Freight Transportation Resilience in Response to Supply Chain Disruptions (2019)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

17 CHAPTER 1: RESEARCH MOTIVATION AND APPROACH 1.1 INTRODUCTION Large-scale disruptions to transportation systems seem to be one of the new realities of today’s world—extreme weather, and over the long-term climate change, is affecting the performance of the U.S. transportation system, and often the global supply chain. Such nature-related disruptions are not new, but the frequency and magnitude of weather events continue to set records each year. In addition to weather, transportation systems have been the target of individual and group attacks against the physical infrastructure and on the information systems that are used to manage them. In recent years, for example, cyberattacks against a major international carrier and one state Department of Transportation (DOT) resulted in significant disruption to their operations. Given the intermodally connected nature of the transportation system, disruptions to one part of a network could very well have a domino effect across the entire modal network and ultimately to the much broader transportation system. This is particularly worrisome for the economy where a range of economic activities (e.g., manufacturing) depend on the freight transportation system to supply needed resources and to distribute final products along a supply chain that often crosses continents and oceans. Such supply chains also include multiple stakeholders and participants. As noted in National Cooperative Highway Research Report (NCHRP) Report 732: Methodologies to Estimate the Economic Impacts of Disruptions to the Goods Movement System, several characteristics of system disruptions are important for identifying likely impacts and subsequently the mitigation strategies that can be used to improve freight transportation system resilience (GTRC et al, 2012). These included:  The spatial or geographic scale of disruption will likely have a direct bearing on the magnitude and incidence of the disruptive impact.  A disruption could affect the entire freight system of an area or affect a specific mode.  The temporal nature of a disruption can have important economic consequences. Thus, network resiliency, in the form of rapid recovery of facilities and services, becomes an important consideration in assessing overall economic impact.  The longer disruptions persist, the more geographically extensive they are, and the more breaks in the supply chain they lead to, the more extensive are likely to be the disruptive impacts.  The economic impact of severe bottlenecks and disruptions could affect a wide range of supply chain participants, not just the ocean carriers, truckers, railroads, barge operators, and shippers that are using the network to transport the goods.  Different types of disruption could have a range of direct and indirect economic impacts.  Whether goods can be shipped economically via other modes depends on the value and nature of the cargo itself, as well as the availability of service and fuel  Network redundancy is a very important characteristic of economic impact. The more alternative movement solutions available, the easier it is to mitigate economic impact.  The global goods movement supply chain is a multi-tiered system with various entities, stakeholders, networks and modes involved, that spans a huge physical space, and by its very nature is susceptible to natural and man-made disruptions.  In case of a major event such as a terrorist attack or an earthquake, standard risk mitigation measures, such as increasing safety stock, diversifying the supply base and building redundancy into logistical systems, may not be enough by themselves to minimize the disruptive impacts.

18 These characteristics suggest that the study of freight system disruptions and of how to enhance system resilience is complex and requires a solid understanding of the freight sector as well as of the nature and range of current and potentially future disruptions. One of the ways of enhancing the response to system disruptions is to understand a priori what options and best practice examples are available, the roles and responsibilities of the different stakeholders involved, and the barriers that might diminish the effectiveness of an organization’s response. Business continuity is equally key to companies’ supply chains, community resilience, and sustaining economic competitiveness. Public agencies and companies have faced system disruptions for a variety of reasons. However, the range, frequency, and impacts of disruptions have expanded beyond just physical infrastructure and includes such new challenges as power and information system failures and cyberattacks. In addition, whereas natural disasters in many cases have contained to specific regions, we see today many widespread extreme weather events that are characterized as “historic,” “once-in-a-life-time,” and “most dangerous in 100 years.” These types of events not only cause disruptions to the freight system in the impacted areas but have a much greater chance of disrupting entire global supply chains. 1.2 PROJECT PURPOSE The purpose of this project was to develop guidance for supply chain stakeholders to plan for, mitigate, and adapt to supply chain disruptions with the aim of enhancing freight transportation system resilience. The target audiences include freight carriers and shippers, state transportation agencies, metropolitan planning organizations (MPOs), freight advisory councils and other organizations interested in a resilient, sustainable and robust multimodal freight transportation system. This project is particularly important and timely given the recent emphasis on freight transportation and system resiliency in U.S. national transportation policy and legislation. 1.3 RESEARCH APPROACH AND METHODOLOGY Figure 1 shows the nine tasks in the project’s research design. Task 1 reviewed and assessed the research, practices, and approaches found in the U.S. and other countries relating to supply chain disruptions. This review included identifying the characteristics of different types of disruptions, the nature of a disruption and its effects on transportation system performance, the factors that could affect system resiliency, and potential system resiliency mitigation strategies. Task 2 developed prototypical supply chain scenarios reflecting a range of commodity, market and transportation modal contexts that was the basis of the analysis. Because of the unique nature of military deployments, a separate analysis was undertaken to identify and characterize supply chain corridors for military deployment. Task 3 proposed an outline for the guidance document, Task 4 recommended a workplan for developing the guidance document, and Task 5 prepared an interim report on project progress. Task 6 used the scenarios produced and approved by the project panel to analyze different supply chain contexts and the likely responses to different types of disruptions. Strategies such things as identifying potential partnerships with the parties affected by supply chain disruptions, presenting an approach for prioritizing disruption response activities by cargo types and stakeholders, identifying potential barriers for implementing effective response strategies, and applying models and analysis tools to illustrate supply chain responses to disruptions. Tasks 7 developed supply chain stakeholder guidance on ways to mitigate and adapt to disruptions to supply chains. This task also developed a self-assessment tool that can be used by agencies to determine the organizational capacity for undertaking resilience-oriented actions. Task 8 tested the guidance by testing it through supply chain stakeholder interviews. Task 9 produced this final report and an accompanying PowerPoint presentation.

19 Figure 1: Research Approach

20 As shown in Figure 1, the research design was divided into two phases. Phase 1 gathered and synthesized information on the state-of-practice and state-of-knowledge of freight system resiliency. Phase 2 focused on producing system resiliency guidance as well as the other research products. With respect to analysis tools or models that could be used to analyze supply chain disruptions, the focus of the research was on existing models and tools in order to illustrate some of the expected impacts of system disruptions on supply chains. No new models or analysis tools were developed as part of this research. The research made a substantial effort to include major supply chain participants in the research, whether by participation in an Expert Working Group (EWG) or by being part of the interview process. The user and/or supply chain agent perspective was considered critical for the credibility of the research products. Because the complexity of the supply chain process will vary by cargo type and market at a minimum, and the impacts from different types of disruptions will also vary over time and space, the research design was flexible in order to capture as many supply chain insights as possible. Military deployments and the supply chains that support them are sufficiently different from normal supply chain activities that a separate analysis was conducted for this scenario. Even though some of the same facilities and assets used by a military deployment might be used for regular supply chain flows, the surge volumes and needed capacities for military deployments are very different and could face their own challenges. As noted above, scenario analysis was the major analysis approach used in the research design. Prior Cooperative Research Program (CRP) research has been primarily based on case studies of agency/firm response to specific disruptions. These studies did not examine an entire supply chain and the effect of disruptions on supply chain decisions. This project, however, identified origin-destination scenarios for different cargo types and for different types of disruptions that became the analysis focus for the research. By doing so, the research provides a more systems perspective on supply chain disruptions.