Katrina Knocks Out Product Pricing and Availability

The aftermath of Hurricane Katrina has raised supply chain havoc for businesses ranging from a large lumber mill to a Web-enabled praline producer.

Beyond the snarl of road shutdowns and traffic tie-ups in the Gulf region, Hurricane Katrina is spurring nationwide business snares over product availability, pricing and warehouse storage, now that the once bustling Port of New Orleans is closed for the foreseeable future.

As of this week, Procter & Gamble is still assessing the damage to its facilities in New Orleans, and deciding what to do about four large warehouses there once used for storing Folgers coffee, said Susanne Dusing, a company spokesperson.

Meanwhile, Chiquita Brands International announced last week that, due to severe storm damage, its port and warehouse operations in Gulfport, Miss. are making a temporary move to two cities elsewhere in the nation: Freeport, Texas and Port Everglades, Fla.

Katrina also threw monkey wrenches into the supply chains of untold numbers of smaller businesses, to an extent that could threaten the survival of some.

"I was just about to post a notice on our Web site that were suspending shipments until FedEx comes up with a more reasonable schedule," said Randy Petry of Gambinos Bakery, a producer of pralines, Mardi Gras cakes and other Southern delicacies, when reached this Wednesday at the companys store in Baton Rouge, La.

"We lost half a million dollars worth of lumber in a warehouse in New Orleans, all of it washed away by Katrina. The [New Orleans] Port Authority told us were covered by insurance, and I really hope so," according to William Almond, who is secretary, treasurer and chief financial officer at Almond Brothers Lumber Company, a business that ships OSB and other lumber products to destinations throughout the world.

For its part, Gambinos Bakery had been running a thriving baked goods business over the Internet, as well as out of several brick-and-mortar stores, some of them located in New Orleans.

Since the storm, FedEx, UPS (United Parcel Service) and the USPS (United States Postal Service) have temporarily ceased operations in the city of New Orleans.

/zimages/1/28571.gifRead more here about how Katrina has applied a stranglehold on supply chain and logistics.

Meanwhile, at Gambinos site in nearby Baton Rouge, FedEx has only managed to make pick-ups a couple of times a week, according to Petry.

"But our items are highly perishable, so we need to get them out the door right away," the bakery executive said.

Almond Brothers is also running into huge snafus around filling customers orders, but the barriers are different.

Located in Coushatta, La. at the northwest corner of the state, the lumber firm has traditionally sent internationally bound orders directly to warehouses surrounding the port of New Orleans, and from there to ocean ships departing the port.

Almond uses warehouse facilities not just for storage, but to prepare OSB and other wood for ocean shipment.

With the port of New Orleans out of commission, the company now needs to find warehouse facilities in another port.

"But Savannah is much too far away, and the warehouse space in Houston was already hard to come by even before the storm," he said.

Transporting the goods to warehouses raises another mares nest of issues. Due to a rise in fuel prices spurred by Katrina, costs are skyrocketing for trucking, the lumber companys customary mode of transport.

Since Katrina struck, Almond has also looked into alternatives such as railroad and barge shipment.

But unlike hired truckers, the railways cant assure that the wood will be protected from any rain that might fall during transport.

Next Page: Companies struggle to ship products.