• DATVF.ATLPHL
    1.706
    0.015
    0.9%
  • DATVF.CHIATL
    1.975
    0.071
    3.7%
  • DATVF.DALLAX
    0.924
    0.014
    1.5%
  • DATVF.LAXDAL
    1.546
    0.092
    6.3%
  • DATVF.SEALAX
    0.892
    0.012
    1.4%
  • DATVF.PHLCHI
    1.015
    0.041
    4.2%
  • DATVF.LAXSEA
    2.140
    -0.004
    -0.2%
  • DATVF.VEU
    1.565
    0.042
    2.8%
  • DATVF.VNU
    1.439
    0.033
    2.3%
  • DATVF.VSU
    1.235
    0.053
    4.5%
  • DATVF.VWU
    1.516
    0.004
    0.3%
  • ITVI.USA
    10,856.810
    -37.810
    -0.3%
  • OTRI.USA
    4.760
    0.080
    1.7%
  • OTVI.USA
    10,838.010
    -38.560
    -0.4%
  • TLT.USA
    2.430
    -0.060
    -2.4%
  • WAIT.USA
    150.000
    -1.000
    -0.7%
  • DATVF.ATLPHL
    1.706
    0.015
    0.9%
  • DATVF.CHIATL
    1.975
    0.071
    3.7%
  • DATVF.DALLAX
    0.924
    0.014
    1.5%
  • DATVF.LAXDAL
    1.546
    0.092
    6.3%
  • DATVF.SEALAX
    0.892
    0.012
    1.4%
  • DATVF.PHLCHI
    1.015
    0.041
    4.2%
  • DATVF.LAXSEA
    2.140
    -0.004
    -0.2%
  • DATVF.VEU
    1.565
    0.042
    2.8%
  • DATVF.VNU
    1.439
    0.033
    2.3%
  • DATVF.VSU
    1.235
    0.053
    4.5%
  • DATVF.VWU
    1.516
    0.004
    0.3%
  • ITVI.USA
    10,856.810
    -37.810
    -0.3%
  • OTRI.USA
    4.760
    0.080
    1.7%
  • OTVI.USA
    10,838.010
    -38.560
    -0.4%
  • TLT.USA
    2.430
    -0.060
    -2.4%
  • WAIT.USA
    150.000
    -1.000
    -0.7%
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Commentary: Hurricane Dorian and thinking about extreme weather events

As Hurricane Dorian continue its life-threatening and destructive march along the southeastern U.S., I have been thinking about hurricanes, typhoons and cyclones. The loss of life and property we witnessed from Hurricane Dorian in the Bahamas is tragic, and on a scale that is hard to comprehend.

My uncle has lived in Puerto Rico for many years – he teaches at the University of Puerto Rico. When Hurricane Maria hit Dominica, the U.S. Virgin Islands and Puerto Rico in 2017, it was the first time since Hurricane Katrina and more recently, Hurricane Sandy, that I paid very close attention to a storm, and what happens leading up to and in the aftermath of a critical weather event of that nature. Late last week, as Hurricane Dorian was making its way through the Caribbean Sea, I checked in with him a few times on WhatsApp to find out how things were going in Puerto Rico. To quote him, “God was merciful this week. We now have to pray for people in the Bahamas and on the mainland.”

Cyclones, hurricanes and typhoons

According to Cambridge.org, a cyclone is “a violent tropical storm” with “winds moving in a circular direction towards an area of low atmospheric pressure.” According to Dictionary.com, a cyclone is “a large-scale, atmospheric wind-and-pressure system characterized by low pressure at its center and by circular wind motion, counterclockwise in the Northern Hemisphere, clockwise in the Southern Hemisphere.”

Cyclones obtain their power from warm, humid air. As a result, they form in regions near the equator as cycles of warm air rising and cold air descending gain strength moving from areas of high pressure towards the area of low pressure at the center of the cyclone. Water contained in the air forms clouds, leading to the heavy rains that accompany cyclones.

Tropical cyclones formed:

  • In the north Atlantic Ocean, the Caribbean Sea and the northeast Pacific Ocean are called hurricanes.
  • In the northwest Pacific Ocean are called typhoons.
  • In the south Pacific Ocean and the Indian Ocean are called cyclones.

A future of changing and more severe hurricanes

According to the National Climate Assessment 2014, “The intensity, frequency and duration of North Atlantic hurricanes, as well as the frequency of the strongest (Category 4 and 5) hurricanes, have all increased since the early 1980s. The relative contributions of human and natural causes to these increases are still uncertain. Hurricane-associated storm intensity and rainfall rates are projected to increase as the climate continues to warm.”

Writing about extreme weather events and how they affect supply chains is difficult because:

  • On the one hand, such events may lead to the loss of many human lives.
  • On the other hand, supply chains, and the trade that they enable are central to the recovery of the communities that have been hit.

Writing about supply chains can appear to minimize the loss of life. However, understanding how supply chains and trade can be rebuilt to be more resilient is central to minimizing future loss of life. In the immediate aftermath of such events, supply chains play a critical role in disaster relief and emergency search and rescue operations.

We touched on related issues in: Commentary: Key supply chain innovation issues to consider in a world with VUCA and again in Commentary: What does the National Climate Assessment say about future risks for supply chains?

This may be a long, difficult and complicated recovery

We do not have to think hard to find a recent example of what lies ahead for the Bahamas. Two years after Hurricane Maria, we can look to the pace of Puerto Rico’s recovery efforts for indications of what the Bahamas might expect. Moreover, as the exchange I had with my uncle suggests, recovery and rebuilding are complicated by the fact that each year’s hurricane season brings with it the risk and uncertainty of a repeat occurrence.

Broadly speaking, in the aftermath of a hurricane of this magnitude:

  • One expects slow progress in the rebuilding of transportation and supply chain logistics infrastructure – airports, roads and ports. This leads to bottlenecks in the movement of people and freight where such bottlenecks may not have existed previously.
  • The Bahamas economy will stall since, according to Economy.com, tourism accounts for between 75 and 80 percent of the country’s gross domestic product (GDP) and employs about 50 percent of the labor force. We know that there will be fewer tourists visiting the Bahamas while recovery and rebuilding are in progress. This will lead to a brain drain as people with the resources to do so depart the archipelago in search of employment opportunities elsewhere.
  • It is unlikely that offshore financial services, manufacturing and agriculture – the sectors that account for the remainder of GDP – will grow quickly enough to offset the decline in tourism-related business.

As a result, the government’s ability to spur economic growth will remain malnourished since tax receipts from business activity will be significantly reduced, creating a vicious downward spiral from which it is difficult to recover.

We can debate what is leading to the increasing frequency of extreme weather events. However, the impact these events have on people, communities, supply chains, trade and economic growth is not up for debate. Lives are lost. Communities are destroyed. Supply chains are disrupted, leading to disruptions in trade with the rest of the world. Taken together, these lead to a decline in economic growth and prosperity.

It is becoming increasingly obvious that climate change, and the accompanying effect on weather patterns is a complex problem. In my opinion this is the most critical problem confronting global supply chains. It is also the most difficult to solve in a meaningful way without collaboration on a scale we have not seen before. I believe that the most consequential innovations of the next half century will be those innovations that enable us to contain the effects of climate change on humanity and the supply chains that make the world we have become accustomed to possible. 

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Brian Aoaeh

Brian Laung Aoaeh writes about the reinvention of global supply chains, from the perspective of an early-stage technology venture capitalist. He is the co-founder of REFASHIOND Ventures, an early stage venture capital fund that is being built to invest in startups creating innovations to refashion global supply chain networks. He is also the co-founder of The Worldwide Supply Chain Federation (The New York Supply Chain Meetup). His background covers the gamut from scientific research, data and statistical analysis, corporate development and investing for a single-family office, and then building an early stage venture fund from scratch - immediately prior to REFASHIOND. Brian holds an MBA in General Management, with a specialization in Financial Instruments and Markets, from NYU’s Stern School of Business. He also holds a Bachelor’s Degree in Mathematics & Physics from Connecticut College. Brian is a charter holding member of the CFA Institute.

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