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Thirteen ‘Perfect Storms' That Are Sweeping the World Right Now
Tracy Alloway
12 July 2022, 03:56 GMT+8
An ear of wheat in a field ahead of harvesting in Ailly-sur-Noye, France.
Photographer: Nathan Laine/BloombergHow many times can the ‘perfect storm’ happen?
In recording various episodes of the Odd Lots podcast over the last couple of years, one consistent theme has emerged. Many industries have been hit by a bevy of challenges, leading to shortages, price spikes and other disruptions. On the podcast, the ‘perfect storm’ phrase has been invoked to describe everything from oil, grains, wooden pallets to coffee beans and even the shortage of bathtubs.
To some extent, this makes sense. A once-in-a-century pandemic has roiled the real economy, unsettling supply chains and hitting the labor force in a way that’s been hard to predict. When faced with an exogenous shock like Covid-19, a moniker like ‘perfect storm’ seems to encapsulate both the scale of the disruption, the difficulty of pinpointing its knock-on effects and the challenge of actually offsetting its impact.
In fact, there’s been a surge in mentions of ‘perfect storm’ in news articles more generally, spiking when the pandemic first hit and remaining elevated ever since. And on Wall Street, it’s a cliched incantation used by money managers to describe one of the worst quarters for many asset classes.
Bloomberg
The suggestion here is that many of these “perfect storms” have been impossible for even experts to predict. And yet, many of these disruptions can be boiled down to a single cause.
Extreme weather conditions have driven home the link between climate change and stress on food supply, resulting in perfect storms for everything from avocados to watermelons. Meanwhile, years of underinvestment and uncertainty caused by the bullwhip effect have hit things like builders, air travel and even pets.
Here’s a quick look at some perfect storms that are happening right now, drawn from various news reports:
Biomedical research in Europe: “The ending of this vital supply of primates for biomedical research is part of a perfect storm for the European biomedical sector, which includes a ban on the export of research monkeys by China and a forthcoming restriction by the European Commission on the biomedical use of first generation primates expected at the end of this year.”
Animal rescue shelters: “Carla Lane Animals in Need rescue centre said the ‘perfect storm’ means it can't accommodate any more animals after owners also feel the pinch of the cost of living crisis.”
Online advertising: “Barclays analyst Ross Sandler wrote in a research note Tuesday that the group faces ‘a perfect storm.’ That includes ‘a step-down’ in advertising spending and conversions across the internet, growing competition from TikTok and Apple (ticker: AAPL), and tough year-over-year comparisons.”
South African citrus: “The study shows that the industry has been hit by a perfect storm of increased production, a major rise in farming input costs, and a decline in real export prices, which is likely to remain for the next few years. This is further compounded by the major economic constraints that exist in SA, including ongoing fiscal pressure, persistent load-shedding, high unemployment rates and low levels of consumer and business confidence.”
Australian avocados: “Due to a glut of fruit, avocados – which cost as much as $3.90 each in 2016 – are now selling for as little as $1, making them one of the few deflationary food items amid soaring prices for many other staples, most notably lettuce. Profit margins – if any – have been further eroded by the rising costs of fertiliser, fuel and freight. Avocados Australia chief executive, John Tyas called it a ‘perfect storm’ for growers with some ‘re-evaluating their future.’”
Texas watermelons: “People from all around Texas come to Gholson to get their watermelons from Holder’s Produce stand. However, for the first time ever, there will be no famous watermelons for sale this summer. ‘We’re just as disappointed as everyone else,’ said Larry Holder, owner of Holder’s Produce. ‘It’s just been kind of a perfect storm this year between the weather and my health issues.’”
Gulf coast shrimp: “Aparicio said Palacio’s trawlers land the largest shrimp crop in the entire United States. But he said a number of factors are now putting the industry are risk. ‘This is developing into a perfect storm,’ he said. ‘Shrimp prices are low, fuel (red diesel) costs are the highest we have seen in a while and no labor.’”
Emerging markets: “I think it's almost the perfect storm for EM. And the only real comparison I can draw is from the very beginning of third world debt crises, which is the eighties, the Foreign Sovereign Immunities Act was passed in 1976, the State Immunities Act in England, 1977. And then we saw a huge, huge volume of lending.”
Lettuce in Australia: “While the sudden price spike hit quickly, wholesalers say it will take longer for prices to come down as growers face a 'perfect storm' of bad conditions. Anthony Joseph, a fruit and vegetable wholesaler and exporter, said wet weather in south-east Queensland meant growers lost one crop and struggled to plant the next one as freezing temperatures set in.”
Air travel: “’We’re now going into the Independence Day Holiday weekend and are concerned that our customers’ plans have already been disrupted once again,’ added Ambrosi. ‘The perfect storm is occurring. Demand is back, and pilots are flying record amounts of overtime but we are still seeing management cancelling, leaving our customers stranded and their holiday plans ruined. Unfortunately, this mismanagement continues. And it extends to a complete lack of urgency to resolve our issues at the negotiating table.’”
Home construction in Australia: “’Costs of metal ores, plastics, and timber have been consistently rising for years, but particularly through the pandemic as factories overseas were forced to shut down for extended periods. I don't think a lot of companies are taking the cost increases seriously. It's a perfect storm,' Matthew Mackey, executive director of engineering company Arcadis, said. ‘Smaller businesses don't have the cash flow, they don't have the same safety net. They're going to feel the pain a lot sooner and a lot more harshly.’”
Other contractors: “Contractors are facing a ‘perfect storm’ as they grapple with high transport and materials costs as well as rising wages, and want more mechanisms to manage price risks, says the Italian builder of Snowy 2.0, Webuild. The pumped hydro project in the Snowy Mountains, which involves building a power station some 800 metres underground and was supposed to be finished by 2026, is among the many big infrastructure projects beset by delays and cost blow-outs. Webuild’s Asia-Pacific director, Marco Assorati, said the war in Ukraine had compounded existing disruption of global supply chains, which have suffered from labour shortages and delays initially caused by the COVID-19 pandemic.
Humanity itself: “Humanity is facing a “perfect storm” of crises that is widening inequality between the north and south, the UN secretary general has warned. The divide is not only “morally unacceptable” but dangerous, further threatening peace and security in a conflicted world. The global food, energy and financial crises unleashed by the war in Ukraine have hit countries already reeling from the pandemic and the climate crisis, reversing what had been a growing convergence between developed and developing countries, António Guterres said.” |
