What is the Typhoon Mangkhut fallout on shipping and the supply chain?

Hong Kong, September 19, 2018: Damage caused by Super Typhoon Mangkhut signal No. 10, the highest in Hong Kong storm warning system. (Photo: Shutterstock)

Typhoon Mangkhut made landfall in Guangdong, China’s most populous province, this past Sunday, before heading west into neighboring Guangxi province. More than three million people were evacuated in southern China as Typhoon Mangkhut moved northward and continued to wreak havoc across the region.

The decision to evacuate towns and cities in southern China came as Hong Kong was left beaten by winds of up to 107 miles per hour and gusts of up to 138 mph. The storm tore off roofs and scaffolding from skyscrapers, shattered windows, shook high-rise buildings and caused serious flooding in low-lying areas as waves of more than three meters (9.8 feet) lashed the coast. By now, the death toll estimates have risen above 100. 

Typhoon Mangkhut is currently the largest storm in the world in 2018, and it’s impacting a region that is the center of manufacturing and shipping. The effects will be felt by industries, companies, and consumers across the globe.  

In light of the devastation wracked upon the Atlantic eastern seaboard, FreightWaves reached out to an expert in maritime logistics to gain a little more understanding in what happens to the supply chain in the face of so much devastation. How can companies prepare, and what is the fallout?  

Victor Garcia is the CEO of San Francisco-based CAI International (NYSE: CAI) a global shipping container, rail, and logistics company that deals with all the major global shipping companies. 

“It’s been a surprisingly active typhoon season,” says Garcia. “We’ve seen a number of different typhoons all across Japan, Korea, and China. This is the largest, and has hit one of the major export areas. We see a lot of potential damage with equipment. All commerce must stop in the area first.”

However, for all that Garcia says they expect only a few days of dislocation. “The change in the supply chain is the before and after,” he says. “Before is the preparation, and the after is assessing the damage. Day four we begin to see what equipment needs to be brought in. Almost inevitably we see elements in the supply chain disrupted. Sometimes we adjust with the equipment in the area. Sometimes we have to find others. Factories start operating right away. Things start operating in a just-in-time approach.”

Accessing equipment becomes top priority. With the typhoons, the overall disruption “takes a few weeks,” to get completely functioning normal again.

At the terminals the equipment doesn’t necessarily get damaged. It’s the top ten carriers where the freight flows are that get the most disrupted, according to Garcia.

At this time of year, coming from southern China are a lot of exports in the Transpacific to Europe and the US. There will be some disruption along those routes. The northern chinese ports have more of a domestic focus.

“A lot of time with the aftereffects—the whole sequence of events changes. They evacuate equipment from all across the globe just to regain normality if necessary. It takes longer to find assets to move depending on the damage. There’s a lot of transitory help and geared toward reestablishing the supply chain,” says Garcia. “We can’t forget that there are human tragedies associated with these events,” he adds.