Typhoon Chanthu disrupts supply chains

The recent closure of Shanghai and Ningbo ports due to Typhoon Chanthu, may create delays that disrupt more than $14 billion of trade flows according to scenario analysis conducted by Russell Group.

Chanthu has weakened significantly since it skirted Northern Philippines as a category 5 and later Taiwan over the weekend. At its strongest, before it made landfall in the Philippines, Chanthu was one of the strongest storms this year, with sustained winds of 260 kph (160 mph).

The Shanghai International Port Group that runs several terminals at the Shanghai Port — the world’s busiest port by cargo volume — announced various closures in anticipation of Typhoon Chanthu. Meanwhile, the nearby Ningbo-Zhoushan Port, the world’s third-busiest after Singapore, also halted operations at some terminals.

Russell’s nalysis shows that the commodities of clothing ($331 million is exported from Shanghai) and computers / office equipment ($361 million) will face severe disruption and could affect the availability of key clothing items or electronic goods in the run-up to the holiday season.

“Our analysis will come as little relief for corporate risk managers, their organisations’ supply chains, ship operators and (re)insurers that have seen disruption after disruption pile on top of each in 2021,” said Russell Group CEO Suki Basi . ”Rising port accumulation exposures across the global economy is serious concern for businesses that rely on just in time supply chain methods. In this quarter alone Ningbo has been closed twice and the first incident created havoc to the logistics of global trade. I would not be a surprised if it happens again.”

“Any effective risk mitigation plan needs to have a more granular understanding of trading relationships. Organisations, along with their risk managers, can analyse data from these modelling insights to plan for the worst and exploit any business opportunities that arise along the way.”