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Journal Article

Resilience of international trade to typhoon-related supply disruptions


Kuhla,  Kilian
Potsdam Institute for Climate Impact Research;


Willner,  Sven
Potsdam Institute for Climate Impact Research;


Otto,  Christian
Potsdam Institute for Climate Impact Research;


Levermann,  Anders
Potsdam Institute for Climate Impact Research;

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Kuhla, K., Willner, S., Otto, C., Levermann, A. (2023): Resilience of international trade to typhoon-related supply disruptions. - Journal of Economic Dynamics and Control, 151, 104663.

Cite as: https://publications.pik-potsdam.de/pubman/item/item_28514
Shipping accidents and environmental disasters pose a challenge to the reliability of maritime supply chains. Since international trade intensifies without a significant diversification of the supply routes the risk of transportation perturbations caused by extreme events like tropical cyclones may increase conceivably. In this study we model the regional and global economic repercussions of typhoon-induced short-term transport disruptions of West Pacific trading routes. Using a numerical agent-based shock model with myopic local optimization, we compute the response of more than 7,000 regional economic sectors with more than 1.8 million trade and supply relations. We compute that transportation perturbations, due to West Pacific typhoons between 2000–2020, may cause local oversupply and scarcity situations as well as the associated regional price changes. In our model economic agents respond to these price signals and temporary supply bottlenecks by rescheduling and increasing their demand. As a consequence from our numerical analysis, we find annual median export volume to increase in all trade blocs due to a decrease of export prices, but substantial regional differences emerge. Further we show that resilience of export to typhoon-induced perturbations increase in China, ASEAN, East Asia, and Europe within the first 16 years of this century. We trace this back to a rise of the inter-connectivity of these trade blocs to their foreign trade partners.