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Global Supply Chain and Impact of the Amazon Rainforest Fire

By Linda Ashok
In Strategic Sourcing
Aug 28th, 2019
0 Comments
3162 Views

Global Supply Chain and Impact of the Amazon Rainforest Fire

Firstly, global warming and wildfires are never good for worldwide supply chain and procurement. Organizations need to estimate the far-reaching impact of the wildfires on their businesses. In this article, we discuss the gravity of the ongoing Amazon rainforest fire. In addition to that, we also discuss industries that are now ready for the consequences. It seems like nature is paying back disastrously.

Wings of the Wildfire

It is not the sunburn that puts homes and businesses at risk during the summers. It is the wildfires that sneak into our lives, calling upon massive damage. From lightning to an electrical short circuit, a burning cigarette butt, or even something as ordinary as a campfire, just about anything can give wings to a wildfire. And therefore, forest inhabitants got to be careful.

A report from the National Oceanic and Atmospheric Administration (NOAA) states that during the first half of 2019, the U.S. had over 3,603 wildfires per month. In June alone, there were 5,657 fires—the 5th most on record for a single month. It seems like North America has the financial brawn to flip the situation, but the southern American countries are not ready.

As of Aug 27th, 2019, the ongoing Amazon rainforest wildfire has already claimed a lot, and we are unsure of how far this wildfire will take its stride. Economically, Brazil is not financially strong, and on top of that, Bolsanaro refused $20M from the G7. Could he still consider the 2017 wildfire in California for the Amazon rainforests? Let’s see the profile of damage.

Amazon Rainforest Wildfire Impacts Global Supply Chain

The northern California Camp Fire destroyed more than 7,300 properties with massive impact on numerous businesses in the region. The present Amazon rainforest wildfire is even more violent.

The Pharmaceutical Industry

25% of modern pharma come from plants of the Amazon rainforest. It nestles 80,000 species of plants identified potent for drug discovery in Western medicine. Between 1940 and 2010, the industry sourced 48.6% of the anticancer agents such as vinca alkaloids, epipodophyllotoxin lignans, taxane diterpenoids, and camptothecin quinolone alkaloid from the rainforest. This massive inferno is going to impact the pharmaceutical supply chain.

The Timber Industry

The supply chain of the timber industry relies on the tropical hardwood of Amazon the Amazon rainforest. The wood serves the making of ship hulls to Asian chopsticks to rolls of paper. The industry sources the mahogany, purpleheart, and teak for furniture and vocal instruments. With this large scale annihilation of the rainforest, the supply chain is going to suffer for long notwithstanding the fauna and the indigenous tribes.

The Oil Industry

The U.S. imports crude oil from the region, releasing copious amounts of greenhouse gases. Study shows American refineries processed 230,293 barrels of Amazon crude oil a day in 2015. California, despite its green reputation, refines an average of 170,978 barrels, or 7.2m gallons, of Amazon crude a day, with the Chevron facility in El Segundo accounting for 24% of the U.S. total alone. Now the supply chain here will suffer the aftermath.

The Meat Industry

Cattle ranching contributes 340 million tons of carbon every year, i.e., 3.4% of current global emissions. Along with this, cattle pastures are always high-risk zones making the forest vulnerable to wildfire. With this ongoing Amazon rainforest wildfire, the meat industry gets a reality check. As a result, sourcing of beef from the cattle ranched in these rainforests will experience suspension for long.

The Cosmetic Industry

The tropical rainforest covers much of northwestern Brazil and sprinkles over Peru, Colombia, and other South American countries. Most noteworthy is that the cosmetic industry is heavily reliant on the rainforest for providing the world’s best beauty ingredients. Consequently,  below are some of the critical ingredients sourced by the cosmetic supply chain that will now suffer considerably.

Clay

First of all, the cosmetic industry sources clay from the region’s decomposed plant material. The potent clay is rich in trace minerals such as calcium, aluminum, magnesium, silica, phosphorous, copper, and zinc.

Açaí

Another important ingredient is Açaí, which is rich in vitamin B, electrolytes, and trace minerals. It is known for reducing cell-inflammation and improving physical energy. The beauty industry primarily sources it for anti-aging or renewing treatment.

Andiroba

The cosmetic industry sources it for rich in fatty acids ideal for manufacturing moisturizers. Its analgesic, anti-inflammatory, and antibacterial properties relieve tense, aching muscles.

Cavalinha

The English calls it the Horsetail good for soothing inflammation and boosting skin elasticity. Also, good for treating acne, cellulite, hair, and nails, the cosmetic supply chain sources it for a high price in the market.

Lemongrass

Lemongrass oil is rather known as a sedative for its calming effect on the mind and body. Administered for anxiety relief, the essential oil is analgesic and antiseptic, with good skin astringent properties.

Murumuru

Murumuru is a Brazilian palm tree that produces seeds to make emollient butter full of vitamins. Production of lip balm and hair conditioners is dependent on this tree. But now a considerable fraction is lost.

Conclusion

Wildfires at any time disrupt an entire supply chain. The loss is hard to recover. The five industries that we discussed in this article will experience a tremendous disruption in their supply chain. With time, there will be impositions of new laws and regulations governing sourcing materials from the rainforest. Although supply chain specialists from around the world are working to amend the situation, the lesson it leaves for business is about responsible sourcing. Through responsible sourcing, companies could avoid vendors that are sourcing from these high-risk regions.

Furthermore, strategic sourcing technology can always help businesses determine the best vendors compliant with environmental and legal regulations. It is never too late because the future seems to be more vulnerable to such wildfires. Let us not be responsible for it. Finally, over-dependence on rainforest sourcing, if not immediate, but will cost a business both financial and reputation loss.

 

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About "" Has 56 Posts

Linda Ashok is a content, communications, & branding professional with 12 years of work experience in BPO, Banking, Payroll, Robo-Advisory, Internal Communications, and Social Media. She is interested in how businesses perform at the intersection of Big Data, AI, IoT, and other emerging technologies.

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