How has the volcanic eruption in Iceland affected trade?

The Eyjafjallajokull glacier had been dormant for the past 200 years. Out of the blue, it was reported that the volcano first sent steam and ash into the sky on Wednesday 13 th April 2010. The eruption took place under the Eyjafjallajokull glacier. This glacier is a popular hiking ground in southern Iceland, but today this glacier is becoming more and more famous across the globe as it continues to spew ash. The volcanic eruption is not only affecting the people in Iceland but also those in Africa, South America, Europe etc. In the past few days, the consequences of the eruption have really hit us all; those of us in the tourism industry, trade business etc. It has affected trade in many ways, some of which are:

- Tourism and travel industry: Planes are prevented from flying certain affected routes, due to the fact that when the ash gets into the engine it seizes the engine. Air companies as a result don’t want to risk the loss of passenger lives as well as their planes. Major airlines have lost approximately $200 million per day. Forthcoming booking for resorts have also been affected since many tourists do not want to risk flying. Some airlines & tour operators are footing the bills for those passengers who couldn’t fly on their confirmed dates e.g. resort bills, city tours etc. This too is costing these companies a lot of money. On the other hand, other means of transport such as buses, trains, boats etc. are being used as an alternative mode to flying. Some have even increased their prices to take advantage of this natural disaster.

- International trade: Goods that are usually air lifted could not be exported/imported as scheduled thus creating mega losses to those in the business. A good example is, Kenyan farmers who have to send their flowers by air while they are still in the bud form so that when they reach their destination they have a few days before they bloom. These flower farmers were not able to export their goods. Farmers of perishable goods such as fruits and vegetables also weren’t able to export their goods to Europe and other affected areas. Since they were not able to do so, these farmers lost around Ksh 393 million in just a few days (worth of fruits, vegetables and flowers). Since some countries are able to receive goods, there are only a few goods available, these go on demand. Thus traders are able to earn more money as many want to buy that good.

It is truly amazing how a minor incident in one part of the world can affect the rest of the world in a major way. This shows how the world is connected and how important our environment is to all of us!