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The power of logistics

Sept. 22, 2003
NewsThe power of logistics While most media attention focused on the power grid, electrical infrastructure and the quick response to the August 14 power
The power of logistics

While most media attention focused on the power grid, electrical infrastructure and the quick response to the August 14 power outage that darkened portions of eight states and one Canadian province, logistics professionals and transportation companies worked in relative anonymity to keep vital freight links open.

In Cleveland, Logistics Today’s headquarters city, power wasn’t the only thing that stopped flowing on August 14. The city’s four water processing plants were offline, interrupting water supplies for most of the city. When service was restored, water purity was in question. Bottled water was in high demand when retailers reopened. Before supplies were exhausted, however, pallet loads of bottled water were already lining the aisles of many retail chains, a testament to how quickly the supply chain responded.

The limited duration of the power disruption may have kept the situation from escalating into a major crisis, but even this short outage showed how resilient the logistics network is.

Where airports had closed, FedEx (www.fedex. com) diverted some freight to ground transportation or rerouted flights to other hubs at airports outside the affected area. All of the hubs operate alike, and they are tied to central computers, so tracking diverted shipments was reasonably easy.

Drivers for FedEx and UPS (www.ups.com) are linked to central operations through onboard communications systems. Getting information to and from the field may have been a challenge, but it was not impossible. Qualcomm (www.qualcomm.com), a supplier of satellite communications systems for the transportation industry, reports message volumes tripled on Thursday, the first day of the blackout. Fleet communications volume was double normal levels on Friday, August 15 — normal daily message volume is 7 million messages.

UPS data centers located in New Jersey and Atlanta have backup power and procedures for dealing with contingencies. The New Jersey data center continued to handle its workload into the evening of the first night of the blackout, according to a UPS spokesman. Both UPS and FedEx — which also has backup power at key facilities and major hubs — were able to process pickups that were in their system over the weekend and get those shipments into the field and, where possible, delivered.

New Penn (www.newpenn.com), a regional less-than-truckload carrier based in Lebanon, Pa., activated contingency plans and cranked up diesel and gasoline generators to keep its terminals operating. “While we were able to move freight into the New York City terminal overnight,” says a spokesman for New Penn, “our biggest challenge was delivering freight in that area due to so many customers being without power and unable to open for business on Friday.” This was a challenge for most LTL carriers because the nature of their operations is a cross dock with no storage capacity. New Penn, because of the increasing volumes of “appointment freight,” had installed racking on its docks for short-term freight storage of shipments that were received ahead of the scheduled delivery time. It used these racks and some additional dock space to hold freight bound for consignees that were closed on Friday.

Some automotive plants in the blacked-out area remained offline over the weekend at the request of power companies to minimize demand on the power grid as it was being stabilized. This would have allowed inbound shipments to those plants to catch up with the rescheduled production. As many as 50 assembly plants operated by the Big Three were affected, according to news reports.

FedEx Custom Critical operates in the most extreme segment of transportation, providing emergency service for shipments that must move in a very limited timeframe. Its central operation in Akron is completely backed up with diesel generators which can be operated for seven days without a fuel shipment. It also has two phone lines running into the facility — one connected through Akron, the other through Columbus. The company has learned from experience how to avoid outages. A lightning strike in 1994 “set off a flurry of planning” to deal with new contingencies uncovered by the event, remembers a company spokesperson. “You can simulate, but it just isn’t the same.”

Con-Way Transportation’s (www.con-way.com) linehaul operation had a generator that was installed to preclude any Y2K problems. Though the generator was tested regularly, when the time came to use it on August 14, the generator broke down. A leaking gasket was located and some creative engineering got the generator and the linehaul operation back online.
A bigger problem was paperwork. Limited electrical backup meant many terminals didn’t have the means to enter bills of lading and other documents into Con-Way’s Internet-based system. In some cases, terminals faxed the documents to another terminal that had power. In other cases, the paperwork was produced by hand, often using flashlights, and was physically driven to other terminals outside the blackout area for data entry.

Reviewing contingency plans after an event is part of the process for each of the carriers.

While the carrier side of logistics is well prepared with back up and contingency plans, not every shipper or consignee company is equally prepared. One manufacturer whose production plants communicate production plans and orders with a central mainframe had a backup facility it was able to put online to plan and reschedule production, but it discovered one area it had not planned for: How do you feed people at the backup facility with no power in the surrounding area and no water?

Similarly, many carriers and shippers found that even if their facilities had backup power, getting people to those sites was a problem. The blackout hit when most commercial drivers were completing their pick ups, and in many cases, freight volumes were higher than normal. Sorts normally occur in late evening, and often those sorts were accomplished using alternative and creative lighting sources — lift trucks or headlights from trucks in the terminal yard. In most cases, carriers reported their sorts were only delayed, not halted.

In the end, it appears the magnitude of the response to the August power outage matched the level of the event and cancelled out much of its negative potential. As manufacturing and retail logistics professionals review the events of August 14 and beyond, supply chains will be strengthened by more complete contingency plans. LT

September, 2003

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