RMS: Damage from Harvey could reach $90b

Meanwhile, U.S. Customs and Border Protection (CBP) is strongly recommending that Texas exporters divert cargo as are ports, railroads and truck corridors are likely to remain shuttered through the end of week, possibly longer.    According to global risk modeling and analytics firm Risk Management Solutions (RMS), economic losses from Hurricane Harvey could cost as much as $90 billion.
   “RMS modelers have run the new RMS U.S. HD Flood Model in real time to simulate the precipitation, run-off, and pluvial and fluvial flows across the Houston domain to support a pipeline of flood deliverables for our clients,” the firm said in a statement Wednesday. “The model estimates that the economic loss from this event could be as high as US$70-$90 billion in total from wind, storm surge and inland flood. The estimate for wind and storm surge continues to be very modest within this total, with analysis of our preliminary event recreations suggesting than less than 10 percent of this economic loss will be driven by wind and storm surge damage to property and offshore platforms.”
   The full extent of the damage done by the storm is still uncertain, however, and RMS warned that this was only an early projection and not the firm’s official insurance loss estimate.
   “Hurricane Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall, with observed cumulative amounts of 51 inches. And with the rain still falling heavily and the waters rising, the situation is too fast-moving to be stating with certainty what the losses in Texas could be,” said Michael Young, head of Americas climate risk modeling at RMS, adding that the preliminary prediction “will be followed by an official insurance loss estimate in the coming weeks.”
   Supply chain operations across the U.S. Gulf region remain shuttered, with an estimated 10 percent of the country’s trucking capacity impacted and a potential increase in shipping costs of up to 22 percent, according to tech firm project44.
   All Port Houston facilities as well as Port Arthur, Galveston and Freeport, will remain closed on Thursday, due to the weather impact across the area. BNSF Pearland (Houston) and Union Pacific Houston facilities remain closed and has ceased movement of trains toward Houston until conditions allow the ramp to re-open for operations, said the rail lines.
   BNSF, however, has given approval to ocean terminals in the ports of Los Angeles and Long Beach to load some Houston traffic in advance of the ramp’s opening, while Union Pacific has opened routes through San Antonio and Hearne in Texas.
   Countless other industry players, shippers and customers have had their cargo delayed and rerouted as a result of the storm.
   Global shipment management software provided CargoSmart has developed a live vessel monitoring dashboard for the Gulf Coast, and has found that 22 container vessels were scheduled to call the port of Houston. As of Wednesday evening, 18 vessels have skipped the port while the remaining four vessels are waiting outside the port area. The waiting vessels are the Rio Blackwater, COSCO Auckland, Washington Express, and APL Scotland, according to CargoSmart.
   U.S. Customs and Border Protection (CBP) has issued advice to exporters to divert cargo in order to prevent delays, congestion and claims for lost or damaged cargo. “Exporters that are able to divert their export cargo are encouraged to do so,” CBP said in an email message to the trade on Wednesday.     When doing so, the agency said exporters or their filing agents should “make every effort to correct and update the Electronic Export Information (EEI) filings within the Automated Export System to reflect the new port of export, the date of export and the carrier information.”
   CBP also recommended that exporters and freight forwarders attempt to determine if the cargo has been damaged. “Exporters will need to make business decisions to either update or cancel the EEI,” the agency said.
   In addition, the agency said if quantity or value adjustments related to the export cargo under an export license or license exemption/exception need to be made, the exporter or its authorized agent should first attempt to amend the EEI filing to show the corrected shipment details.
   If the amendment is not successful, exporters or their authorized agents are recommended to contact CBP’s Outbound Enforcement by email at OFO-Export-Cargo@cbp.dhs.gov and provide the following information: ITN (internal transaction number), license number, and corrected quantities and value for each controlled commodities, including the International Traffic in Arms (ITAR) data elements.
   The hurricane has shown the industry that normal supply chain calculations and predictions have limits. Fauad Shariff, co-founder of digital ocean freight procurement platform CoLoadX, wrote in a blog post that Hurricane Harvey is what Nicolas Massim Taleb coined in 2007 a “black swan.” Black swan events are unpredictable and catastrophic. We cannot plan for them, all we can do it react accordingly, said Shariff.
   Several industry players have provided potential solutions to the struggles shippers face during events like Hurricane Harvey, however. For example, project44 is now offering LTL Transit Time and Visibility, along with real-time Truckload Visibility products, free of charge for the next 30 days for its customers.
   Shippers can turn tracking and geo-location data into “actionable visibility insights,” and use those insights to make informed decisions about their inventory, said the company.
   “Real-time visibility can help optimize transportation routes during natural disasters. Accurate, up-to-date transit times allow shippers to better forecast inventory availability and deliver contingency plans for delayed shipments,” the company said.
   President of project44 Tommy Barnes wrote in a LinkedIn article on Tuesday that, “More companies using real-time automation and visibility tools during times of emergency means that more people will get the help and products they need when they need them, and that the transportation system will experience fewer negative economic and operational after effects.”
    A timeframe for ports and rail facilities in the area to return to normal operations has still yet to be determined, though many are aiming the resumption of services for Saturday at the earliest or by next week at the latest.