Natural Disasters and Business: The Impact of the Icelandic Volcano of April 2010 on European Logistics and Distribution – A case study of Malta

During one week in April 2010, distribution of packages and cargoes by air were grounded throughout Europe, as the eruption of a major series of volcanoes sent toxic and metallic particles into the air in the form of gas clouds. Most airlines operating in the affected area, anxious to comply with safety rulings, suspended all flights during this time. The major ‘express’ logistics and distribution companies – such as TNT, FedEx and DHL – were profoundly affected. Most packages for TNT, for example, are sent to a distribution hub in Leige, in Belgium. This hub became log-jammed and undelivered packages accumulated. In a study of the impact on the island of Malta (conducted by an MSM MBA student from intake 26 as research for an MBA thesis), it was discovered that an entrepreneurial approach – by using sea-based deliveries also incorporating landbased trucking services – enabled TNT to steal a march on its competitors. Although taking two or three days to make deliveries that might normally take one day, TNT were able to keep their packages moving, when their competitors’ packages were holed-up in Leige. Otherwise packages were hand-carried on commercial airlines – anything to solve customer problems. Customers won from the competition were so impressed by the responsiveness and flexibility of TNT in Malta that they were subsequently retained. The lessons here for global logistics in handling natural disasters are many. Crisis management planning needs to be firmly in place, especially as volcanoes can erupt at any time – and many other natural disasters can negatively impact logistics and distribution effectiveness. Alternative methods and approaches to ensure deliveries need to be explored. Otherwise the loyalty of customers can be compromised, as even though they may appreciate a positive customer service attitude and low prices, results are everything in this business.