After Hurricane Harvey tore through the Houston area in 2017, the shocking consequences included 68 casualties, 275 trillion pounds of rain, and $125 billion in damages. The storm soon became known as the deadliest one since Hurricane Katrina. To this day, countless people are still struggling to overcome the long-lasting problems that came to life as byproducts of the destructive storm.
In the spheres of entrepreneurship, there have been hundreds of small businesses that were forced to shut down while many others suffered enormous losses. In fact, the losses were so widespread that the IRS rapidly implemented a Hurricane Harvey Disaster Area which allowed unprecedented deductions to help taxpayers overcome financial adversity. One of the most negatively affected industries that did not get much relief from this program, however, was the shipping market. Courtesy of the hurricane, Houston’s powerful shipping network was completely shut down and left helpless for weeks.
Fortunately, the devastating events facilitated a change in the operations that forced many shipping businesses to begin developing hurricane preparation strategies.
Establishing Emergency Logistics Teams
According to a successful shipping investor, Brian Ladin, emergency logistics teams were the first new line of defense. This was not a difficult step to implement since logistics are an essential part of every shipping operation. Thus, companies just leveraged their existing skills tied to logistics to form emergency response teams.
These groups were trained on hurricane strategies and proper response plans. They were also introduced to resources that can help identify upcoming storms as well as improve workers’ safety.
Proactively Training Employees
Since employees operating in the shipping industry are usually at the forefront of events surrounding a tropical storm, many companies began doing proactive training sessions. These were events where important information about the hurricane season was showcased and workers were taught how to seek safety in dangerous situations.
They were also introduced to some corporate resources that many shipping organizations offer in times of natural disasters. Common examples include safe and flood-proof warehouses, emergency transportation options, and disaster communication materials.
Shutting Down Early
Brian Ladin also recognizes that one of the most common rules that nearly all shipping companies adhere to nowadays is shutting down early. This means that they maintain extremely low thresholds for any warnings tied to the hurricane season. So, if there is a threat of a potential disaster in an area connected to the company, the odds of that company immediately shutting down and employees vacating the facility are extremely high.
Such an approach reduces any underlying risks of human casualties as people are encouraged to put as much distance between the potential disaster and themselves as possible.
Carefully Selecting Ports
In 2012, the United States Coast Guard shut down almost all ports that were placed alongside a path of an anticipated hurricane. This was the first of the many such actions taken by the Coast Guard who did the same thing during almost all other hurricanes in the subsequent years. The main objective was to preserve ships that were docked in those ports. After all, an enormous amount of rainfall could lead to hefty damages.
Unfortunately, many ports that were not identified as extremely risky still suffered during certain hurricanes. Due to this, the shipping industry has started paying close attention to where each ship from their fleet is located. Since these assets cost anywhere from a few million to hundreds of millions of dollars, the potential losses could be crippling.
Currently, however, Mr. Ladin states that the vast majority of operators have contingency relocation plans that were developed to prioritize the ships’ safety.
Communication and Fulfillment Alternatives
Besides helping the employees and preserving the company’s assets, shipping businesses also have to face tough predicaments where the hurricane seasons completely halts their operations. In 2017, for instance, Houston-based operators were moving 1,000 fewer loads. In addition, the average costs per mile increased by a whopping 15 percent. Those types of situations are now combatted via better communication resources and various fulfillment alternatives.
The communication resources were established to allow the businesses to get in touch with customers or suppliers and disclose delays caused by the hurricane. As far as the fulfillment alternatives go, they were created to help mitigate the adversity by passing on projects to ally shipping companies. That way, the load numbers and related costs would not change as much.
Ultimately, Brian Ladin states that the shipping market has become much more demanding when it comes to their insurance considerations. Most companies are now paying for full flood and business interruption coverage. Although doing so is much pricier, it would let them mitigate some of the losses during the hurricane season.