Inside Logistics

Editorial: March/April 2011

Reeling now, Japan will recover


April 18, 2011
by Michael Power

MM&D MAGAZINE, MARCH/APRIL 2011

By any measure, the March 11 earthquake and tsunami that followed have been heartbreaking calamities. Japan and the world have yet to fully absorb the scale of the devastation of a 8.9-magnitude quake and the following 10-metre high tsunami, capped off by a looming nuclear crisis.

Likewise, the scale of the economic devastation has yet to sink in fully. In terms of manufacturing, the country has seen shutdowns across many key industries, including steel, parts for electronic goods, vehicles and auto parts (just as the auto industry picks up).

The disaster has hit ports and airports along Japan’s northeastern coast. This disrupts not only the transportation of goods to airports and ocean gateways, but also slows the movement of employees and supplies to production plants. It will be a while before Japan’s economy and supply chain are able to recover.

But recovery will come. While reeling at the moment, Japan’s economy rests on firmly entrenched fundamentals. A disaster of this magnitude would easily crush the economy of a less-developed nation. Fortunately for Japan, it’s industrial base, transportation infrastructure and global economic inroads run deep.

Factories and transportation links in Japan’s northeast are important. Yet, the region is far from much of Japan’s industrial heartland, which lies further south and west. Tokyo, Kawasaki and Yokohama are Japan’s most populous and industrialized regions, producing 20 percent of its manufacturing output. The Osaka, Kyoto and Kobe regions are the second-largest economic centre and also removed from the disaster’s ground zero.

Transportation hubs in those regions, including port terminals in Tokyo and Yokohama, have been operating normally.

The death and personal loss are horrifying; on the economic front, the devastation could have been much worse for Japan.