“The flapping of a single butterfly’s wing today produces a tiny change in the state of the atmosphere. Over a period of time, what the atmosphere actually does diverges from what it would have done. So, in a month’s time, a tornado that would have devastated the Indonesian coast doesn’t happen. Or maybe one that wasn’t going to happen, does.” This was in 1989 the statement of Ian Stewart which started the chaos theory.

Although the chaos theory was of major interest in meteorology, today we can extend its reach to logistics and world economy. According to the theory a tiny butterfly can have caused Katrina - one of the biggest hurricanes in U.S. history ? and disrupted oil and gas production in the Gulf of Mexico, to a quarter of the US total domestic oil and gas production. Although Top oil exporter Saudi Arabia said that it was ready to boost its oil output to 11 million barrels per day (bpd) to fill any supply shortages caused by Hurricane Katrina, the market reacted on this disaster with increasing oil prices again, and let the prices reach an all time high level.

In the past period the impact of increasing oil prices was already noticeable in f.e. the European continent. Major freight forwarder Frans Maas published it?s half year figures, and stated that the increasing gasoline prices did have a negative impact on the results of the freight forwarding division. And this was before the Katrina. The increasing oil prices will have direct impact of the prices of gasoline, kerosene and petrol. Therefore it is only a matter of time that the huge increases will have it?s impact on prices for transportation.

Although the price increases in a lot of cases can be passed on towards the final customer, the effect of the increasing oil price will have a world wide impact on the complete supply chain. In most cases negative, but on the other hand positive as well. The damages should be repaired, goods should be transported to the area and that will have a positve impact on certain economies.

And for those entrepreneurs who will not survive this new disappointment after the recession, they can always blame the tiny butterfly who caused this all.

The Glossary of Terms in Logistics & Shipping is the most comprehensive paper-based dictionary and therefore the standard for defining terms used in the area of Logistics and Shipping. Use this powerful tool to expand your professional vocabulary and ensure that everyone on your team is speaking the same language. www.theKnowledgeTransfer.com

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