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BTS, ISM data show a slow return to normal following earthquake and tsunami in Japan

By Jeff Berman, Group News Editor
May 23, 2011

Following the tragic events of the earthquake and tsunami in Japan earlier this year, the immediate and long-term impacts of it are likely to impact the United States, due to damage caused to the freight transportation system in Japan.

This was a chief finding from the Department of Transportation’s Bureau of Transportation Statistics (BTS) in a paper it released entitled “Preliminary Observations of the Tsunami’s Impact on U.S. Trade and Transportation With Japan.”

According to the BTS, the Japanese earthquake and tsunami could result in the U.S. facing potential ramifications in the form of lower levels of air and maritime imports for automobiles and parts and high-end electronics and devices like semiconductors, and specialty chemicals.

“The disruption of Japan’s transportation and distribution networks has already affected U.S. industrial supply chains, particularly automobile manufacturing and assembly plants,” said the BTS.

The BTS paper added that damaged equipment, loss of power and disrupted intermodal infrastructure in Japan reduced shipping capacity and interfered with international trade links. And it also pointed out how the earthquake and tsunami disrupted Japan’s transportation and distribution networks and subsequently U.S.-based industrial supply chains for automotive manufacturers GM, Toyota, Nissan, and Honda in the form of supply disruptions and shortages.

And U.S. companies that engage in maritime trade with Japan may be forced to deal with ongoing disruptions until repairs are made, with BTS explaining that American firms may seek to obtain these products from alternate producers both internationally and domestically while waiting for factories, supply chains, and transport networks in Japan to recover. It added that U.S. air and maritime exports to Japan may increase, such as grains and agricultural products, steel and 2010 building products, and materials related to energy production to help aid in recovery, and rebuilding of the affected region. 

This BTS paper follows the Institute of Supply Management’s (ISM) Semiannual Economic Forecast, which asked purchasing and supply managers in manufacturing what percentage of commodity or input price increases they will be able to pass along in the form of higher prices to their customers.

The tally coming back from managers, according to the ISM, was 34 percent of those prices, with two industries—primary metals and plastics & rubber—stating they would be able to pass along 75 percent of increases received, with 11 other industries saying they would be able to pass along 11-to-20 percent of their costs, and five industries noting they would be able to recover less than 20 percent.

“The manufacturing sector is much more dependent on Japan than non-manufacturing is,” said Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee, in an interview. “With Japan, many of the pass throughs are for Japanese divisions of U.S. companies; this is a relationship that is not as common in the non-manufacturing sector.”

The ISM’s data also noted that 23 percent of surveyed executives said that they anticipated delays in their U.C. operations as a result of supply chain failures, due to the events in Japan. Of this 23 percent, 59.6 said they can maintain normal operating capacity. The remaining 77 percent said they forsee no problem due to supply constraints.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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