South Florida Gas Woes: Supply Chain Disruptions Again?

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Recently, South Florida drivers experienced yet another disruption in a critical resource: gasoline for operating their cars. Port Everglades, in Broward County, is the primary entry point for gasoline, diesel and jet fuel for the dozen or so counties that are situated south of Lake Okeechobee. As is often the case with such shortages, their occurrence initially comes about because of something normal and predictable in our environment, such as a storm, or for others, a fire in a manufacturing plant that produces a necessary commodity, but the effect of such event is often due, at least partly, to poor risk management.

On April 12, Fort Lauderdale was deluged with 26 inches of rain, shutting down half of the terminal fuel pumps at Port Everglades, which is an event that its infrastructure is built to encounter every 100 years or so. The reality from the research is that such storms are occurring more often in places such as St. Louis and Dallas, given that the global climate is warming up gradually, providing increasing levels of moisture that fuel such wet storms.

Being aware that our weather is changing strongly suggests that steps must be taken to ensure that supply chains are better managed and more resilient to disruption.

To help put this in a better perspective, supply chains traditionally have operated on a rather exquisitely balanced supply and demand. Until the COVID-19 pandemic, most were unaware of the role of supply chains and their critical role in enabling firms to control shortages and avoid delivery delays of both ordinary and essential products. Firms practiced vetting multiple vendors for both cost and reliability that still continues today, but the pandemic fundamentally transformed the strategic thinking on how business is to be conducted going forward. More emphasis is now placed on how to better manage disruption risks and understand what constitutes threats to the continuity and wellbeing of firms. This is why this rain event and its effect on gasoline availability was both foreseeable and, to some degree, better manageable.

Interestingly, Port Everglades, in order to push aside blame, reiterated that it is primarily a seaport and that the private petroleum companies that use its port facilities have responsibility for their own storing and distributing of gasoline and other fuels. While the port also viewed such delays in the restocking of gas stations as primarily a delivery problem and not a supply chain issue, it was without question a supply chain disruption. The port and its tenants did not possess sufficiently robust continuity plans to weather such events.

Clearly, disruption-prone organizations, which all are vulnerable to varying degrees, must construct capabilities that better organize the organization’s available resources and harden its infrastructure, so that resilience is realized. The state is diverting 500,000 gallons of gasoline to South Florida for its use. This demonstrates that the various parties are in the process of learning how to manage such events more ably in the future. Going forward, there will be more attention devoted by the port to reducing operational risks by elevating the terminal pumps, adopting measures that improve the vessel docks and finding ways to mitigate the effect of the rising seas.