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The Oil Drum | Fukushima Open Thread - Tue 3/29

Seems the spreading radioactivity is severely disrupting supply chains.
Looming Loss of Billions - Automobile industry is Setting up Contingency Plans (German)

A summary of the most important points:
The global automotive industry is bracing for the impacts of supply disruptions. Could lead to losses of billions. Shipping companies are avoiding the ports of Tokyo and Yokohama which handle 40% of Japan's container freight. Hongkong's OOCL announced on Friday they will reroute their ships to Osaka. If radiation is detected on one of their ships, they will face month of delays due to inspections. A Japanese ship showed radiation in the Chinese port of Xiamen although it had kept at least 120km away from Fukushima at all times.

The infarction for supply chains is just a few days or weeks ahead. The first test will be a ship with 2,500 containers landing in Long Beach, CA on Friday. It's the first that set sails from Japan after the quake. It's arrival is a sign that the automobile factories in North America and Europe only have two weeks before the supply pipeline (from before the quake) is empty.

Japan is a premier source for car (consumer) electronics - 35% of the global market, chips are $7.3b annually. Top management in car companies is fearful since the lack of highly specialized parts from Japan could stop production. 20,000 individual parts are needed for a compact car alone. E.g. Hitachi Automotive produces 60% of the global supply of a part that measures air flow in motors. The factory north of Tokyo is now closed.

Merck produces the glossy pigment Xirallic 40km away from Fukushima. Production has been halted. Consequences: Chrysler has limited its retailers to ten colors. Ford eliminated some black and red tones.

Mayhem is brewing in the auto parts pipeline from Japan to the rest of the world. 40 suppliers of the three largest Japanese car companies have halted production due to quake damage, rolling blackouts, or radiation danger. Japan produces 13% of the world's cars. Toyota has closed 11 factories, Honda has 110 suppliers in the quake area, ten of them can't say when they will restart production.

According to iSuppli, if the affected suppliers can't restart production within six weeks then a third of production could be cut in the worst case. "It would be very difficult for every big manufacturer to escape this disaster." says Michael Robinet of IHS. IHS has marked the calender at the beginning of the third week in April. It could be the start of serious production delays.



Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Tue Mar 29th, 2011 at 12:02:03 PM EST
That this is a very powerful argument against globalization, pales beside the human cost.

You can't be me, I'm taken
by Sven Triloqvist on Tue Mar 29th, 2011 at 12:14:27 PM EST
[ Parent ]
No, that's an argument against excessive efficiency at the cost of redundancy, except who gives a fuck if we can't get our new toys for a few weeks or months?
by Colman (colman at eurotrib.com) on Tue Mar 29th, 2011 at 12:37:05 PM EST
[ Parent ]
Is it not the same thing?

You can't be me, I'm taken
by Sven Triloqvist on Tue Mar 29th, 2011 at 12:55:07 PM EST
[ Parent ]
Just In Time logistics = Globalization !!!???

So, in what may be my last act of "advising", I'll advise you to cut the jargon. -- My old PhD advisor, to me, 26/2/11
by Carrie (migeru at eurotrib dot com) on Tue Mar 29th, 2011 at 01:02:52 PM EST
[ Parent ]
Globalization is a PR-term that tends to shift meaning, but one of the meanings at least contains the system of global just in time logistics, in particular in multinational corporations.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue Mar 29th, 2011 at 03:51:43 PM EST
[ Parent ]
In Happy-Happy Neo-Classical EconoLand, where the Invisible Hand of the Market spreads Magic Pixie-Fairy Dust where 'ere it is needed, the Supply of Goods (and transportation infrastructures) always meets the Demand for Goods (and transportation infrastructures.)

And we know this because the Soviet Union collapsed.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Mar 29th, 2011 at 03:40:15 PM EST
[ Parent ]
Best comment evar.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Mar 29th, 2011 at 03:56:06 PM EST
[ Parent ]
globalisation as we know it is dependent on cheapish oil, so much of this nonsense of it being 'efficient' to make necessary parts the other side of the planet will go away as the real price emerges from consequences, just as we see with nukes at fukushima.
there's no-one more blind that he who doesn't want -or care- to see.
we were seduced by it's tacky charm, didn't eschew it enough for moral reasons, now we get to find out how morality is ultimately the most pragmatic of virtues.

and for such baubles do we toss away our heritage...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Mar 29th, 2011 at 01:04:30 PM EST
[ Parent ]
Duplicate deleted.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 29th, 2011 at 01:23:41 PM EST
[ Parent ]
globalisation as we know it is dependent on cheapish oil

I must disagree with this. Globalization is dependent not on cheapish oil, but on the popular support for free trade, and governments removing import quotas, tarifss or outright trade bans. We had (and currently have) globalization when trade was free but oil dear (or irrelevant, as ships ran on wind or coal). We did not have globalization when trade was unfree but oil cheap. Globalization is to a much greater degree about politics and policy, than it is about energy costs.

It is about energy and technology too, but not the way most people might think. The invention of the container is a much greater force for globalization than $150 oil will ever be against it. This is because globalization is about free trade on the high seas, and oil prices or not, it's still dead cheap to transport containers on these huge ships. Local markets served by trucks might make some products very dear indeed, while transoceanic trade is still abundant.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Mar 29th, 2011 at 04:09:17 PM EST
[ Parent ]
Starvid:
We had (and currently have) globalization when trade was free but oil dear (or irrelevant, as ships ran on wind or coal).

yes, that's why i said 'as we know it'.

until the spice trade, globalisation was rational. even spices served to relieve culinary boredom and preserve foods longer.

today's globalisation is different, 2000 mile lettuces are irrational, though there are still some who'd disagree, pointing to text and numbers to back them up.

it's the old problem of trusting the rational intellect too much. here be dragons.

the japanese are wizards at added value, more cunning craftsmen are impossible to find, but if you base your global wealth capture on other countries' raw materials and your IP, sooner or later that tower's going to fall, as resources are finite, and technology jumps borders. it's amazing, ~and a testament to their amazing creativity~ that their economy is 3rd on earth, considering their size and physical resource deficiency.

globalisation used to be about meeting real needs intelligently, entirely rational. my valley grows better spuds, yours grows better rutabagas, we trade, win-win.

pretty much all down hill from there...

;)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Mar 30th, 2011 at 02:31:57 PM EST
[ Parent ]
The first test will be a ship with 2,500 containers landing in Long Beach, CA on Friday. It's the first that set sails from Japan after the quake.

That ship already arrived last Friday and went through a Coast Guard inspection with no problems. Not counting the fishing boats and small coastal craft that got caught up in the tsunami, the only ship that I know with any problems is the MOL Presence (see my earlier comment). The shipping line may have to buy the load on that one - a pretty strong incentive to stay away from Tokyo/Yokohama.

OOCL and Hapag-Lloyd have rerouted to Osaka. Otherwise it's business as usual for Maersk, Hamburg-Süd and a host of others (K-Line, MSC, China Shipping, APL, Yang Ming) serving Tokyo. For a summary, see also this NYT report from a few days ago.

For the the Tokyo traffic rerouted to Osaka, I imagine most of the containers will be trucked north since JR Freight is not set up to handle a lot of ISO boxes in that they have very few overhead cranes and instead use forklifts at their terminals (the vast majority of containers that move on JR are the railroad's own non-ISO 12' boxes).

Trucking this freight north will definitely add time and cost to these moves. My guess is that the shipping companies that move to Osaka will lose this freight to those that stay in Tokyo. The ones that hold out longest will benefit with both higher volumes and higher rates.

by Jace on Tue Mar 29th, 2011 at 04:51:41 PM EST
[ Parent ]
To follow up and to clear up some misreporting due to complexity of the liner business, the only shipping company that is explicitly avoiding Tokyo, Yokohama and until tomorrow, Nagoya is Hapag-Lloyd.

Hapag-Lloyd operates transpacific routes in a pooling arrangement known as the Grand Alliance along with OOCL, NYK and MISC. As a result, those companies have also had impacts on some of their Japan trade. NYK and OOCL continue to serve Tokyo and Yokohama on their other, non-alliance routes.

Hapag-Lloyd's move has been driven in part by ship owner Claus-Peter Offen who has stated that if his ships are 'affected' by radiation, they are not insured. At least one of the Hapag-Lloyd ships serving Japan, the Vancouver Express, is owned directly by Offen.

by Jace on Wed Mar 30th, 2011 at 10:47:35 AM EST
[ Parent ]

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