Supply chain impacts from the Southern California wildfires have been minimal, according to logistics experts. However, several experts noted challenges could come later once people begin to rebuild infrastructure and homes.
The wildfires in Southern California wiped out several neighborhoods, closed streets and highways and upended the lives of many residents in Altadena, Lake Hughes, Pacific Palisades and San Diego County.
The fires have not been 100% contained, according to a California Department of Forestry and Fire Protection map last updated on Jan. 27. But progress is being made as the Eaton fire is at 99% containment while the Hughes fire is at 98% containment. Acres impacted from all four active fires is at 54,519, according to the Cal Fire map.
Warehouses avoided direct impact
The wildfires had little to no impact on warehouses since most of them were outside the fire zone, Lisa Anderson, president of LMA Consulting Group, told Supply Chain Dive in an interview. Still, there are short-term challenges presented for some businesses.
“Even businesses outside the fire zones are experiencing ripple effects from power outages, infrastructure strain and shifting consumer demand,” Anderson said.
Anderson said she has a client that supplies building products. The client's manufacturing facility was without power for about a week due to preventative shutdowns, although their area wasn’t in the path of the fires.
There are several warehouse and logistics centers in Southern California but most are in the Inland Empire, Anderson said. Some locations that make up the Inland Empire include Riverside, Upland, Fontana and San Bernardino.
One logistics provider, DHL Supply Chain, told Supply Chain Dive in an email that it faced no direct impact from the fires.
“DHL Supply Chain operates 13 sites in the area and has experienced no direct impact to our associates or facilities from the recent fires. Our teams continue to monitor the situation and are prepared to support any shift in our customers’ supply chains to ensure their business continuity,” the company said.
Even with no direct warehouse impacts, Anderson said retail supply chains are going to be disrupted by shifting consumer demand.
For example, a store in a local area devastated by the fires could have burned down. As a result, local residents from that specific store might shop in other areas for essential items they lost in the fire, she added, changing buying patterns and inventory needs along the way.
Rebuilding efforts to spark supply, storage needs
While there isn't a clear timeline for rebuilding efforts in affected areas, CBRE experts told Supply Chain Dive that short-term storage demand for building and manufactured home suppliers is expected to jump.
It will take some time before any type of rebuilding actually starts, Robert Peddicord, executive managing director at CBRE’s South Bay operations, said.
“Most of the communities are talking about construction won't start for two to three years because obviously the infrastructure needs to be rebuilt first. First, you need to remove all the waste, and then the infrastructure needs to be rebuilt. [The] time frame that's coming up right now [is] two to three years before any construction starts,” Peddicord said.
Items that could face shortages amid rebuilding efforts include materials such as drywall, cabinetry, plumbing and roofing supplies, Peddicord said.
Once materials become available and start coming into Los Angeles, there will be a higher demand on storage space required due to the significant amount of inventory needed for infrastructure and homes, John Morris, president of Americas Industrial & Logistics at CBRE, said in an interview.
“Some of that might be Class A big bulk warehousing like the kinds of facilities that are used to ship e-commerce and so forth. But I think most of that is going to be in less functional … kinds of buildings that just are going to be needed for temporary storage,” Morris said.
The increased demand for that space will raise the values and pricing, he said. Morris also said there could be heightened interest in industrial outside storage that can be used for materials like poles, beams and wiring.
Supply chain resiliency should remain a hot topic in the fires, Anderson said. Even more so now because businesses have to find ways to carry on in order to support their customers.
“Additonally, having manufacturing options outside of the primary location can provide vital flexibility, ensuring production continues even if primary facilities are impacted by power outages or other disruptions,” Anderson said in a Jan. 16 press release.
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