The Japan Disaster: What Happens Now?

Japan’s March 11 earthquake and tsunami badly damaged a nuclear power plant, wreaked havoc on supply chains, and seriously disrupted consumer spending. Parts of Japan are expected to suffer electricity shortages into the summer, further limiting economic activity. Many are left wondering— how long will it take for trade to and from Japan to regain stability?

News sources say rising oil prices and radiation fears pose major threats to trade activity in Japan. In fact, Japan’s Ministry of Land, Infrastructure, Transport and Tourism is set to start radiation checks on ships and containers leaving three main international ports in and near Tokyo for foreign ports by the end of April, according to an article by PIERS’ sister company, The Journal of Commerce (JOC). Many in the industry see these precautionary measures as positive steps toward repairing the interruption in trade. Therefore, accessing current global market intelligence is more important than ever to make sense of these developments.

In a recent webcast held by PIERS and JOC, experts discussed the impact of the Japanese earthquakes, tsunami and nuclear troubles on global supply chains and revealed this type of disaster holds opportunities as well as impediments. Panelists included Mario Moreno, JOC/PIERS economist; Jim Rice, deputy director for the Center for Transportation and Logistics at MIT; and Bruce Arntzen, MIT senior research director.

Moreno emphasized just how important Japan is to U.S. trade—Japan ranked as our fourth largest trading partner in 2010. In a recent JOC article citing PIERS data, Moreno predicted a one percent decrease in imports from Japan for the full year, facing the reality that plant damage and electrical shortages have disrupted production of automotive parts—the top category of containerized imports from Japan. Rice and Arntzen further put the disaster into perspective by explaining how this disaster is different from other recent events such as the Haiti earthquake or the Gulf oil spill, mainly because Japan is both a major supplier region and a major consumer region.

So what happens now? Companies should stick to their business continuity plans overall, say Rice and Arntzen. Now is the time to gauge how your suppliers have been impacted and find out their dependency on Japan. While demand may fall off in some areas, there may be ample opportunities for growth if a material void can be filled.

If your supply chain has been disrupted and you would like assistance reestablishing it, or if you see an opportunity for growth, PIERS has the tools to help you. Contact us at (800) 952-3839 or register for a free demo to learn more about our solutions.

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