Japan crisis threatens supply chain disruption

[Levent BAKIR]

Japan crisis threatens supply chain disruption
14/Mar/2011 by Thomas Cullen.

The crisis caused by the Japanese earthquake and tsunami are probably not over yet. The problems of the affected nuclear power station threaten the country with a shortage of electricity and there remains a continuing possibility of further aftershocks. However, it is important to note that large parts of the country remain comparatively unaffected. The country's principal airports, Narita and Haneda, have reopened.

Sea ports, however, have been badly affected with all ports in the country closed just prior to the tsunami. Reports from the terminal operators such as APM Terminals indicate that major ports such as Yokohama and Osaka have not sustained serious damage, although the landside storage and transport networks may have suffered. There is also speculation that ships have been driven aground on port approaches.

Road and rail disruption is reported to be severe but usually localised.

One of the immediate impacts appears to be on the automotive sector. The export of passenger cars is a major trade out of Japan and this may be heavily reduced. Toyota has announced that it is suspending all production at its plants in Japan. Other manufacturers have also temporarily stopped production. Car parts exports are not fundamental to assembly operations beyond Japan and there is a probability that even in the short-term production elsewhere will fill much of the gap.

Other industries are not quite so robust. Supply chains in the electronics sector are particularly dependent on Japanese production, even if the final assembly takes place in China. There are already reports of key electronic components being in short supply as leading electronic manufacturers such as Sony, Sharp and Panasonic have shut plants.

Japan has a large chemical sector much of which is located on the coast. There is a strong possibility that its facilities will be damaged, with Dow Chemical already reporting one of its facilities flooded.

It is these supply chain effects that may be one of the longer lasting issues for the logistics sector, with global markets in air and sea freight depressed due to lack of volume.

http://www.transportintelligence.com/content/countries-regions/asia-pacific/


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Levent BAKIR
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