Tianjin explosions' effect on supply chain could last ‘years’

8 September 2015

The impact of the explosions at a chemical warehouse in Tianjin, China on the global supply chain could last years, according to a report.

A study by Resilinc examined the impact of last month’s explosions at a chemical warehouse in Tianjin, China, which killed more than 100 people and damaged more than 17,000 homes, port buildings, warehouses and processing facilities.

The Aftermath of the Tianjin Explosions report outlined the short and longer-term effects of the explosions, and concluded the impact extended far beyond that of a significant logistics disruption.

The report said the explosions caused extensive damage to factories, warehouses and other services in the port of Tianjin, as well as closing operations at the two of the port’s terminals. Transport and utilities infrastructure was also damaged. Following the blasts, the Chinese government conducted nationwide inspections of facilities handling dangerous chemicals and explosives.

The study concluded port operations would only begin to properly resume by around the middle of September, with re-routing potentially causing weeks of delays, while waiting for replacement equipment damaged in the blasts could take up to six months.

Longer-term effects include ongoing impacts on company share prices, new regulations, heavier fines for non-compliance, and stricter insurance rulings.

The report said: “Such unfortunate realities in the immediate aftermath of the Tianjin explosions offer only a small glimpse of the global supply chain impact that can be expected.

“The less apparent and less visible ripple effects will be felt weeks, months and even years to come.”

Resilinc said companies putting the right supply chain risk management (SCRM) strategies into place could mitigate the impacts. Measures recommended included mapping the global dependencies in supply chains, proactively protecting the highest impacting and most vulnerable areas of the supply chain, and securing alternative routes related to production, shipping, sourcing and the related costs to each of these supply chain elements.

“Such decisions to implement proactive SCRM practices and solutions to navigate – versus react to – such events as the Tianjin explosions will have the greatest long-term positive impact on a company’s performance, longevity and prosperity,” the report said.

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