaster management is long overdue. The 2017 Atlantic Hurricane season provided myriad case studies in the importance of supply chains during disasters. By many measures, the 2017 Atlantic Hurricane Season was historic, particularly for its effects on the US mainland and its territories. Three major hurricanes—Harvey,
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