Anticipate Disruptions from Hurricane Delta Across the U.S. Gulf StatesEverstream Team
Amid an unusually active hurricane season in the U.S. Gulf Coast, supply chain managers should anticipate further disruption this week as a new powerful storm named Hurricane Delta is expected to make landfall along the Louisiana coastline on October 9 or 10 as a major hurricane, with wind speeds of 100 mph (160 km/h). The storm is the seventh tropical storm to impact stretches of the U.S Gulf Coast since the start of the hurricane season on June 1.
As a Category 3 hurricane on the five-tier Saffir-Simpson scale, Delta is likely to bring strong winds and heavy rains within its path that could result in widespread flooding, power outages, and associated manufacturing disruption across industrial clusters of the petrochemical industry in Louisiana and Texas. In addition, ports along the Gulf Coast from Port Arthur in Texas to New Orleans in Louisiana remain on high alert and could potentially shut down operations depending on the actual trajectory of the storm system. Once inland, Delta is expected to weaken as it moves northeast across the Mississippi River valley.
Storm likely to complicate production recovery in the petrochemical industry
During the 2020 hurricane season, multiple storms have disrupted supply chain operations along the coastline between Texas and Alabama. The strongest storm so far, Hurricane Laura, made landfall on the U.S. Gulf coast on August 27 as a Category 4 hurricane. In the wake of continued COVID-19 and other operational issues at the plants, the hurricane disrupted energy and chemical clusters in Texas, Louisiana, and Alabama that have yet to fully recover production output. Multiple force majeure notifications remain in effect until further notice.
At the time, the greatest impact on production was experienced in the Lake Charles area of Louisiana and the Beaumont area of Texas where major petrochemical companies, including Sasol and Indorama Ventures, shut down operations in advance of Hurricane Laura’s landfall. Following the storm’s impact, power outages in the areas caused additional issues and prevented some plants from restoring full operations, forcing them to declare force majeure.
Amid the restart phase, approaching Hurricane Delta threatens to further complicate efforts to restore normal operations and lift force majeures in the coming weeks. Several plants have already begun to again shut down operations out of precaution, in particular in the Lakes Charles area in western Louisiana. Among these companies are Lotte Chemical, Bridgestone Firestone, and Philipps 66.
Damages from wind and flooding as well as continuous power outages could cause additional production challenges, with some force majeures potentially lasting well into November.
|Company||Plant||Product||Start of force majeure||Reason|
|LyondellBasell||Bayport and Channel View, TX||Propylene oxide (PO)||Oct 7||Leak|
|Ineos Phenol||Mobile, AL||Acetone||Oct 1||COVID-19|
|Dow||Freeport, TX||Methylene diphenyl diisocyanate (MDI)||Oct 1||Recent storms|
|Formosa Plastics||Point Comfort, TX||Specialty Polyvinyl chloride (PVC)||Sep 29||Feedstock shortages and breakdown issues|
|DAK Americas||Port Bienville, MS||Polyethylene terephthalate (PET)||Sep 17||Feedstock shortages|
|Covestro||Baytown, TX||Polycarbonate (PC)||Sept 10||Hurricane Laura|
|Covestro||Baytown, TX||Toluene diisocyanate (TDI)||Sept 1||Hurricane Laura|
|Chevron Phillips Chemical||Orange, TX||Polyethylene (PE)||Sept 1||Hurricane Laura|
|Indorama Ventures||Port Neches, TX||Ethylene oxide (EO)/ ethylene glycol (EG)||Aug 31||Hurricane Laura|
|Sasol||Lake Charles, LA||Polyethylene (PE)||Aug 31||Hurricane Laura|
|Westlake Chemical||Lake Charles, LA||Construction staple polyvinyl chloride, vinyl chloride monomer||Aug 31||Hurricane Laura|
|LyondellBasell||Bayport, TX; Lake Charles, LA||Polypropylene (PP)||Aug 27||Hurricane Laura|
|Lotte Chemical||Lake Charles, LA||Ethylene glycol (EG)||Aug 26||Hurricane Laura|
|INEOS Olefins & Polymers||La Porte and Alvin, TX||Polypropylene (PP)||Aug 25||Hurricane Laura|
|LyondellBasell||Channelview, TX||Butadiene (BD)||Aug 21||Reboiler failure|
|Formosa Plastics||Point Comfort, TX||Polypropylene products||Aug 10||Production outage|
Ports from Texas to Louisiana prepare for hurricane-force winds
In addition to production challenges, Delta is expected to disrupt operations at ports located in eastern Texas and Louisiana. The largest ports in the area, Port of Houston and Port of New Orleans, have been put on port condition Yankee, meaning that hurricane-force winds can be expected within 12 hours. Other ports monitoring the storm include Lake Charles, Beaumont, and Port Arthur. As the storm moves closer to the coast, restrictions on vessel movements and port operations may increase further and short term port closures may result in congestion with increased vessel waiting times, while yard operational stoppages could create container backlogs in the terminals.
Similarly, road and rail freight services across the region are expected to be impacted by flooding and infrastructural damages caused by heavy rains and severe winds. According to meteorologists, Delta could bring 4 to 8 inches of rain to the central Gulf Coast with an isolated maximum of 12 inches. Major roads, including Interstate 10, could become inundated with water, causing congestion and delays. Long traffic jams have already been reported on October 8 due to residents moving out of the Lake Charles area.
Railroad operator Norfolk Southern has begun preparing for potential service disruptions, protecting infrastructure, and repositioning rail equipment from low-lying areas around New Orleans. Similarly, BNSF is holding all New Orleans-bound trains from moving into the area. Other rail service providers, such as Union Pacific and Kansas City Southern, have also circulated advisories on Hurricane Delta. In anticipation of its landfall, the City of New Orleans has begun to close flood gates on October 7, effectively ceasing interchange with eastern rail carriers until further notice.
Customers should expect disruptive impacts to production and logistics operations in areas ranging from eastern Texas to New Orleans in Louisiana from today, October 9, with the storm potentially causing prolonged production outages and longer shipping times as well as delays in the weeks to come. Companies are advised to monitor impacts on their key suppliers and logistics hubs in the affected areas and activate contingency plans to minimize supply chain disruptions where possible.