As we pen this commentary, the news of the massive 8.9 magnitude earthquake and subsequent tsunami that has hit northern Japan is permeating global news channels. The quake occurred 80 miles from the coast of Sendai, which is located within Miyagi prefecture, largely an agricultural and industrial region. The depth of the quake was shallow, estimated to be 24 kilometers, which triggered the devastating tsunami which was estimated to be 10 meters in height (33 feet). Tsunami warnings have been extended throughout the Pacific including Hawaii, the west coasts of California and Alaska. The effects of the quake were felt in Tokyo, which is 200 miles south of the epicenter, and broadcast outlets, Twitter, YouTube and other web sites are literally lit-up with first-hand accounts on the ground. Over 30 aftershocks of magnitude 5.0 or greater have already occurred and more are expected.
First and foremost, our thoughts and prayers go out to all of the people and associated families within Japan that have all been impacted by this tragic event. Disturbing news is unfortunately yet to come.
The global supply chain impacts of this disaster are yet to be fully understood, yet we would assume that there will be certain implications that will unfold over the coming days and weeks. Global international relief is being mobilized that includes domestic, military, and non-governmental agencies including the Red Cross.
As we pen our initial commentary, there are numerous reports concerning supply chain impacts:
- Cellular phone networks are literally overwhelmed with traffic, hindering service
- Massive fires are reported in over 80 locations which include petrochemical, refinery and utility plants.
- Air and surface transportation has been disrupted. There are reports that Sensei airport is underwater, and Tokyo’s Narita airport had suspended all flights. U.S. military airbases were allowing airlines to utilize their runways for landing purposes. High speed rail, commuter and subway lines across all northern regions were shutdown due to safety concerns.
- Japan’s governmental agencies currently have special concerns around Nuclear power plants that have been impacted by the quake, with reports that at least one plant has had its cooling system fail.
- There are reports that Sony halted and evacuated 6 factories, Toyota has closed 3 factories, while Nissan has closed 4 factories. Other firms such as Panasonic are still assessing impacts. We located two articles, one from Bloomberg News, the other from the New York Times that provides initial business and supply chain impacts.
Supply Chain Matters has just a few initial thoughts to share as this tragedy continues to unfold. First, there are few global countries more well prepared than Japan that are able to deal with the effects of a massive earthquake. We can take some solice that prior contingency planning, backup systems and building safety code planning will prove valuable in buffering loss of human life as well as economic impacts. The city of Tokyo while certainly severely shaken, has been spared severe damage thus far. The northern region impacted, while certainly populated with industry, is not where the highest concentration of industrial activity lies in Japan.
A final initial thought concerns the blur of global events that have occurred over these past days. Supply chains have had to deal with the ongoing aftereffects of a devastating earthquake in New Zealand, unprecedented social turmoil surrounding the Middle East, a sudden slowdown in economic activity surrounding China, and now this unfolding catastrophe. We often comment on the effects or vulnerabilities to today’s very lean supply chain and our global community is about to be once again tested.
Supply Chain Matters will provide ongoing commentary as global supply chains impacts begin to unfold in the coming days.