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More complications for Japan’s shippers

U.S. multinationals were shifting some critical cargoes from ocean to air carriage a few days ago, but that strategy may become complicated due to a shortage of fuel
By Patrick Burnson, Executive Editor
March 18, 2011

Japan’s supply chain continues to be disrupted by the ongoing consequences of last week’s earthquake and tsumami.

Maersk Line and other global vessel operators are avoiding some Japanese ports to mitigate the risk of contamination from damaged nuclear reactors.  U.S. multinationals were shifting some critical cargoes from ocean to air carriage a few days ago, but that strategy may become complicated due to a shortage of fuel.

“We use a combination of both air and ocean to transport parts from Japan,” said Larry Wilson, a spokesman for Boeing’s supplier management division. “We have not made any changes in shipping, and are continuing to monitor the situation.”

Brandon Fried, executive director of the Air Forwarders Association, told LM that air carriers are flying into Japan fully fueled, but must stop at Honolulu or Anchorage before arriving at the U.S. mainland.

“That, of course, displaces the cargo payload substantially,” he said.

Japan produces 3-4 percent of the global jet fuel supply, some of which is exported to Asia. Some of this refinery capacity has been lost due to damages caused by the earthquake. This supply restriction could lead to higher jet fuel prices. Meanwhile, The International Air Transport Association (IATA) has mobilized its resources to support the aviation industry in several critical areas including procurement of fuel.

“Some key fuel infrastructure facilities in Japan have been damaged,” said IATA spokesmen. “Most Japanese airports have fuel supplies for the next 10 days. IATA is coordinating actions among airlines to maximize existing fuel supplies, including voluntary tankering of jet fuel.”

IATA is also briefing airlines and officials on industry agreed rationing regimes should supply shortages arise.

“It is too early to assess the long-term impact of the Japanese tragedy on the global air transport industry,” said Giovanni Bisignani, IATA’s Director General and CEO. “However, understanding the structure of the Japanese air transport industry does give insight on the potential short-term impact of a major slowdown in Japanese air travel.”

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About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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