Supply Chain Managers May Have New Concern Over Hurricane Sandy: Infrastructure Damage

In its preliminary evaluation of the economic impact of Hurricane Sandy, IHS Global Insight said potential infrastructure damages currently stand around $10 billion of insured damages and about twice as much, or $20 billion, in terms of total damages.

“This would put Sandy on par with Irene in terms of total infrastructure damage estimated around $15 billion,” said economist, Gregory Daco. “However, with Sandy being a much larger storm, it is likely to end up causing more flooding damage than its 2011 peer which would increase total damage estimates.”

Category 1 Hurricane Sandy has now become the largest tropical system recorded in the Atlantic measuring around 900 miles across – covering an area close to one and a half times the size of Texas. According to the National Weather Service, Hurricane Sandy was reinforced by two cold fronts from the north and west transforming it into a post-tropical superstorm (i.e. nor’easter) with heavy rains, snow and gusting winds as it moved up the Eastern coast.

The region affected by Hurricane Sandy will be similar to the one affected by Hurricane Irene in 2011 – a region stretching across 15 states on the East Coast with a gross regional product of around $3 trillion. Assuming the total economic losses are around $30 billion to $50 billion that would represent losses equivalent to 1.0% to 1.7% of gross regional product (GRP) for the states affected.

This would be larger than the damages from Hurricane Irene which represented about 0.5% of GRP for the 13 most states affected, but it would be much less than Hurricane Katrina, which caused around $120 billion in damages, amounting to 9.6% of gross regional product for the states most impacted – Alabama, Florida, Louisiana, and Mississippi.

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