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Opinion: a warning of dark water ahead

Cyclone season is looming and the risk is higher than this time last year

 

In the October edition of ATN, the Forward Vision column foreshadowed the alert industry insurer NTI echoed yesterday about being aware and planning for a summer or wet season marked presently by La Niña climatic conditions. This is what was written.

 

It is pretty tempting to relate the exploits, accomplishments and weaknesses of Lieutenant General the Lord Robert Stephenson Smyth Baden-Powel, who had a veritable alphabet of honours to his name, along with the founding of the Scout Movement and helping form the Girl Guides.

Tempting but pointless, given the name of this column.

Rather, a bit more ‘forward’ thinking was his caution to said scouts and guides: Be Prepared.

It would seem a commonplace in such a dynamic industry as transport and logistics, one so at the mercy of outside factors – expecting the unexpected is part of the enterprise.

Often they come without warning – a failed truck part, customers shifting destinations at short notice, a serious accident on a major route, a computer systems failure somewhere in the supply chain.

Some, such as issues with individual trucks or accident disruption, lend themselves to IT fixes.

Routes can be reprogrammed and onboard computers can identify the problem part and, in more modern trucks, signal a failure is impending and advise of the appropriate action.

But some issues are yet to gain the IT treatment and, though rerouting is often relatively easy, flooding is one.

 

Read NTI’s warning on preparations for the severe weather season, here

https://www.fullyloaded.com.au/industry-news/2012/nti-encourages-preparations-for-severe-weather-season

 

On the nation’s coasts, with their concentration of businesses and assets, the industry has long experience of the outsized cost of the worst of such events.

Remember when $250 million was an enormous amount in national terms? Category 3 Cyclone Winifred cost that – the first to be ‘valued’ in the hundreds of millions and only the third to be costed at all – in 1986.

And, before that, you would have to look to Cyclone Amy in 1971 for an event in North Queensland quite as destructive.

Now, think Cyclone Veronica last year in WA at thankfully much fewer lives but $1.63 billion in damage.

It is worth noting that the total cost of damage in the 1980s was less than $400 million, in the 1990s $1.71 billion, in the 2000s $1.75 billion and, in the decade just passed, $12.6 billion.

In the 2010s, the one that hurt transport and logistics nationally the most, with roads washed away and depots and distribution centres inundated, was 2011’s Category 5 Cyclone Yasi, which was costed at $3.56 billion.

Why be particularly exercised about this now? After all, ‘cyclone season’ has the name because they are always expected from December to April inclusive.

It is because the Bureau of Meteorology and others note the Pacific Ocean’s Southern Oscillation has entered a La Niña phase, meaning more rain generally to eastern Australia and northern WA can expect something similar, along with strong winds.

La Niña was in effect when both Cyclone Amy and Cyclone Yasi rolled down the Queensland coast and the year before Cyclone Winifred.

It was also present for Cyclones Larry and Monica in 2006 which cost $480 million in 2006.

Worth keeping in mind also that La Niñas can stay in place for up to four years.

What those costing are aimed at covering is insured damage and reconstruction. The impacts on business, such as the loss of freight or extra fuel on alternate routes, outside that are not recorded, nor the extra cost of agricultural produce.

In 2011, Yasi saw the Consumer Price Index (CPI) rise 3.6 per cent in the June quarter, driven by fruit, up nearly 27 per cent, itself driven by bananas, up 138 per cent.

It takes little imagination to understand the fall in pallets of bananas making their way down the Bruce Highway, nor the knock-on effects of this and related shortages and disruption.

Cyclones are something of a lottery. Cyclone Debbie, in 2017, another La Niña year, evoked memories of Yasi. It was bad, but not that bad.

Will the next six months see a Yasi or a Debbie? We don’t know. But industry players most at risk should be prepared regardless.

 

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