El Niño is officially set to wreak havoc around the world—starting now. Deemed “too big to fail” by NASA, the weather event will impact supply chains at every stage. As the event starts to take effect, here are ten things you should know about how different weather systems will impact your supply chain.
1. This El Niño will be as big—or bigger—than the last record-setting event in 1997.
Scientists weren’t sure until this week how big this year’s El Niño was going to shape up to be—but they’re now saying it could overtake 1997’s super El Niño, potentially setting records in some areas of the Pacific. The two satellite images of 1997’s El Niño compared to this year’s are eerily similar, meaning we should see parallels between the two.
2. It will probably alleviate California’s drought.
El Niño is set to bring copious amounts of precipitation to California and the Southern United States. The Southern U.S. will see a wet winter while California is preparing for storms that will bring floods and mudslides. These clouds have a silver lining, though: mountains will get snow, meaning a possible end to California’s severe drought. That’s good news for agriculture and manufacturing in the state, two industries that rely heavily on almost nonexistent water.
3. Raw materials will be cheaper to export from Australia.
El Niño tends to cause drier winters in Australia, and a lower chance of cyclones. There’s a 75% chance of fewer cyclones in Australia this winter, meaning that mining in the region will get easier. Iron, ore, and coal will be easier to produce, which is good news for importers of those materials. This should keep prices low and shipping lanes open.
4. But droughts elsewhere might cause shortages of certain raw materials.
During the 1997 El Niño, droughts in Indonesia and Argentina caused mining activity to halt, raising prices of copper, zinc, and nickel. The same shortages could occur this time around, as mines and factories that run on hydroelectric power are shut down due to droughts.
5. Off-shore production of certain minerals will increase, boosting supplies of tin, nickel ore, and bauxite.
Because of the absence of winter storms in Southeast Asia, offshore mining will become easier. A shorter monsoon season in Indonesia, the Philippines, and Malaysia will help miners procure more materials, used heavily in the electronics industry. Copper, however, is set to slow in availability as Papua New Guinea’s extreme droughts have already closed mines.
6. El Niño will add to the pool of warm water already killing fish in the Pacific.
Fishing industries are set to struggle this winter as warm water from “the blob” meets warm water pushed up by El Niño, delivering nutrient-poor waters to the area, starving marine life and suffocating fish like cod, salmon, and other popular species.
7. Burning rainforests in Indonesia are wreaking havoc to Southeast Asian economies and air quality, impacting numerous industries.
Indonesia’s extreme drought has led to severe fires that are a monster to tackle, as the fires are burning on fields of peat that can smoulder for months. The fires are causing high levels of haze in Singapore and other countries, where pollution levels are almost unprecedented. The haze is affecting the health of millions of people and threatening to close businesses. Indonesia’s industries will also be halted by the fires, which are burning through natural resources at terrifying speeds.
8. Typhoons can disrupt air and ship travel in Southeast Asia.
The number of typhoons seen in the Pacific will increase due to warm waters staying around longer than usual. It sounds contradictory, as certain parts of Southeast Asia are experiencing crippling drought. But the typhoons will threaten Taiwan, China, and Japan, leaving countries like Indonesia in need of precipitation. This could be a record-setting year for typhoons, meaning heavy disruptions of air and sea freight.
9. Food prices will likely skyrocket.
Growers of grains and staple foods—including the U.S.—have seen disruptions in planting already. Rice shortages in the U.S. have spiked prices, and analysts are predicting a rise in prices in Asia, too. Droughts in Southeast Asia and India, too, have caused crop output to fall. According to The Street, during the 1997 El Niño there were significant increases in the prices of sugar, rice, palm oil, and coffee.
10. The Filipino economy is set to slow down in coming months due to climate changes.
The fast-paced economy of the Philippines will be affected by both droughts and flooding from typhoons. Crop success is important to the Philippines’ economic health, and poor performance affects wages and consumer spending. Disastrous typhoons can also knock out industries and transportation from the country.
By Janie Ryan - September 13, 2018