Hurricane Ian – Exacerbating Supply Chain Challenges

In light of the impending landfall of Hurricane Ian, we’re pausing this week’s What Is It post to focus on the impact of the storm. We’ll resume the weekly series next Wednesday, so stay tuned.

Hurricane Ian continues its path towards central Florida. Once Ian finishes its trek through Florida,  Georgia, and South Carolina are next in the path.  With wind speeds just shy of a Category 5, the storm will do major damage throughout the region.  The storm is projected to be the eighth-costliest in American history, causing an estimated $45 billion in damages.

Although the storm is concentrated in Florida, its effects will be felt far outside the state. Resilinc, which monitors supply chain risk for companies, estimates it will take nine weeks for local businesses to recover. Freightwaves reports that up to 28,000 manufacturing firms and 7,000 health care producers could be impacted by the storm. There’s also a logistics impact – with ports closed and trucks off the road, the recovery time after the storm will require increased activity to keep up.

Much of Florida’s agricultural sector is under siege, which could be particularly impactful for citrus crops. With harvest season coming in November, the devastation could mean fewer shipments of food (less trucking demand in the next few months) and higher food prices. For airlines, some 2,800 flights have been cancelled this week.

Fuel prices are trading higher this morning, reacting to the shutdown of 485,000 barrels per day of Gulf Coast production as well as disrupted fuel flows. A bullish EIA report this morning is also pushing prices higher, as inventories fall. With a supply chain crisis in Florida, falling national inventories will make it harder to mobilize supply outside the region and transport it to the disaster zone.

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The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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