Applied Financial Metrics to Measure Interdependencies in a Waterway Infrastructure System

Abstract

Waterway systems connect economic and industrial sectors by enabling efficient freight transportation. However, disruptions along these freight corridors can impose significant impacts on supply chains that are reliant on maritime transportation. This study investigates the interdependencies between consumers of steel and transportation of raw materials on the Great Lakes Waterway. Corporate financial metrics are applied to map the supply chain for value-added products and quantify interdependencies between firms. The cascading effects of waterway disruption are estimated through network mapping and a supply-driven inoperability input-output model (SIIM) with a novel application of corporate financial metrics to quantify interdependencies. Publicly available corporate financial descriptors offer a practical means to quantify interdependencies, which are used to assess economic perturbations from waterway disruption. The results show that the inventory turnover ratio serves as a valuable measure of interdependence, which is illustrated for automotive manufacturers. Specifically, this industry exhibits risk exposures similar to integrated steel producers in the region, potentially translating to production loss or price adjustments as a result of supply-chain disruption in the Great Lakes Waterway system. The integration of corporate finance metrics in network models and SIIM serves to quantify and understand opportunities for risk mitigation.