• Anticipate supply chain disruptions amid ongoing wildfires in California

    31 August 2020

    The 2020 California wildfire season, which started as early as May 5, escalated significantly in recent days, and is encompassing at least 5 fire systems at present in the central and northern part of the state.

    The worst affected areas include the SCU Lightning Complex fires (Alameda, Contra Costa, San Joaquin, Santa Clara, and Stanislaus counties), the LNU Lightning Complex fires (Lake, Napa, Sonoma, Solano, and Yolo counties), and the CZU August Lightning Complex fires (San Mateo and Santa Cruz counties), which have put 20,000 infrastructures at risk. As of August 30, the California wildfires have burned over 1.66 million acres, which has surpassed the total acres charred by the wildfires of 2019.

    The SCU and CZU fires have burned the largest amount of acres, and have yet to be contained. Fires continue to grow across the Bay Area as of August 30, with two of them being some of the largest blazes recorded in California’s history in and around the greater San Francisco Bay area since mid-August. Moreover, separate wildfires have been reported in the Point Reyes National Seashore area of Marin County as well as in Monterey County. In response to the fires, California Governor Gavin Newsom on August 18 declared a state of emergency while evacuation orders ensued amid the record-breaking heatwave across the state, which has also caused intermittent rolling blackouts across different counties from August 15 to at least until August 19.

              Figure 1. Map showing active wildfires in California as of August 26, Source: Riskpulse  

    As of August 30, the following wildfires remain active with evacuation orders in effect for the below counties:

    Wildfires Size Affected Counties
    LNU Lightning Complex fires 375,209 acres burned and 58 percent contained Lake, Napa, Solano, Sonoma and Yolo
    SCU Lightning Complex fires 377,471 acres burned and 50 percent contained Santa Clara, Alameda, Contra Costa, San Joaquin, Stanislaus
    CZU Lightning fires 84,640 acres burned and 35 percent contained San Mateo and Santa Cruz
    River fire 48,088 acres burned and 93 percent contained Monterey
    Butte/Tehama/Glenn Lightening Complex fires 2,782 acres burned and 75 percent contained Tehama and Glenn zones of Tehama
    Lake fire 31,089 acres burned and 87 percent contained Los Angeles

    Power outages

    Amid the raging wildfires, record heatwave and the COVID-19 pandemic, California also experienced rolling blackouts in mid-August, which was the first in the state since 2001.

    The power outages, caused by an excessive demand for electricity during the scorching summer heat, prompted the California Independent System Operator (Cal-ISO) to issue a statewide flex alert on August 19 to keep the state’s power grid from becoming overloaded. Authorities also urged businesses statewide to restrict their power usage to conserve energy. While there has not been any rolling blackouts in the state since August 19-20, any persisting heatwaves, which are exacerbated by the wildfires, are likely to strain the grid further. Moreover, some utilities such as SCE may hasten planned outages in the event that wildfires break out in high-risk fire areas as defined by the utility.

    When coinciding with scheduled power outages by Pacific Gas & Electric (PG&E) and Southern California Edison (SCE), the aforementioned combination of factors is anticipated to create notable disruptions throughout the state.

    Road closures

    The wildfires have prompted closures of several sections of expressways and other roads in different counties. As of August 29, the following road closures remain in effect:

    Counties Affected roads
    Mesa Portions of Colorado State Road 139
    Larimer Portions of Highway 14
    Grand Portions of Colorado state roads 3, 30 and 50

    Industry impact

    While no businesses have reported disruptions due to the wildfires as of this writing, there is potential for rolling blackouts to threaten the manufacturing sector while road closures across different counties may affect logistics & transportation activities.

    As shown in Figure 3, California has a large presence of tech firms including Qualcomm, LeeMah Electronics, and 4 Star Electronics Inc. that produce semiconductors, motion sensors, and coaxial cable for the automotive, engineering, and manufacturing industries. The state also houses Silicon Valley, a global hub for innovation and high technology, located in the southern part of the San Francisco Bay Area in Northern California, which is currently vulnerable to the ongoing blaze and haze. As of August 22, three groups of wildfires continue to rage: one near Santa Cruz, another one east of Silicon Valley, and the third in Napa Valley. These three have become among the largest blazes the state has seen.

              Figure 2: Map of industrial clusters representing automotive, engineering & manufacturing, life sciences & health care, and technology sectors in California. Source: Resilience360

    The rolling blackouts also pose challenges to the healthcare system in California, particularly amid the COVID-19 pandemic as the sector depends on electricity to function ventilators and appropriate storage place to store temperature-sensitive pharmaceutical ingredients and drugs. The state has over 3,000 biotechnology and pharmaceutical, and medical equipment and device manufacturing companies, though disruption to power outages caused by weather-related events is not new to the industry. In October 2019, 248 hospitals in California had to run on generators after power companies temporarily shut off services to prevent fires during windy weather. However, during a global pandemic, a combination of wildfires and power outages threatens to mount further pressure on the healthcare industry.

    Outlook

    The typical fire season in California during the dry period normally runs from May to October, with the peak activity occurring from August to October. There are at least two more months left where the risk of new fires will continue to grow until fall rains arrive. According to weather experts at Riskpulse, Resilience360’s sister company, the weather in California will remain favorable for continued expansion of ongoing fires, with a high risk of possible new fires due to the lack of rainfall for the next two weeks and beyond; combined with high temperatures.

    If this risk materializes, an over-utilization of Cal Fire resources may leave businesses imperiled, and ongoing evacuations and road closures may impede shippers’ ability to move goods. The ongoing persistence of the wildfires will undoubtedly pose challenges for businesses throughout the remainder of the season. Customers are advised to keep abreast of the latest developments and should establish and communicate emergency response and contingency procedures throughout their supply chains accordingly.

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