On July 24 Supply Chain Matters initially alerted our readers to extraordinary torrential rains and flooding conditions impacting China.  The most visible incidents were the flooding and loss of life that overwhelmed the city of Beijing, but flooding conditions occurred through many parts of eastern and central China.

Our second advisory posted on August 2 alerted to continuing storms and flooding conditions that were impacting many provinces of eastern China. The Three Gorges Dam on the Yangtze was reported to be managing the largest flood peak in more than nine years, with additional tropical storms impacting southeast China. The Yellow and Yangtze Rivers, both of which support major transportation movements, were continuing to rise.

Today, there are numerous published reports noting that Typhoon Haiku has wreaked havoc in the most populous areas of eastern China. washing out roads, disrupting transportation and electrical power. This typhoon made landfall in central Zhejiang province with maximum winds of 150 km per hour (90 miles per hour). Officials evacuated over 370,000 people from the city of Shanghai and reports indicated over 5 inches of rain fell on the city from Tuesday evening to early afternoon Wednesday. All passenger rail services between the cities of Hangzhou and Ningbo were suspended with flight operations suspended at Hangzhou Xiaoshan International Airport. This was the third typhoon to impact China is less than a week.  Readers can gain visual images from this BBC report.

We continue to issue this series of alerts because so much manufacturing activity resides in China, and with the numerous occurrences of torrential rains and flooding, there is bound to be some impacts on transportation, logistics and production.  The first evidence point comes from a report issued by global reinsurance provider Aon Benfield.  Aon’s latest July 2012 Global Catastrophe Recap quantifies that the extended periods of rain in July, that spawned flooding and landslides and the loss of life of 324 people in nearly two dozen provinces amounted to an estimated $8.3 billion in combined economic losses. That was just July.

Extraordinary flooding was not just confined to China, and included Japan, Indonesia and North Korea and Russia. In fact, after reading some of the details in the report, the reader will get a strong sense that something is happening to our planet.  Any remaining cynics as to the occurrence of global warming not occurring should download and read this sobering report.

Of more concern to industry supply chains, we cite a blog posting on CNN that predicts that there will likely be more flooding disasters around East Asia over the next couple of months as the tropics heat up and cyclones traverse these hard-hit areas from the Philippines all the way to North Korea. All of this disturbing activity coincides with a traditionally heavier Asia based production cycle as manufacturers and retailers build-up inventories for the 2012 holiday buying season.

The coming weeks will require very close communications and monitoring of suppliers across East Asia and China as this pattern of significant storms and consequent floods continue to challenge existing both infrastructure and steady production operations. Scenario-based planning, contingency and risk mitigation plans should be at the ready.

Bob Ferrari