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

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13  Public agencies focus on disruptions to the transportation systems for which they are responsible. Although they are concerned about how to handle traffic after a disruption, they often do not think about how that disruption is affecting activities outside their jurisdiction such as supply chains. Hence, the resiliency of the freight network during times of disruption typically defaults to the private sector with some localized support from federal, state and local governments in times of need.  Business continuity dictates that companies strategically manage freight movements along their supply chain and invest in strategies to protect their business from risks. From a system resiliency perspective, it is thus important to understand each supply chain stakeholder’s priorities before, during, and after a disruption.  The competitive market environment makes it difficult for public agencies to coordinate and support disaster preparation and recovery actions for freight movements (because of a reluctance to show perceived preference to one industry or firm over another). While the increasing number of natural disasters and other disruptive events has led, in some cases, to enhanced collaboration with the private sector, there are still few examples where this has occurred outside the context of emergency response.  The degree to which an organization, whether public or private, is actively engaged in preparing for system disruptions is largely driven by the perceived likelihood of future hazards, their experiences with previous events, and by association the geographic scale of their market. For example, global companies have more exposure to the multitude of disturbances and stresses that impact their activities around the world and have more resources to address resiliency challenges.  At their core, successful resiliency efforts are carried forward by trained and experienced individuals. An important strategy for enhancing organizational capacity for addressing resiliency is to mentor and train employees so they can make decisions at the local level in real-time response to issues that arise during a disruption. For example, several of those interviewed noted that they have faced situations where communications and information exchange was not working after a major disaster and thus centralized command and control for the company response was greatly hindered.  Ensuring infrastructure resilience cannot be accomplished solely by restoring a system to its previous state after a disruption, particularly in circumstances in which essential transportation assets are already vulnerable from lack of maintenance. Interviewees emphasized the importance of redundant infrastructure for critical transportation assets, and if necessary, plan for cargo diversion alternatives that help maintain business continuity.  The freight transportation system is an interdependent network of organizations with different missions, operations and programs, and assets exposed to varying degrees of risks and vulnerabilities. Because the responsibility for improving freight transportation resiliency does not fall to a particular sector or specific agency, all stakeholders must work together collaboratively, which for public agencies means under an umbrella of a regulatory framework and a range of funding programs. Some of the suggested strategies identified as part of this study included:  Share information among key stakeholders on likely needs and response strategies before, during, and after a disruptive event;  Pre-plan likely scenarios to ensure alternatives are available after, or during, a disruptive event;  Build redundancy into supply chain infrastructure and operational strategies;  Overcome regulatory barriers by working with regulatory authorities prior to a crisis; and  Establish clear lines of communication and responsibility for different types of disruptions, especially having in place contingency strategies for breakdowns in central command and control.

14 An accompanying guidance document provides a framework for the steps that can be taken to assess an agency’s current efforts at promoting system resiliency and of developing organizational capability. The framework consists of the following steps. Step 1: Organize for Success – Identify responsibilities for improving supply chain resilience or the components of the transportation system for which your agency/firm is responsible. Establish organizational mechanisms and institutional relationships that will serve as foundational partnerships as you move forward with the process. If necessary, institutionalize these partnerships with formal agreements, protocols, or understandings (these most often emphasize who is responsible for what). Ensure that those responsible are supported by leadership and have enough resources to succeed. Step 2: Develop a Communications/Information Exchange Strategy – Think about the information channels that need to be established for this effort to be successful. Who are the key participants? How to best reach out and engage them in the process? Develop or enhance current communication strategies both during the resilience planning process and during emergency response efforts. Understand what types of information support and types of data will be necessary to support and maintain the resilience planning process. Step 3: Assess Current Practice – Focus on what you and your partners are currently doing with respect to infrastructure provision and system operations. Are you designing key infrastructure with resilience in mind? Has your continuity of operations plan been updated recently? Does your staff have the knowledge, expertise, and the resources to promote resilience in supply chains? Step 4: Understand Hazards and Threats and Their Impacts/Consequences – This step is perhaps one of the most critical in that enhancing supply chain resilience depends on the type and nature of the expected disruptions. This step could look at all the types of threats and impacts that might be faced in the future, or it could focus on the one or two threats expected to be most likely or most impactful. This effort will vary by the level of detail desired, the degree to which other background information is already available from other sources (e.g., future flooding locations from already-conducted adaptation studies), and the amount of resources (both funding and human expertise) available to conduct the assessment. Step 5: Develop Strategies, Actions and Plans – Based on the assessment from Step 4, collaboratively identify strategies, actions, and plans to improve supply chain resilience. These actions could focus on issues internal to your organization or on improving the relationships among key participants in the supply chain. The breadth of actions is quite broad, ranging from actual infrastructure changes, changes to standard operating procedures, enhancements to existing institutional relationships, training for staff and so forth. This step also includes identifying "early wins", which is designed to establish credibility in the process by identifying actions/strategies/ projects that can be implemented in the short term (and hopefully without much financial support). This could include physical changes to projects already in the development stage, changes in protocols, changes to emergency response/operational strategies, or training opportunities for staff. Step 6: Implement Strategies and Actions – This step includes identifying which of the strategies and actions from Step 5 should proceed to implementation based on organizational capabilities and resources, and which of these actions will have to be implemented later. Implementation plans would include those actions that can be taken solely by one agency and those that will require joint efforts (and if so, how the responsibilities will be divided among those involved). Step 7: Monitor Performance and Incorporate into Assessing Current Practice – Provide feedback into the planning and decision-making processes after disruptions occur. Based on actual experience with disruptions, what should be done differently to enhance supply chain resilience in the future? How can operations be improved and how should infrastructure be provided differently to enhance system resilience?

15 The project also identified the following research needs: 1. Detour/Alternate Route Assessments: Examine the entire spectrum of identifying detour routes, assessing their capabilities in terms of handling more traffic, and identifying the types of strategies that could be used to implement these strategies. 2. Develop Supply Chain Performance Measures: Develop performance measures for use by transportation planners that reflect the impact of transportation system performance on supply chains. 3. Emergency Response and Planning: Examine the linkage between emergency response/emergency management planning and the long-range transportation planning process to identify areas of commonality and where planning can help prepare the transportation system better for potential disruptions. 4. Hazard Mitigation Plans: Explicitly examine how supply chain considerations and factors (or at least awareness) can be integrated into state Hazard Mitigation Plan and other plans that focus on preparing for and responding to disruptions. 5. New Transportation Agency Roles and Responsibilities for Addressing Resiliency: In light of increasing occurrences of natural and man-made disasters, transportation agencies and organizations may benefit from establishing new roles and responsibilities to enhance organizational responses to supply chain disruptions at the state and local level. There is a need to identify specific capabilities, knowledge, and tools that employees would need to fit this role. 6. Integrate Transportation and Emergency Management Planning: Coordination between transportation and emergency management agencies is often overlooked in the planning process, because Emergency System Functions (ESF) are usually implemented at the operational level and not the planning level. There is a need to examine the possible contributing roles of metropolitan planning organizations (MPOs) in emergency management planning. 7. Continue to Promote Freight Fluidity Planning and Data Collection Techniques: Freight fluidity describes how well a supply chain performs in a freight transportation network, measuring supply chain performance across multiple jurisdictions using travel time, travel time reliability and cost. State and local transportation officials should examine selected supply chains to better understand freight performance and identify freight bottlenecks and congested areas that may require transportation system improvements to enhance freight movement. Collaborating with the private sector to collect data to examine candidate supply chains can bring a greater understanding to freight fluidity planning efforts at the local, regional, and national level. 8. Research the Use of State Freight Plan Data to Evaluate Supply Chain Disruptions: State freight plans use some type of commodity flow data to evaluate how commodities are transported in and out of the state. State DOTs can examine state freight plans and identify candidate supply chains for future research and examine what types of data would be needed to incorporate supply chain concerns into agency planning. 9. Incorporate Resiliency into State Freight Plans: The Fix Americas Surface Transportation (FAST) Act requires state DOTs to consider resiliency as part of their state freight plans. This project would examine how resiliency could be incorporated into these plans by using a commodity flow/disruption scenario analysis methodology. 10. Develop Vulnerability and Adaptive Capacity Assessments: State DOTs should assess the vulnerability of the freight system, based on the defined natural and man-made hazards. This study would illustrate how such assessments would incorporate supply chain concerns into the methodology. 11. Support for Military Deployments: Using a wide range of the latest cargo handling and communications technologies, the US DOD has developed detailed procedures and protocols for moving men and their supporting equipment and supplies to designated deployment seaports. As the nation’s cargo volumes continue to increase, and as new freight handling technologies come on line, future deployments can benefit from continued research into several areas, including:

16 Intra-and Inter-Agency Communications  Use of the latest communications technologies to ensure continuous real time in-transit visibility of the condition and location of both cargos and cargo handling assets,  Exercising inter-agency communications protocols: to ensure that appropriate priority is given to military convoys and their cargos, including early communication of modified asset needs (e.g. Extended seaport gate opening hours),  Simulation exercises of potential cyber-based as well as physical attacks on deployment assets and infrastructures, including procedures to provide backups to inter-agency communications during loss of primary communication methods. Deployment Assets Management  Procedures for handling large and heavy non-containerized military equipment during seaport vessel loadings, typically under heavy security, and with coordination of activities by experienced military cargo handlers.  Methods from rapidly identifying and responding to the location and status of possible backup assets (e.g. alternative modes or routes) in case of lost asset capacity.  Cargo handling procedures in support of force package integrity: procedures to ensure the availability of enough staging areas, trained personnel, loading equipment, and vessels for moving complete military units through the nation’s strategic seaports (thereby greatly reducing the time a unit must spend in assembly upon arrival within theater). Performance Assessments  Development of standardized land corridor-based as well as seaport-based performance measures that can be used to identify and quantify operational concerns: including assessments of the potential for and possible remedies to worst-case (e.g., heavy “sea-lift surge” ) conditions during periods of joint military- commercial cargo operations both within and on the routes leading to and from a designated seaport.

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.

21 CHAPTER 2: SYSTEM PERFORMANCE AND SUPPLY CHAIN RESILIENCY: REVIEW OF THE LITERATURE 2.1 INTRODUCTION Various documents, including journal articles, reports, conference papers, articles in periodicals, news articles, presentations, and electronic media, were examined to identify freight resiliency research practices and approaches found in the U.S. and other countries. The primary focus was to collect literature presenting freight disruption case studies, describing mitigation measures that minimize the impact of disruptive events, and/or providing lessons learned to assist in expedited recovery efforts in the future. General literature addressing the types of disruptions, resiliency factors, and broad mitigation strategies focused on the freight supply chain were also reviewed. More than 100 documents were considered out of which some 75 documents became part of more detailed review. Documents that specifically focused on case studies and mitigation strategies for disruptive events were organized into a searchable literature database. The time period of the literature reviewed spanned the years 2000 to 2016. A literature database was created that tabulated various articles, reports, and presentations, and provided a searchable tool that could be filtered based on the type of disruption event, impact severity, and resiliency strategies employed. Besides identifying the types of cargo movement dealt with, the database identified the modes impacted, the nature and geographical scope of the disruptive event, its location and disruption type, as well as its impact, resiliency category, any resiliency strategies adopted or suggested, and a summary of each reference reviewed. One of the purposes of this literature review was to identify how system resiliency was defined or interpreted by various participants in the supply chain. While there is currently no universally accepted definition of resilience in transportation systems, recent literature offers some useful insights (see discussions in Goodchild et al, 2009; Ponomarov and Holcomb, 2009; Mattsson and Jelenius, 2015; Reggiani et al, 2015; and TRB, 2017). Wang (2015), for example, suggests that a resilient transportation system must display the following qualities: be able to recover efficiently from disasters; be reliable in terms of network connectivity and travel time; and be economically, environmentally and socially sustainable. Getting a little closer to actual performance measures, Chang et al (2010), suggested that transportation system performance (in their case in response to earthquake events) can be measured by a disruption’s impacts on travel delay cost, network flow capacity, and source-to-destination reachability or connectivity. While specific formulas vary by study and agency, these measures are similar to the types of performance measure outputs produced by current transportation planning models. The literature reviewed for this research was not limited to disruption events that have occurred in the past, but also included publications that postulated events that might occur in the future, and how the supply chain community should be prepared for these events. Key conclusions and findings from the literature search are summarized below. 2.2 DISRUPTION TYPES AND CHARACTERISTICS A disruptive event is one that causes direct short-term or long-term impacts such as fatalities, infrastructure destruction, community damage, agency or firm operational disruptions and economic loss (Mesa-Arango et al, 2013). In terms of freight transportation, disruptions can be defined as unplanned and unanticipated events (and in some cases planned events such as the planned shutdown of locks for maintenance) that affect the normal flow of goods and operations in supply chains and transport networks (Svensson, 2000). Disruption, in the context of seaports, is often defined as any significant loss of a port’s regular cargo-handling capacity. Port disruptions not only affect those freight businesses directly involved in maritime operations but can also affect the broader regional economies and industrial sectors they support (Southworth, Hayes, McLeod & Strauss-Wieder, 2014).

22 In order to enhance freight transportation system resilience, it is important to understand various types of disruptions and their characteristics. The following sections discuss these characteristics using several well-documented disruption events as examples. 2.2.1 Lead Time An important resiliency-related characteristic of a disruption is the degree to which businesses, public agencies, and individuals know that a disruption is likely to occur. This is also known as “lead time”, defined as “the time between knowing that a disruptive event will take place and the event’s first impact” (Sheffi, 2015). This timeframe, which varies depending on the type of disruption, can help characterize types of disruptive events. Some disruptions, such as those relating to climate change, may involve long-term trends that provide ample lead time (although even here decisions relating to infrastructure that will be in place for a long time should consider likely future environmental conditions in project location and design (Meyer et al, 2014)). Other disruptions could be planned, such as noted above a lock closure, providing relatively accurate advance notification and opportunities to make alternate arrangements. Disruptions can also occur without any advance notification, such as an earthquake, wildfire, or terrorist attack. Based solely on lead time, a disruptive event was characterized in this research as follows: Abrupt events – disruptions that occur with no to extremely little advance notification. These could be natural disasters such as earthquakes, tsunamis, or man-made events such as terrorist attacks, bridge failures, fires, technology failures, or financial failures. If advance notification of such events is possible, such notification is usually measured in minutes or hours. The September 11, 2001 terrorist attacks in New York City and Washington, DC temporarily prevented movement of goods across all borders into the U.S. (Oke & Gopalakrishnan, 2009). Manufacturers began to experience disruptions to the flow of materials especially for just-in-time parts delivery. Ford Motor Company had intermittent idling of assembly lines. Toyota was about to halt production at its Sequoia SUV plant in Indiana due to lack of steering sensors (Sheffi, 2002). Similar consequences were observed after the March 2011 earthquake in Sendai, Japan, which measured M9.0 on the Richter scale (OSSPAC, 2013), and in turn generated a debilitating tsunami. The damage caused by the earthquake and the tsunami shut down manufacturing plants in Japan that made automobile parts (Baymout, 2014). A Hitachi automotive plant which was shut down by this disaster produced a $2 monitor for a $90 airflow sensor used in many vehicles. Due to the disruption in the delivery of this one part, the General Motors engine plant in New York and its vehicle assembly plants in Europe and the U.S. were shut down (Rice, 2011). A bridge deck fire in Atlanta, Georgia in 2017 caused one of the busiest interstate highways in the nation to be closed for just over two months. Although the impact on long-distance trucking was minimal (the state only allowed truck travel on this interstate by permit and thus many trucks used alternate routes anyway), the closure of the interstate significantly disrupted local goods movement and shipments to nearby businesses. Rapid events – disruptions that occur with little to moderate advance notification. These could be natural events such as a hurricanes, snow or ice storms, floods, or man-made events such as a labor strike. These events show some warning signs and notification could occur days in advance of the actual event onset. Some examples include:  Superstorm Sandy struck the City of Santiago de Cuba on October 26, 2012. Hurricane forecasting showed that the storm would hit the eastern U.S. seaboard sometime thereafter. Within three days, Sandy made landfall near Atlantic City, New Jersey, causing a very disruptive storm surge along the New York and New Jersey coasts (Southworth, Hayes, McLeod & Strauss-Wieder, 2014). Disruptions to the nation’s logistics network were significant and lasted, in some cases, for weeks.

23  In 2002, negotiations between the International Longshoremen and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) stalled resulting in a work slowdown on all U.S. west coast ports and a strike by ILWU workers (GTRC, 2012) (Farris III, 2008). Many cargo and container ships were stranded in west coast harbors or tried to find alternative ports.  In 2007, a combination of heavy snow in the Cascade Mountains followed by heavy rains in the southwest portions of Washington State resulted in major flooding. The rainfall intensities were 140 percent higher than the 100-year storm amount (GTRC, 2012). This led to closure of a section of I-5 due to landslides, flood debris, and downed powerlines blocking the road. Truck detours added substantial travel times to normal truck routes in this corridor (WSDOT, 2008).  Hurricane Maria in 2017 made a devastating landfall in Puerto Rico causing major damage to both public and private transportation/logistics facilities. Besides the impact to freight infrastructure, the hurricane highlighted the broader issues of recovering from major disruptions, such as the lack of labor for handling containers because employees were focusing on their own families’ concerns. Planned/Predictable events – disruptions that occur with an ample amount of advance notification. These could be natural events such as climate change, or man-made events such as a scheduled river lock or bridge closures. Most of these events are planned and hence they provide enough warning before occurring. Advance notification of such events could be measured in weeks, months, or years.  An example of such a planned event is the Columbia-Snake River lock closure. In order to replace aging lock gates and repair other navigation components, the U.S. Army Corps of Engineers (USACE) closed the Columbia-Snake River to barge traffic. Five of the locks from The Dalles in Oregon to Lewistown in Idaho were closed for repairs. This led to closure of the entire waterway for a 14-week period. Stakeholders were notified 18 months in advance to help them prepare for the planned disruption (Southworth, Hayes, McLeod & Strauss-Wieder, 2014).  Another example includes reconstruction projects of major freeways that require the shutting of many lanes, often resulting in massive backups. Such first major reconstruction started to occur in the 1980s as the useful life of many interstate highways built in the late 1950s and 1960s were being reached. The planning for these types of projects often entailed years of preparation, and not only examining strategies for maintaining traffic flow on the interstate itself, but also keeping traffic in the broader corridor from being disrupted while encouraging the use of alternate routes and modes of travel (Meyer, 1985).  Climate change is also a type of predictable disruption even with the uncertainties associated with when exact impacts will occur and how they will impact various aspects of society. As noted in the 2018 National Climate Assessment: "Our Nation’s aging and deteriorating infrastructure is further stressed by increases in heavy precipitation events, coastal flooding, heat, wildfires, and other extreme events, as well as changes to average precipitation and temperature. Without adaptation, climate change will continue to degrade infrastructure performance over the rest of the century, with the potential for cascading impacts that threaten our economy, national security, essential services, and health and well-being" (U.S. Global Change Research Program, 2018). Sea levels have risen over the past century as have average surface temperatures. In almost every scientific study, expectations are for stronger hurricanes, increases in the number of hot days and heat waves, and an increase in intense precipitation…. all events that directly affect the logistics and infrastructure components of the transportation sector (TRB, 2008; Meyer and Cumming, 2016; Becker & Caldwell, 2015). Several states and metropolitan areas are conducting vulnerability assessments of their transportation system to identify the types of climate change stresses that their communities and infrastructure systems will likely face in the future.

24 2.2.2 Geographic Scope Another important characteristic of a disruptive event is how far the impacts “reach” up and down the supply chain. The geographic scope can be classified as follows: Local – disruptions that affect a local area and can be mitigated by providing detours or other alternate routes.  For example, in 2013, the northern span of I-5 bridge over the Skagit River in northwestern Washington State collapsed as an oversized loaded truck struck the cross truss and sway braces. This led to the closure of the bridge and the establishment of two detours. The primary detour route added 0.5 miles and the secondary detour added 3 miles of additional travel, respectively. The bridge was reopened within 115 days of its collapse after a permanent span was in place (Horton, 2015). In other instances, such as rural areas not having network redundancy, the length of detour could be much longer and thus result in more economic costs to system users. Regional – disruptions that impact the freight transportation and supply networks of an entire region and require areawide mitigation strategies.  For example, in July 2001, a CSX freight train carrying a mix of freight and hazardous material derailed in the Howard Street Tunnel in downtown Baltimore (NTSB, 2004). The fire led to closure of the tunnel to rail traffic for a week. All CSX trains were rerouted through Norfolk Southern Corp’s tracks. Significant delays, cancellations, and diversions of CSX’s freight trains were observed. CSX’s entire east coast system, as well as the system in the Midwest and as far as Ohio, were affected (SAIC, 2002).  Another example is the above referenced Columbia-Snake River lock closure. This river system supports goods movement from Washington, Oregon, and Idaho, consisting mainly of agricultural products, paper, forest products, and mineral bulk products. The lock closure affected all three states for a period of 14 weeks, requiring mode shifts and other (e.g., higher price) responses to freight movement (Southworth, Hayes, McLeod & Strauss-Wieder, 2014). National – disruptions that impact the freight transportation and supply networks in large parts of the nation, requiring extensive mitigation strategies, and involving multiple agencies at all levels of government. Such disruptions may lead to declaring a federal state of emergency.  Superstorm Sandy is an example of a disruption that had a national impact. In its aftermath, the Port of New York and New Jersey was closed for a week. This led to supply chain disruptions, especially given the timing of the storm….merchandise was arriving from Asia for the holiday season. Vessels were diverted to the Port of Halifax, Canada and Port of Virginia, Norfolk. Containers were subsequently trucked to their final destinations, inflating overall transportation costs (Stevens Institute, 2013).  The West Coast labor dispute reference above also resulted in national-level disruption. The PMA’s lock out of labor affected all the ports on the west coast and lasted for 10 days. More than 200 ships were anchored outside the ports of Los Angeles and Long Beach; it was estimated that it took six to seven weeks to clear the backlog (GTRC, 2012). When the disruption occurred, the six largest west coast ports handled about 253 million tons of cargo annually, with more than half of all containers passing through these ports annually (Farris III, 2008). International – disruptions large enough to affect international freight transportation and supply networks and that require extensive mitigation strategies involving multiple countries.  As noted earlier, the 2011 earthquake and tsunami in Sendai, Japan disrupted supply networks in many parts of the world. The vulnerability of the distributed global network of suppliers for automobile parts to such large-scale disruptions was well illustrated by this disaster in that the closure of plants in Japan had a domino effect throughout the global automobile manufacturing supply chain.

25  Massive floods in Thailand in 2011, most flooding in 50 years, had a similar effect on Asian supply chains as the 201l earthquake and tsunami in Japan. About 50 percent of the automobiles manufactured in Thailand (approximately 900,000 vehicles) were exported to other Asian countries. The floods affected the automobile manufacturing plants of Toyota, Honda, Mitsubishi, Isuzu, Nissan GM, Ford and Mazda. It was estimated that the flooding caused a monthly reduction in assembled vehicles of between 80,000 and 100,000 vehicles (Vaidya and Rao, 2011). A study of the response of auto manufacturers suggested that they would likely adopt one or more of the following strategies:  Increase the stock-pile in terms of auto parts and re-visit the process of just-in-time production so that they have enough parts stock for at least a month.  Adopt a multi-sourcing strategy that involves not only sourcing parts from different suppliers but from different regions to reduce the vulnerability of critical assembly processes.  Modify the investment strategy to focus on “de-risking” the supply chain by emphasizing activities in geographic locations that are least impacted by natural disasters (Vaidya and Rao, 2011).  The September 11, 2001 terrorist attacks in the U.S. also generated an international level disruption. This event not only affected airline travel (and thus air cargo) due to three-day closure of the North American airspace, but they also affected freight moving through the ports of New York and New Jersey, which were both closed for three days. In the aftermath of the attacks the aviation industry lost significant air traffic and revenue. The event also seems to have led to the failure of some financially weak carriers. Swissair and Sabena went bankrupt within months of the attack (IATA, 2011). While the ports and their freight movement were not affected in the long term, for several days, vessels had no place to go, as all international port of entries were closed (GTRC, 2012). 2.2.3 Disruption Impact – Level of Loss The level of loss in terms of loss of lives and economic costs is difficult to quantify, especially for less severe and short-lived disruptions. Moreover, even when a disruption is covered in the literature and popular press, there are often inconsistencies in the reporting of the same event. For example, USA Today reported that Hurricane Sandy caused $65 billion in damage in the U.S. and was responsible for 159 deaths (USA Today, 2013), while a report produced by a major re-insurance group estimated damages worth $72 billion (Aon, 2013). Depending on its geographic scope, level of predictability, duration, and loss of lives and economic activity, the level of impact of a disruptive event can be generalized as follows: Severe impact – disruptive events that can affect national or international freight transportation and rank very high in terms of economic loss, and/or in which many lives are lost. Such events include the 2011 Japan Earthquake, the 2002 West Coast port shutdown, and the September 11, 2001 terrorist attacks. High impact – disruptive events that can affect national or regional freight transportation and rank high in economic loss, and/or lives lost. Events such as Superstorm Sandy or Hurricane Katrina can be considered as high impact events. Low impact – disruptive events that can affect regional or local freight transportation and rank low to moderate on economic loss incurred, and/or number of people injured. Events such as the Columbia-Snake River closure or the I-5 Skagit River bridge failure fall in this category.

26 2.3 MILITARY SURGES A commercial port’s throughput capacity can be affected by disruptions from both natural and labor sources and as well from sudden increases in port traffic that overwhelms port resources. Such a surge in demand occurs for selected ports with a rapid military deployment. Military overseas deployments begin with the movement of troops, material, and equipment from military installations within the Continental U.S. (CONUS) to designated U.S. seaports as their most common domestic destination. With more than 95 percent of U.S. warfighters' equipment and supplies passing through U.S. seaports, a great deal of stress is placed on both the cargo-handling and transporting capabilities of these ports, as well as on the highways, railways, and waterways feeding into them (BTS, 2018). With a heavy reliance during such “sealift surges” on the nation’s commercially-operated ports and modal carriers, a great deal of cooperation and coordination is required among the numerous military and civilian government agencies and private sector companies involved. Adding to the unique nature of such cargo surges, deployments usually involve the transport of large pieces of military equipment such as helicopters and tanks that are not otherwise commonly dealt with, using in some instances military vessels designed specifically for that purpose. In 2005, the U.S. Maritime Administration (MARAD) produced a report assessing the conditions at U.S. commercial ports during the multi-modal movement of military cargo for Operation Iraqi Freedom (OIF) (as reported in BTS, 2018). The assessment included the performance of three major components of the intermodal system---waterside, port/terminal intermodal interface, and landside movements---with an emphasis on the ability of the nation’s commercial freight transportation infrastructure to handle an unexpected surge in cargo during a military deployment. The problems that a military surge in cargo deployments can pose for commercial ports was well summed up as follows: “…, U.S.-based forts may load and dispatch six trains per day to ports, while the receiving port may only have the capability of handling and unloading one to two trains per day. Military deployments, which must preserve unit integrity, may require that a port receive materials and supplies from more than a dozen different U.S. military installations in a short timeframe. Trains and trucks may be dispatched from bases and arrive at the terminal gates with little advance warning” (as reported in BTS, 2018). The report also noted that: “DOD logistics planners have adopted successful commercial methods of handling freight and will redirect cargo at the last moment to accomplish a just-in-time (JIT) delivery. Usually these changes occur with little or no warning to the receiving port” (as reported in BTS, 2018). The MARAD report also noted that the significant projected growth in international trade through U.S. ports, and hence in increased volumes of freight movement, represented a considerable challenge for the nation’s marine transportation system. Nowhere is the challenge seen as more acute than at the nation’s strategic seaports where cargo-handling capacity shortfalls in coming years, notably in the movement of containerized freight, had been projected. Port site visits by MARAD staff indicated that a surge in seaport traffic resulting from a military deployment could lead to significant commercial as well as military shipment delays for a number of reasons, re-ordered here into physical asset issues associated with, 1) landside access, 2) within-port cargo handling operations, and c) issues associated with inter-agency coordination and communications. Landside Port Access  Truck access - trucks entering a port may undergo time-consuming, at-gate credentialing /security checks.  Rail access - including restricted rail use due to low overpass bridges, limited or non-existent on-dock rail handling facilities, and the possibility of congestion at rail-highway traffic crossings.

27  Highway capacity - inadequate highway access capacity leading to multi-truck queues into the port. Adequate signage was also an issue at some ports. Within-Port Cargo Handling  Training - an insufficient number of skilled laborers, especially skilled drivers and handlers of large pieces of military equipment.  Staging Areas - inadequate space in cargo staging areas within the port. Coordination and Communications  Coordination - a lack of understanding of the composition of the military cargo to be deployed through the ports/an incomplete in-transit cargo tracking capability.  Communications – including up-to-date information sharing between trucking firms, railroads, port operators, the U.S. Transportation Command (USTRANSCOM) and its deploying units, and the non- Department of Defense (DOD) federal agencies involved in port regulation and monitoring vis-à-vis the composition, scheduling, port access requirements, cargo staging area locations and special handling needs associated with military unit moves. A similar list of supply chain-based deficiencies is provided by Stribling (2009); also of note, each of these issues is a recurring theme in the literature. 2.4 DISRUPTION CLASSIFICATION Based on the literature review, the disruption classification chart shown in Figure 2: Disruption Classification Framework was developed as part the research. As shown, the chart has “advance notification” on the vertical axis and “disruption impact” on the horizontal axis. Note that this concept is similar to a risk management figure where color coding is used to indicate risk severity. For example, disruption events that fall in the “planned or predictable” notification and “low impact” cell are shown in the lighter color. Compare this to an event in the “abrupt” and “severe impact” cell, which is indicated in a much darker color. For purposes of the research case studies, this chart was used to identify the types of disruptions that would be considered as part of the scenario analysis. The intent was to provide across all scenario case studies a range of disruption characteristics. Events that fall under planned/predictable notification with low to high impact are classified as Class 1 disruptions; those that fall under abrupt, rapid and planned/predictable notification with low, high and severe impact respectively are classified as Class 2 disruptions; and those that fall under abrupt notification with high to severe impact and events that fall under rapid notification with severe impact are classified as Class 3 disruptions. The concept in Figure 2 is presented as a descriptive framework for the types of events that characterize system disruptions. However, the framework also provides an important perspective on the level of risk an agency or firm is willing to adopt with respect to supply chain disruptions if the likelihood of an event occurring is superimposed over the two dimensions shown. For example, without considering the likelihood of an event, one would focus on the "severe" impact events in Figure 2 although likely done so with a consideration of the costs of preparing for and responding to such events. This calculation is altered when the likelihood of the event occurring is included. For example, assume that the likelihood of a terrorist attack against a facility that would be severely damaged is quite low. Compare this event to one that might occur more often but when it does the disruption is small (e.g., a snow storm). Decision makers would have to decide how to allocate funds to prepare and respond to these types of events, with specific attention given to the perceived risk of disruption if the more disruptive event does occur.

28 Ab ru pt Product Quality (Material  Defect) Technology Failure  (Operating System) Infrastructure Failure Accident (Fire/Explosion) Financial Failure (Bankruptcy) Weather Events Technology Failure  (Cyberattack) Terrorism Weather Events  (Earthquake, Tsunami) Military Deployments Ra pi d Weather Events (Snow Storm,  Flooding) Military Deployments Labor Strike Weather Events  (Hurricane, Blizzard) Pl an ne d/ Pr ed ic ta bl e Climate Change  Infrastructure Closure  (Lock Closure) Military Deployments Low High Severe Disruption Impact Ad va nc e  N ot ifi ca tio n Figure 2: Disruption Classification Framework

29 2.5 SYSTEM RESILIENCY FACTORS Accidents, acts of terrorism, financial disasters, natural disasters, and the like can lead to large-scale consequences for a region, its communities and those that live and do business in the affected areas (NAS, 2012). With the uncertainty of the timing and magnitude of many types of disruptions, it is very difficult to be completely certain what, who and where organizational resources will be needed to respond. In the private sector, this has led to the development of business recovery and resiliency plans (Gajjar, 2016). In the public sector, this has led to emergency management plans and protocols, and more generally in the transportation sector a concern for transportation system resilience. Resilience, as defined in the Presidential Policy Directive 8 (White House and DHS, 2011), refers to the ability to adapt to changing conditions and withstand and rapidly recover from disruption due to emergencies. New definitions of resilience and the systems or entities to which resilience refers have been seen in the literature in many different topical areas (NAS, 2012), including resilience concepts applied to ecological systems, infrastructure, individuals, supply chains, financial systems, and communities. At the level of the individual, financial resilience can be defined as the ability to withstand life events, such as unemployment, divorce, disability. and health problems. At the organizational level, it refers to the ability to withstand recessions, stock market meltdowns, acts of terrorism and other jolts to the organization’s way of doing things (O'Neill, 2011). For purposes of this research, supply chain resilience is defined as the adaptive capability of the supply chain to prepare for unexpected events, respond to disruptions, and recover from them by maintaining continuity of operations at the desired level of market position and control over structure and function (Falasca, Zobel, & Cook, 2008). An interesting extension to this definition of supply chain resilience is that it is not just managing risk but also offering an opportunity to be better positioned than the competition to recognize and respond to an event, and even to gain advantage from a disruption (Sheffi, 2005). For example, in the aftermath of the 9/11 terrorist attacks and the likely imposition of more stringent security procedures for the movement of imports into the U.S., several foreign ports were looking at investments to be some of the first ports to meet these requirements so that they would gain a competitive advantage over others. In addition, this research has shown the importance of the roles of both public agencies and private firms in keeping freight flows open when faced with system disruptions that affect both assets and facilities owned by both public and private entities. Social resilience is another important concept in a broader definition of system resilience, which can be defined as the ability of groups or communities to cope with external stresses and disturbances as a result of social, political, and environmental change (Adger, 2000). In the context of this research, social resilience relates to the employees (and their families) that are affected by a disruption, as well as the communities that are immediately adjacent to the impacted area. Based on the literature review, the following factors were identified as contributing to system resiliency:  Physical Infrastructure – infrastructure that enables the physical movement of goods from origin to destination such as road, rail, and pipeline infrastructure; terminals; distribution centers; and warehouses.  Logistical – components of the supply chain that manage and decide logistics arrangements such as network routing, reassigning vehicle/vessel capacity, creating transportation management plans, risk pooling, and the like.  Financial – components such as the capital investment program, potential funding sources, investment decisions for infrastructure improvement, PPPs, and the like.

30  Communication / Transactional / Informational – components such as inter-organization or stakeholder communications, exchange of invoices and payments, emergency communications documentation, communication roles and responsibilities, information gathering, employee education, and the like.  Regulatory / Oversight – components such as lobbying on issues, post-event oversight, public policy updates and changes, promoting national programs and policies, and the like.  Institutional – components such as corporate policies, social and political aspects, and social capital, where each reflects the interpersonal relationships and institutional structures that establish boundaries for interagency and interpersonal interactions. 2.6 POTENTIAL MITIGATION STRATEGIES Various mitigation strategies, i.e. strategies for enhancing supply chain resilience to disruptive events, are discussed in this section for commercial and military operations organized by the resiliency factors identified in Section 2.5. The supply chain resilience guidebook that accompanies this final report provides more information on the types of mitigation strategies that are appropriate for different contexts. 2.6.1 Commercial Operations Moving freight into, out of, and within the U.S. involves cooperation and coordination among numerous public and private sector organizations, from point-of-origin shippers and carriers (and their brokers), to intermediate warehouses and then final customers. The latter includes the nation’s seaports and airports where the goods are imported or exported abroad. State and local government agencies need to be concerned about such movements for the purposes of facilitating trade, ensuring public safety, and supporting environmental stewardship. Developing and sustaining a product supply chain is therefore a multi-actor process, and is only as strong as its weakest link, be it related to physical, logistical, transactional, informational, regulatory, or institutional factors. Physical Infrastructure: Some mitigation strategies deal with structural and inspection components of existing physical infrastructure. Studies performed by Oregon and Washington State discuss mitigation strategies for physical infrastructure that deals with disruption events such as earthquakes and catastrophic bridge failures, including the creation of a statewide inventory of critical buildings in both the public and private sectors, as well as the maintenance of an up-to-date inventory of local transit agency, port, and rail assets (OSSPAC, 2013; WSDOT, 2008). Taking the example of widespread coastal flooding, Hurricane Sandy identified the need to consider future high-water surge events associated with ports and coastal communities. This includes a need to identify physical systems such as electrical grids, storm water outfalls, and road and rail infrastructures for facility hardening, chokepoint removal, capacity building, and increased redundancy (Stevens Institute, 2013). Infrastructure might need to be “hardened” with a range of actions designed to improve the structural integrity of infrastructure (such as the procurement of emergency generators and use of microgrid technology for electrical power (Southworth, Hayes, McLeod & Strauss- Wieder, 2014), as well as developing plans for elevating or redesigning facilities to avoid flooding due to storm surges (Sturgis, Smythe, & Tucci, 2014)). Another strategy is to develop ecological or green strategies, such as developing coastal wetlands to buffer against tidal surges. An example from outside the U.S. is the study conducted by the University College London on the resilience of the United Kingdom (UK) food supply to port flooding on the east coast of the UK. The study included mitigation strategies for enhancing the resilience of physical infrastructure, including improved defenses against flooding such as tidal barriers (Achuthan, Zainudin, Roan, & Fujiyama, 2015).

31 Mitigation strategies for protecting physical infrastructure against longer lead-time threats such as climate change have also seen some interest in recent years. The adoption of new, adaptive design standards will likely have to occur as future climate conditions and the options available for addressing them become better understood. With climate change, we are witnessing stronger hurricanes, an increase in the number of hot days and heat waves, and increases in intense precipitation events, all of which directly affect the infrastructure components of the transportation sector (TRB, 2008). Rehabilitating transportation infrastructure to higher design standards that could withstand changing climatic conditions would have to consider the extent to which network redundancy allows the continued movement of freight while the asset is under construction. An example of asset redesign comes from the Port Authority of New York and New Jersey where facilities considered critical to the operation of the port have been redesigned to withstand larger-than-predicted storm surges (on top of expected sea level rise). Of course, freight transportation is not the only system that relies on physical infrastructure. Military deployments also rely on designated infrastructure within the nation’s strategic highway, rail and seaports networks. A report prepared by the Government Accountability Office (GAO, 2013) looked at how DOD has addressed all Congressionally- directed concerns and issues in its “Report on Strategic Seaports". The report states that it is important to assess the structural integrity and deficiencies of port facilities and determine the infrastructure improvements needed to meet national security and readiness requirements. The report assessed the condition of the landside port infrastructure for all 22 strategic seaports, including roads, bridges, cargo staging and loading areas, rail infrastructure, and berths within the port boundaries. Logistical: Logistical mitigation strategies are also important for all types of disruptions, be they abrupt, rapid or planned. A well-organized logistics strategy increases system and supply chain resilience by helping with faster recovery. Most major freight carriers and shippers have business continuity and emergency response strategies already in place in the event of a supply chain disruption. Many of these plans, however, are organization-centric with little discussion of how a particular organization can interact with other agencies (outside their direct supply chain participants) that control critical infrastructure or services on which supply chains depend. One of the biggest wake-up calls in terms of formulating logistical mitigation strategies for supply chains was the 2011 Japan earthquake and tsunami. The literature on this event and its aftermath shows that it is important to identify the supply chain footprint, not only for critical suppliers, but for all suppliers and sub-suppliers throughout the entire supply chain. Doing so helps increase supply chain visibility for inventory tracking and tracing as well as for physical audits and inspections. It also helps in forecasting expected demand (Rice, 2011; Baymout, 2014). Such a supply chain perspective includes consideration of some of the common components of logistics plans including: Vehicle/vessel re-routing: The most common and thus important mitigation strategy is to reroute cargo whose supply chain is disrupted. This has included vessel re-routing during Hurricane Sandy; barge re-routing during the Columbia-Snake River closure (Southworth, Hayes, McLeod & Strauss-Wieder, 2014); train re- routing during Howard Street Tunnel fire (SAIC, 2002); road traffic re-routing during the Skagit River bridge collapse (Horton, 2015) and the storm-related closure of I-5 and I-90 (WSDOT, 2008); and the many air traffic re-routings due to the September 11, 2001 attacks (IATA, 2011) or during the 2010 Eyjafjallajokull volcano eruption that closed most of the European air space (EUROCONTROL, 2010) Product sourcing and lean supply chains: The literature review revealed that the most affected supply chains during major disruptions were those that relied on a single product source or depended on JIT inventory to create a ‘lean’ delivery system. This points to the importance of developing multiple sourcing strategies rather than relying on one source (Oke & Gopalakrishnan, 2009), where diversifying geographically among sources is done for added resiliency (Baymout, 2014). Moving away from JIT inventory management towards maintaining a “Strategic Emergency Pool” (for example, the Strategic Petroleum Reserve), also helps minimize the effects of a disruptive event (Sheffi, 2002; Sheffi & Rice, 2005; Rose & Wei, 2013). In today’s supply chains, this may include the use of “Sell-One-Store-One” concepts that seek to maintain parts availability within leaner supply chains. The idea is to increase redundancy in parts supply while ensuring that