Supply chain managers often bemoan increasing regulation, and how new regulations or overly stringent oversight increases supply chain costs and makes their day-to-day jobs more complex. But as we have seen in the news recently, failures in government oversight can increase our supply chain risks.
The oil spill in the Gulf of Mexico is currently not affecting the Port of New Orleans or traffic on the Mississippi river, but the Coast Guard is monitoring the situation closely. As reported in a Boston Globe article, the Coast Guard must prepare for “a sudden course shift that could push the thick gunk into the shipping channel of the Mississippi River.”
According to a Wall Street Journal article, the oil rig that caught fire and sank didn’t have a remote-control shut-off switch used in two other major oil producing nations as last resort protection against spills. Legislators are now asking how the Minerals Management Service, the federal agency charged with regulating off-shore drilling, could have given British Petroleum a permit.
Meanwhile, USA Today reported on a different oversight failure:
The U.S. Transportation Department never conducted required safety checks on 20,000 to 30,000 companies that got special permits to move risky shipments of hazardous materials by road, rail, water and air, records show.
Some companies using the permits have had serious hazardous materials accidents or safety violations, according to data compiled by DOT’s inspector general. This year, for example, a company got a special permit to haul a poisonous and flammable ammonia solution despite having 14 hazardous material spills in the last four years, including four “serious” incidents that caused evacuations, major injuries, highway closures or other significant consequences. The firm also had 11 violations of hazardous materials rules.
Shortly after that article was published, an 18-wheeler being loaded with fuel at a San Antonio refinery exploded, setting off a chain reaction of smaller explosions.
This prompted firefighters to create a half-mile evacuation zone around the fire. The explosion occurred at the intersection of a four lane divided highway. It is not yet clear who or what is at fault: the trucking company, poor terminal automation equipment, or both.
Clearly, regulations serve a useful purpose in many cases. From a supply chain perspective, good regulation and oversight can help supply chains run smoother, but only if they are enforced.
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