New Zealand Earthquake Highlights Significant Impact on South Island Businesses

Kaikoura Earthquake

The earthquake in North Canterbury has been significant and is already highlighting how a major event of this nature can have a significant impact on businesses.

What is of considerable concern to Standby are that many of the supplies to the South Island now come from the North Island.  We have noted over the years how many organisations have moved their major distribution centres to the North Island, assuming they can truck south every day with any interruption of service only ever going to last a few days.  As a consequence of this shift of dependence to the North Island, many of the fresh food suppliers, such as market gardeners have gone out of business, meaning there is very minimal local resource to replace this supply from the North Island. 

The loss of State Highway 1 via Kaikoura and its railway will not be a quick fix.  Already engineers are saying it will be many days before they can even inspect and evaluate due to the potential aftershocks and falling rocks.  Once they can access these areas, they will then have to design ways to address the broken roads and railway line.  Looking at the recent photographs, they may also have to do it one slip at a time, as the steepness of the cliffs and rocky shoreline means they cannot simply go around a slip with their heavy machinery and work on multiple sites at the same time.  It is therefore likely that businesses in the North and South Island will need to think of the loss of this critical transport link in terms of months not weeks. 

Standby noted that one Chief Executive in the South Island stated he has two weeks’ supply and their key supplier has not yet activated their Business Continuity Plan. This would appear to be the wrong decision by the key supplier in the North Island.  According to reports there should still be an alternative route down the West Coast and over the Lewis Pass, but that will definitely add extra time to the trip and the potentially only be smaller trucks can make the journey.  This will require more trucks to move the same volume of goods so activating their plan in two weeks’ time when supplies are running short will likely be too late.  By then all the surplus trucks and transport will be taken by others.  

Those who act now and work with their customers will retain those customers, those who sit on their hands will find it hard to make up for lost time.  The problems with this transport arterial route is not just a South Island problem for businesses, it is also a North Island problem.  Activate your Business Continuity Plans now.