Chennai Floods: Widespread Impact on Supply Chain

Chennai Floods: Widespread Impact on Supply Chain

Widespread flooding, triggered by heavy rains that started in the second week of November, has caused significant disruption in the major Indian city of Chennai, the capital of the south-eastern state of Tamil Nadu. Chennai has been declared a Disaster Zone on December 3 and further heavy rain is forecast over the next 72 hours. Everstream Analytics first reported on the situation on November 13 and has been closely monitoring the developments. Effects from the disruption are already evident, and some alternative routings are available at this time.

The bout of heavy rain that started anew on Monday, Nov 30 has caused approximately 4,000 people along the banks of the Adayar River to be evacuated. Approximately 1,500 people were evacuated on Dec 2 after the road servicing the airport became submerged under 50 centimeters of water.
The death toll from flood related events has risen to 188. Some 400,000 people have been displaced, and estimates suggest that the floods have caused over USD 1 billion in damages.

The Army, the Navy, the Air Force and the National Disaster Response Force have all deployed state- wide to assist local residents. Power supply in Chennai has become particularly erratic. Additionally, many institutions have been forced to close, with the widespread nature of the recent flooding suggesting that many businesses in the area have had to halt or temporarily suspend their operations.

Flooding and related disruptions are expected to continue as rainfall is forecast for the region for the next several days, though it may gradually decrease starting Wednesday, Dec 2.

Impact on Transportation

Latest reports detail an almost paralysation of transportation to/from and within the Tamil Nadu State due to widespread flooding following a period of intense rainfall. Chennai International Airport is reported to remain closed until Dec 6 due to flood disruptions. Social media reports show tarmacs inundated with water. Transport and other local services and infrastructure have also been disrupted.

Many bridges have been closed in the city of Chennai. Flood waters have also forced the closure of multiple sections of the East Coast Road (State Highway 49). Roads leading to the port and airport are also underwater, slowing down the import and export movements to and from the port/airport. Regional rail routes have also been impacted by the inundation, with multiple service cancellations noted by Indian media sources.

Alternative Routing

On Wednesday, Dec 2, an Air India passenger aircraft carried out a test landing at Arakkonam Naval Base (a military airfield near Chennai) and landed safely. Commercial air traffic is expected to begin operating from this airbase on Thursday, Dec 3 as an alternative. Reports also suggest that Bangalore airport (BLR) is fully functional and may be used as an alternative to Chennai Airport (MAA) for shipment and customs clearance.

Impact on Automotive and Technology Companies

Chennai rains have hit Automotive companies particularly hard and have forced a number of OEM and tier supplier plants to shut down more than once in less than a month. A number of major carmakers, including Ashok Leyland, BMW, Daimler India Commercial Vehicles (DICV), Ford and Renault-Nissan, operating in the area have been affected by what has been described as the heaviest rainfall to hit the area in more than a decade. The rain has caused flooding at certain facilities and disrupted the delivery of inbound parts, as well as the movement of vehicles outbound to dealers. Flooded roads and rail tracks have also prevented workers from reaching the factories.

Most plants were closed for the first time on Nov 16 and 17, which for most vehicle manufacturers equates to production of between 1,200 and 1,800 vehicles (and 1,500 for two-wheeler OEMs such as Yamaha and Royal Enfield) according to data from market research firm Frost & Sullivan. Following on, the rainfall in the first week of December forced the second plants to shut down on Dec 2 and 3.

Heavy rainfall has also impacted the operations of Technology companies in the Chennai area. However, Tech companies claim that they have deployed alternative measures to ensure there is limited impact on critical services.

Cognizant which has its largest office in Chennai with 60,000 people across 11 facilities in the city said that some of its employees have stayed back in the office to support critical services while some have travelled to other cities to support operations. IT powerhouse Tata Consultancy Services said that its offices in Chennai remained shut on Dec 2 but it claims that its strong business continuity plans will ensure that there is limited impact on its operations.

The Government has declared holiday on Dec 3 & 4 for all companies around Chennai taking into considering safety issues. Most employees of companies present in the area will most likely not be available and irregular power supplies may make home-office very difficult.

How the Event Unfolded

Below is a summary of how the situation escalated, as reported by Everstream Analytics in the last 3 weeks. The first incident was reported on Nov 13. As “scattered to heavy” rains are expected to continue for the next few days, we highly recommend you to continue monitoring the situation as there is potential for the adverse conditions to further escalate.

November 13, 2015:

Heavy rainfall has been reported in the Chennai area and has delayed and cancelled several train links to/from the region.

November 17, 2015:

Flooding has caused widespread disruption to railway networks in southern regions, including various delays, diversions, and cancellations for numerous trains in the area, extensive damage to property and infrastructure has occurred.

November 21, 2015:

More rain is forecast for Nov 21; at least 120 have died from flood-related incidents, several trains were reported to have been cancelled between Nellore, Tirupati, and Chennai due to water covering the tracks and landslides blocking railways and roads.

November 22, 2015:

The death toll from rains rises to 121; the local economy has been affected, damage to roads and railroads has been causing disruptions in some areas.

November 27, 2015:

Additional rainfall prolongs flood-related disruptions; death toll at least 176, the government intensified efforts to prevent the spread of disease as many areas of the region are inundated with stagnant water.

November 29, 2015:

At least six days of additional rainfall expected in the area; may decrease on Dec 2; on-going flood-related disruptions expected.

December 1, 2015:

4,000 local residents have been evacuated and rail services have been cancelled due to flooding.

December 2, 2015:

Further rainfall and flooding paralyses transportation; Chennai International Airport to remain closed until Dec 6, and regional rail routes have also been impacted.

December 3, 2015:

Chennai has been declared a Disaster Zone and the Army are carrying out evacuations. Transport, other local services and infrastructure have been severely disrupted and some roads have subsided.

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