Recent disasters force a rethink of risk strategies

Companies involved in shipping and logistics will have to rethink their approach to dealing with risk, especially after the events in Japan over the past fortnight, said Abrie de Swardt, marketing director of IMPERIAL Logistics. “As the supplier of approximately 20% of semiconductors and 40% of flash memory chips worldwide, and a major supplier in the likes of the automotive sector, the company believes last week’s earthquake and tsunami in Japan will force companies to rethink their approach to managing supply chain risk,” he said. De Swardt’s comments follow the release of the second phase of a global risk survey that found most companies rated natural disasters, fires and explosions as uncommon supply chain risks within their operations. The recent natural disasters in Australia, New Zealand and particularly Japan are, however, proving the global impact of such incidents on supply chains. The risk study was undertaken by the Association for Operations Management of Southern Africa and IMPERIAL Logistics with the Massachusetts Institute of Technology’s Centre for Transportation & Logistics (MIT CTL) in Boston. He added that supply chains were considerably more vulnerable because of globalisation, involving trading partners from different regions who speak different languages and have experienced different risks. “The scale and unpredictability of the natural disasters occurring across continents requires a more holistic approach to supply chain risk mitigation, both for shippers and logistics service providers (LSPs),” he says. “Comprehensive contingency plans are therefore needed.” For example, despite Japan’s main airports, Narita and Haneda, having been reopened and road and rail disruption reportedly only localised, sea ports have been badly affected. Analysts forecast that “supply chain effects may be one of the longer-lasting issues for the logistics sector, with global markets in air and sea freight depressed due to lack of volume.”