Learning Lessons from Supply Chain Disruption

One of the most prominent economic impacts to emerge from the COVID-19 pandemic was the breakdown of supply chains for many consumer, medical, and industrial products. Though the shortages of goods such as toilet paper, semiconductor chips, personal protective equipment and more made widespread headlines, the range of items affected spread much wider — including to the supply of critical water treatment chemicals. The American Water Works Association found in November 2021 that 45% of surveyed water utilities were experiencing shortages of water treatment chemicals, among other staffing and supply issues. 

Shortages of chlorine did make news in the summers of 2021 and 2022 due to the difficulty pool-owners had obtaining it to clean their pool water, but the threat it posed to water utilities — where chlorine is a critical component of the treatment and disinfection process — was much less widely known. In 2021, the pandemic spurred the shortage by causing a decrease in production capacity, an increase in demand (largely from a boom of newly-installed pools), and other logistical failures. However, non-COVID factors also played a role in the shortages.

Hurricane Laura, which struck Louisiana in August 2020, severely damaged the BioLab Inc. chemical plant, a major US producer of chlorine. In 2022, the labor dispute between rail workers and rail companies briefly led to an embargo on the rail transport of hazardous materials including chlorine and other water treatment chemicals. While further major disruptions did not occur in 2023, the EPA considers the chlorine supply chain to be “vulnerable to periods of reduced product allocation and/or price increases” and maintains a page tracking the status of chlorine availability and pricing. 

The most severe supply chain disruption in 2023 for water treatment chemicals came right at the start of the year — when a four-alarm fire devastated the Carus Chemical factory in LaSalle, Illinois, on January 11. Carus is the only producer of potassium permanganate in North America, which is used to oxidize contaminants in drinking water. While the company initially warned of  a 3-month outage in its production capacity, potassium permanganate production did not resume at Carus until August. Luckily, overseas imports were able to fill demand after some initial shortages, and the EPA found that supply had stabilized by May.

Other water treatment chemical supply chains that the EPA considered to be disrupted since 2020 include carbon dioxide, sodium hydroxide and hypochlorite, hydrochloric acid, ferric and ferrous chloride, oxygen, and fluorosilicic acid. However, none of these disruptions are considered to be ongoing.

While supply chains of water treatment chemicals have always been susceptible to periods of economic strain, such as the Great Recession of 2007-09, COVID-19 revealed many more risks in the system. According to the EPA’s “Understanding Water Treatment Chemical Supply Chains” report:  

“The supply disruptions that have occurred during the pandemic era revealed a range and intensity of supply chains stressors that had not previously been observed in such a short timeframe. While high-impact events such as a pandemic or repeated extreme weather events concentrated on industrial hubs may have been considered low-probability in previous assessments, supply chain risk planning may have to consider greater frequency and co-occurrence of such high-impact events.”

The most prevalent long-standing threats to the stability of supply chains include natural disasters, equipment failures, logistical problems such as transportation delays, and malicious acts like cyberattacks and sabotage — none of which will stop being a concern even as the pandemic is increasingly behind us. International markets can also be severely affected by trade barriers, armed conflicts, and natural disasters. 

Perhaps the most prominent chemical shortage preceding 2020 was a national shortage of chlorine in 1974. While a single cause of the shortage could not be identified, New York Times reporting at the time cited the new requirement to chlorinate wastewater, the closure of production facilities, and the energy crisis of the 1970s (which was peaking with the 1973-74 oil shock) as likely factors.

For more information on the supply chain history of various water treatment chemicals, the EPA’s supply chain profiles of 46 commonly used chemicals contains shortage histories for 2000-2022, as well as risk profiles for shortages of each chemical. Risk ratings for these chemicals can also be found in the “Understanding Water Treatment Chemical Supply Chains” report.

As for future concerns, chlorine availability could continue to be made vulnerable by natural disasters in the Gulf Coast region. 33% of American chlor-alkali facilities, in which most chlorine is produced, are located along the Gulf Coast, which is both historically prone to hurricanes and under greater threat as climate change intensifies storms. Disruptions in chlorine supply also lead to disruptions in ferric chloride supply, which requires hydrochloric acid. 

The EPA has many resources to assist in preparing for and responding to supply chain challenges. The critical steps to prepare are:

1. Using federal and state support programs for operational efficiency and cost reduction
2. Management of supplier relationships
3. Coordinating with other utilities, state and local agencies, and water sector associations
4. Instituting operational flexibilities 

To respond to disruptions, the EPA recommends:

1. Seeking federal support
2. Communicating with suppliers
3. Coordinating with partners

Follow the Supply Chain Resilience Guide for more information, instructions, and tips to prepare and respond.  

More information, tools, and links from the EPA: 

• Current Supply Chain Disruptions
• Platform for Coordinating Supply Chain Efforts
• Chemical Suppliers and Manufacturers Locator Tool
• Supply Chain Case Studies
• Water Treatment Chemical Supply Chain Profiles
• Understanding Water Treatment Chemical Supply Chains and the Risk of Disruptions
• Supply Chain Resilience Guide for Water and Wastewater Utilities
   

Featured Video: TXWARN Tabletop Exercise

Most areas of the country will have to deal with a large-scale disaster at some point. Whether it's an earthquake, blizzard, hurricane, tornado outbreak, flooding, or large-scale drought, most regions are great places to live until they're really, really not. Water utilities play a vital role in disaster scenarios, whether they're ensuring the delivery of clean, safe drinking water or safely removing and treating wastewater. Unfortunately, just because these services are vital doesn't mean they'll remain unaffected in a disaster scenario. In 2005, the experiences of New Orleans during Hurricane Katrina drove home just how vital utilities are to the disaster response process. However, many utilities are not used to their role as emergency responders, and may not have a plan in place if their services were needed in the event of a disaster.

One way to plan for a disaster before you're in the midst of it is to participate in a tabletop exercise. In a tabletop exercise, the major players in a disaster event---police, fire, utilities, mayor, emergency response coordinator---all sit down together and consider step-by-step how they'd respond to a specific disaster if it hit their hometown. It helps to be specific: What if the tornado hit the water tower on the way into town? What if the main road through town was blocked with debris? What if there was a power outage? Specific questions like these can help you think about your resources and emergency planning in more detail.

One very detailed introduction to disaster response tabletop exercises begins with today's video. In 2011, the state-level disaster response agencies for the state of Texas met with TXWARN and tried to plan a response to a fake hurricane, as described to them by facilitators from the consulting group Horsley Witten. The exercise begins with the "hurricane" still out at sea while the agencies at the table think through how they would need to plan depending on where the hurricane makes landfull. It progresses through landfall and widespread rain and storms, and concludes with the participants talking about the exercise and identifying things they could change or improve to plan for a real emergency. This first video is an hour and a half long, and the entire run of the exercise comes to a little over 6 hours of video. But even watching selections from the videos will give you an idea of what kinds of problems and solutions might be worth considering for your own utility's disaster planning.

Watch the PT 1 TXWARN TABLE TOP video from Texas AWWA with this link.

You can also find the remaining exercises here:

Tabletop Exercise Part 2

Tabletop Exercise Part 3

Tabletop Exercise Part 4

Featured Videos: Preparing Your System for Disasters & Emergencies

Preparing Your Wastewater System for Disasters and Emergencies from RCAP on Vimeo.

Featured Video: A Day Without Water