The definition of “Black Swan” events continues to be re-defined in this new era of extraordinary climatic events.
Super Typhoon Haiyan, which is being described as the most intense typhoon ever recorded, plowed across the central Philippines today, leaving widespread devastation. The typhoon roared onto the country’s eastern island of Samar at 4:30 a.m. local time, flooding streets and knocking out power and communications in many areas of the region, and then continued barreling into five other Philippine islands. Various media reports indicate that this massive storm hit with maximum sustained winds of 315 kilometers per hour (195 mph), with gusts up to 379 kilometers per hour (235 mph). This equates to the high end of a Category 5 hurricane in North America, one that can bring massive destruction and human casualties.
The reports we have monitored indicate the government agencies across the Philippines have taken extraordinary measures to evacuate people from vulnerable and high impact areas, and hopefully that may limit the extent of such casualties. The implications for destruction to basic residential, industry, and transportation infrastructure are an obvious concern.
A published report from The Washington Post (paid subscription or metered free viewing) quotes a weather expert indicating that “there will be catastrophic damage” in the wake of this storm. The typhoon was not expected to directly hit the Manila area, but with the breadth and size of this storm, there is bound to be some storm related impacts. If there is any good news, The Post article indicates that because this typhoon is fast moving, the full impact of flooding and heavy rain may not be as bad.
As we pen this commentary, reports indicate that most all communications have been severed within the impacted areas and thus little is known at this point regarding the state of damage and destruction. This massive storm is expected to move westward and impact the countries of Vietnam and Laos sometime this weekend.
We have alerted our readers to previous natural disasters occurring in the Philippines because of the global supply chain and services that are sourced in this region. Within the greater Manila area are many major semiconductor test and assembly facilities including those of Amkor, Maxim and On Semiconductor, to name a few. The area also hosts a number of major IT, corporate services and customer support outsourcing operations.Vietnam has also raised its profile in sourcing within industry supply chains, notably apparel and high tech industry sourcing.
This massive and historic typhoon comes in the wake of extraordinary climatic events that have impacted the Asian coastal and central regions in the past few months. We recently alerted our readers to the flooding impacts within Thailand, a massive cyclone that struck coastal regions of India, among other events. It seems that not a week goes by without another alert to an earthquake incident occurring in Japan, and there was yet another reminder earlier this month for the fragility of the Taiwan region to earthquake events. It is indeed a new era of historic climatic changes and it concerns major hubs of industry value-chains.
Obviously, procurement, customer service, supply chain risk management and other teams need to continue to monitor reports regarding conditions in the impacted areas, including any implications to industry and transportation infrastructure. It may be a few days before normal communications can be restored and assessments can be garnered. In the 2011 devastating earthquake and tsunami that impacted Northern Japan, it was several weeks before the full extent of destruction and impacts were brought to light.