Readers of this blog are very sensitized to the increased incidents of major supply chain disruption brought about from the extraordinary occurrences of natural disaster occurring all over the globe. The year 2011 provided the most

Source: Xinhua Net

sober reminders, given the devastating tsunami that struck northern Japan and the destructive monsoon floods that impacted Thailand.  It took many months and many extraordinary efforts for industry supply chains to recover.

In our commentaries and speaking on this topic, in order to capture the attention of audiences, we often posed the question: What if similar types of disruption occurred in China, where significant multi-industry supply activity originates? What would be the impact?

If you have not been keeping up with the latest news concerning current flooding in China, best you do so.  This country has experienced extraordinary rainfall and flooding since late last week.  Many media reports focus on the city of Beijing, where the worst flooding in 60 years has tragically taken the lives of 37 people and impacted thousands of people. On Saturday, nine inches of rain fell in a 16 hour time period, taxing the water and sewer infrastructure. Air transportation was halted stranding thousands of travelers and already there are reports of upwards of $1.6 billion in economic losses.

According to a posting on Relief Web, since early May, torrential rains have been lashing regions across China. In Gansu, Hunan, Guizhou, Guangxi, Jiangxi, Zhejiang, Fujian and Guangdong provinces, rivers have broken their banks and landslides have caused high human and economic losses. The torrential heavy rains have also impacted 17 provincial areas of China since July 20 and governmental agencies have now declared an emergency response to the conditions. According to reports by the Xinhua news agency, China’s flood control authority issued a nationwide alert on Monday for flood control departments to prepare for surging water flows in the Yangtze River and floods in other parts of the country. Another report indicates that The Three Gorges Dam is today expected to experience its largest flood peak this year with a peak flow of 70,000 cubic meters of water per second. (see pictorial) In Sichuan province, water levels in several rivers have exceeded warning levels and the Luzhou section of the upper portion of the Yangtze has seen its largest flooding since 1949. Floods are expected to peak in areas of the city of Chongqing sometime today.

To make matters somewhat worse, Typhoon Vicente made landfill earlier today over the city of Taishnan, south of Guangdong province and southwest of the manufacturing region of Guangzhou. Reports indicate that this storm will bring gales and heavy rains to coastal areas as it moves northwest. Intercity high-speed train service was temporarily halted as was airport operations.

While the situation is still unfolding, Supply Chain Matters feels that early reports related to the magnitude of the current flooding situation across wide regions of China’s industrial areas is bound to provide some supply chain impacts.  The open question is how much and how severe, which only time will determine. Similar to what occurred in October 2011 regarding Thailand, we are therefore issuing an early supply chain alert.

We advise supply chain teams to assess this situation very closely over the coming days and stay in contact with China based suppliers and contract manufacturers. Now is the time for monitoring and contingency planning.

Bob Ferrari