Natural Disasters Like the Earthquake in Turkey and Syria Should Put Supply Chains on Notice
As of this writing, the 7.8 earthquake that struck Turkey and Syria has claimed the lives of more than 22,000 civilians. Worse still, survivors, many of whom are now homeless, will now have to face a series of “worsening and horrific conditions” including cold and snow. The Syrian city of Aleppo, for example, is forecasting lows of -2 to -3 degrees Celsius over the weekend.
“We are in real danger of seeing a secondary disaster which may cause harm to more people than the initial disaster if we don’t move with the same pace and intensity as we are doing on the search and rescue side,” said World Health Organization (WHO) Robert Holden at a press conference.
To the world at large however, there is another, more subtle, danger. With increasing frequency, large-scale natural disasters have had a catastrophic effect on global supply chains. This earthquake is only the most recent example, with Turkey and Syria are extremely active shipping hubs, with locations such as the port of Iskenderun on the Mediterranean Coast responsible for the distribution of a variety of goods including fertilizer, corn, wheat, bran, soybeans, iron, polyester fibers, and soda ash. Turkey is also a significant hub for oil transportation, responsible for 1% of the world’s supply coming primarily from Iraq and Azerbaijan.
“The earthquake will affect Turkey’s normal production and life, and the impact on Turkey’s industrial chain and supply chain may adversely impact the nation’s currency exchange rate and inflation,” said Bai Ming, deputy director of the international market research institute at the Chinese Academy of International Trade and Economic Cooperation, said.
Such concerns are hardly reserved for major earthquakes. Fires, floods, extreme winter conditions, or even volcanos can cause major damage to the global supply chain. Researchers, for example, have been warning for years that it is only a matter of time before a major volcano eruption in the Malacca Strait — which is responsible for the movement of 40% of the world’s trade and home to a dense array of submarine ethernet cables that maintain a global network — will occur.
“In 2018, researchers at the University of Cambridge’s Centre for Risk Studies envisaged the effects of scenarios including a VEI6 eruption at Marapi,” said a recent report from the BBC. The eruption, they suggested, might produce ash clouds and fine tephra – fragments of rock ejected into the air – that waft across the Malacca Strait towards Singapore and Malaysia. The resultant damage to local infrastructure and supply chains, with aviation particularly badly affected, would combine with a global temperature drop of 1C to wipe an estimated $2.51tn (£2tn/€2.3tn) off global GDP over a five-year period.”
As the people of Turkey and Syria recover from the current tragedy, companies around the world can see this event as a wake-up call regarding the risks of natural disasters not just to human life, but to the global infrastructure. Is your supply chain ready for the worst? If not, we want to talk to you!