Top 10 Scary Supply Chain Disasters in the US
by Marilyn Bunderson
It’s nearly Halloween, and that means it’s time to talk all things scary! And what’s more scary than disasters and other events that disrupt our supply chain and keep products from getting to their needed destinations?
Frankly, not much.
As we’ve seen in recent years, supply chain disruptions can impact businesses and households in some pretty interesting—and devastating—ways. Read on to discover my take on the top 10 shipping disasters in the U.S. that impacted the supply chain. I’ve included economic impact according to total damage in some cases and direct impact to the supply chain in others. And look out, because a few of these may surprise you!
10. Red Sea piracy (2024)
Economic impact: $80 billion worth of cargo diverted
Houthi rebel attacks on ships in the Red Sea have been a significant setback for our supply chains. Cargo ships from October 2023 to March 2024 had to reroute around the Cape of Good Hope, lengthening delivery times and causing delays in manufacturing activities. The auto-supply chain saw a large impact in particular as parts were delayed in their transport to manufacturing facilities. These disruptions drove up the costs associated with shipping, and roughly $80 billion worth of cargo was diverted. In the midst of the crisis, the cost to transport a container from China to the East Coast of the U.S. rose from $2,500 to $6,500.
Unfortunately, the pirates have not stopped their attacks, though they aren’t as numerous as they were earlier in the year. And though Europe has shouldered the brunt of the economic impact, the U.S. has not dodged the bullet. The longer routes, increased insurance, and other factors drive up costs for everybody. Consider this: the cost of fuel for a very large gas carrier (VLGC) is $30,000 a day or more. Imagine how fast that will add up when extra days are added on to the length of a trip. So while the financial impact to the supply chain has not been fully calculated, I’ve included it on our list for two reasons. First, it has driven up costs overall and is ongoing. Second, pirates deserve a place on a spooky Halloween list.
9. Hurricane Ian (2022)
Economic impact: $118.5 billion in damages
Hurricane Ian hit land on September 28, 2022, in Florida, causing major damage and loss of life in Florida and the southeast U.S. The storm had a large economic impact in loss of products from citrus production to automotive suppliers. In addition, several major ports were closed temporarily, which disrupted deliveries. Though Ian caused damage to nearly 4,500 warehouses in the path of the storm, the storm had less impact on supply chains than it could have. Closures and transportation disruptions were short lived, and many manufacturers and suppliers had resiliency built in their processes and were able to reroute and compensate.
8. The Maersk cyberattack (2017)
Economic impact: Billions of dollars spread across several companies
In 2017 a cyber attack brought the shipping giant, Maersk, to its knees. The cyberweapon, called NotPetya, was aimed at causing disruption and destruction, and it worked. Port facilities across the world went down, requiring hundreds of man hours to get things running again. The impact was enormous. Maersk’s estimates of the financial impact to their company was around $300 million. In addition, TNT Express lost $400 million, Merck lost $870 million, and many other companies lost tens of millions, bringing the total economic impact into the billions.
7. Hurricanes Harvey, Irma, and Maria (2017)
Economic impact: $265 billion in damage done, combined
Hurricane Harvey hit Texas on August 27, 2017, as a category 4. A few days later, hurricane Irma formed as the strongest hurricane ever observed in the Atlantic. It hit Florida as a category 4 on September 10 after devastating the island of St. Thomas. Then, less than two weeks later, Maria hit Puerto Rico as a category 5 on September 20, causing 2,900 fatalities. The 2017 hurricane season was extremely active, with 10 hurricanes and 17 named storms.
As you can imagine, the three storms greatly impacted the supply chain. All major ports along the Texas coastline were closed for several days. In addition, many oil and gas refineries were closed. Thanks to lessons learned during hurricane Katrina, safeguards and processes were put in place to mitigate the effects of the storms. Port closures, flood-related delivery issues, gas shortages, and evacuations certainly did mess with the supply chain, however, especially as about a quarter of the U.S. refining system was offline for several weeks.
The combined damage from the three hurricanes was $265 billion ($125 billion for Harvey, $50 billion for Irma, and $90 billion for Maria). Hurricane Harvey ranks second in terms of costliest hurricanes in the U.S. (this does not include hurricanes in the 2024 season since the costs are not yet known). While I could not find a specific number tied to the financial hit to the supply chain for these three hurricanes, it is certainly in the billions of dollars.
6. Winter storm Uri (2021)
Economic impact: $80 to $130 billion
Known as the Great Texas Freeze, in January of 2021, Texans experienced a hard freeze warning that lasted for 8 days, 23 hours, and 23 minutes. (Yes, they know down to the minute.) Ice on the roads caused 100-car pile ups, fatalities, and impassable roads. The people of Texas also experienced food shortages and, of course, absolutely freezing temperatures without the resources to handle them. Fish froze, sea turtles had to be rescued, and vegetation was impacted as well.
Nearly three quarters of the U.S. chemical production happens in Texas. With the blackouts and transportation issues over 10 days, the supply chain “froze” as well. Ranchers lost stock as well as grazing grain. Farmers lost their citrus crops, and replacing the trees to full production would take years. These losses to Texas from black outs, infrastructure damage, and opportunities are estimated to be $80 to $130 billion.
5. Port of Long Beach labor strike (2014)
Economic impact: $7 billion in direct economic losses
The summer of 2014 was hot in more ways than one. First, temperatures across the country were a bit hotter than usual, hitting the top 10 in California. Then July turned up the heat when labor negotiations broke down between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). Workers protested and then stopped working as they negotiated for improved working conditions and labor agreements. A 2018 study found that direct losses were above $7 billion, and indirect losses to the U.S. were an additional $6 to $8 billion. Another source found that the strike caused losses of $2.5 billion per day. The strike ended after about 10 days.
4. Port of Los Angeles congestion (2021)
Economic impact: Tens of billions of dollars
So much has been happening in the last few years in terms of supply chain impact, that many of us may have forgotten the container congestion in the Port of Los Angeles in 2021. If a package didn’t come as expected, and many didn’t, we all knew it was probably sitting on a container ship off the coast of Los Angeles, where hundreds of ships clogged the port.
Why did this happen? Post COVID-19 pandemic, stores ordered goods to fill their empty warehouse and shelves. And they didn’t only order just-in-time goods. They wanted just-in-case items as well. We had all learned our lesson (more on that down the list). A CNN report stated that “The Port of Los Angeles has received 900,000 container units per month.” To put it in perspective, a single month of those high numbers would have set a record prior to the pandemic.
The economic impact was tremendous. One researcher estimated $15.7 billion in export losses due to the unprecedented congestion. Another report found $24 billion worth of goods sitting in limbo in the crowded port at any one time, while $238 billion worth of cargo experienced “significant delays” during the crisis.
3. Suez Canal blockage (2021)
Economic impact: Nearly $10 billion in U.S. goods impacted every day
In March of 2021, the Suez Canal was blocked when a large container ship, the Ever Given, ran aground due to high winds and poor visibility. The blockage lasted six days, impacting 400 ships and causing a lineup of ships waiting to pass through. Other ships rerouted around the event. U.S. traffic through the canal at the time, some heading east and some heading west, was about $9.6 billion every day. Fuel charges added up quickly. And while the U.S. impact was significant, the global impact was estimated to be over $40 billion in trade cuts.
2. Hurricane Katrina (2005)
Economic impact: $28 to $44 billion in lost marketable goods
Those who remember hurricane Katrina know what I mean when I say that we all learned just how devastating a hurricane can be. The human impact of the hurricane cannot be overstated, though that’s not the purpose of this article. The overall damage caused by the hurricane, outside of the loss of human life and the incredible suffering, is estimated to be $125 billion, the costliest hurricane to hit the U.S. at the time. Breaking it down to discover how it impacted the supply chain is a bit trickier.
The Congressional Budget Office estimated the loss of marketable goods and services to be $28 to $44 billion for initial production losses. This included gas and oil production, which had implications throughout the U.S. with increased gas prices, which in turn drove up the cost to transport goods. The estimate does not include transportation issues caused by port closure, higher costs, road damage, manufacturing hurdles, and inaccessibility.
1. COVID-19 pandemic (2020)
Economic impact: $14 trillion
If you’re reading this, you lived through the 2020 COVID-19 pandemic. It was a hard time. Lives were at stake, store shelves were bare, medical supplies were in high demand, and we all learned how important the supply chain is to our daily lives. I mean, none of us will ever look at toilet paper the same. Who does not have a stockpile of the round white rolls at home just in case at this point?
Researchers tell us that the economic impact in the U.S. alone of the COVID-19 pandemic is over $14 trillion. Absolutely staggering. First we were hit by reduced transportation and people staying home from work. But then we were hit again as movement started back up because supply chains had broken. The cost to ship a container rose steadily from $1,500 in January to nearly $3,500 by December. (Interestingly, still much lower than the hike we’ve seen from the Red Sea rebels.) Air freight rose as well. The pandemic caused delays, increased shipping costs, and supply shortages.
Every year, the supply chain is impacted by events from natural disasters to piracy and even labor disputes. It’s not a simple task to nail down the economic impact, especially as these events influence inflation, the job market, and more. It’s messy. Take this year’s hurricane season, for example. I haven’t included hurricane Beryl, hurricane Helene, or hurricane Milton on this list, mainly because it’s too early to determine the impact. Helene impacted the healthcare supply chain, and the inland flooding was unprecedented. Early estimates say it caused $38 to $58 billion in economic loss alone.
We will continue to see supply chain disruptions; the key takeaway in supply chain resilience when it comes to navigating these shipping disasters is diversification. Have a contingency plan in place with options to reroute. Even so, in some cases, there’s not much you can do but hold on, wait for the storm to pass, and brush the dust off when it’s over. Then you will simply need to see where you are and be prepared to take next steps. After all, the supply chain is the lifeblood of our country.
Enjoy your Halloween!
Looking to diversify your supply chain? Talk to one of our shipping experts today!