Trade could suffer from the 'Japan effect'
Radiation from the damaged Japanese nuclear reactors could have far-reaching effects on trade
The impact of the recent earthquake and subsequent tsunami on Japan’s imports and exports potentially has significant implications.
The consultancy Box Trade Intelligence (BTI) makes the fundamental point that any prolonged shutdown of the nation’s fabrication plants due to power shortages could change intra-Asian trade dynamics.
“Clearly automotive and industrial machineries commodities are very important for Japanese exports across the total intra-Asian trade,” says BTI. “A drop in industrial output of these commodities will impact some of Japan’s key export markets and, if production is dampened for some time, there is the risk Japan loses those markets to other countries.
“Meanwhile, with 72% of the total intra-Asian trade’s waste paper produced in Japan, should volumes decline there would be opportunities for other supply markets.”
Overall, Japan accounts for 16% of the region’s total exports and 20% of all imports with only China having a greater influence in the region.
BTI identifies the top seven categories of imports moving through its container ports as: consumer items; electrical machinery, miscellaneous machinery, telecoms equipment, textiles, foodstuffs, furniture and fashion items. Much, it says, will depend on consumer confidence in the aftermath of the crisis as to how trade volumes of these items fare. Equally it points out that a substantial proportion of Japan’s imports are related to its industrial production and that “a reduction in output would impact these commodities".
As to the rebuilding works that will take place, it is BTI’s assessment that it is the country’s bulk trade as opposed to container trades that will feel the benefit of these. It forecasts an increase in building materials import over the medium term.
Meanwhile, at the time of writing, Japan’s Government and shipping community are making strenuous efforts to assure the world’s shipping lines that its ports are safe to call at. Hapag Lloyd and OOCL are two lines who have suspended calls at the ports of Tokyo and Yokohama, the ports closest to the nuclear fall-out zone.
“We re-routed all vessels to Kobe directly after the earthquake,” said Hapag Lloyd spokeswoman Eva Gjersvik. “The safety aspect is too important to take any chances.” Other major lines, however, have continued to call at Tokyo and Yokahama. These include well known names such as Maersk Line, APL and CMA CGM as well as all the major Japanese container lines.
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