Supply Chains are indeed the ties that bind us all in a global economy

Posted on March 12, 2011

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Last June 23rd I can vividly recall the feelings I had when while sitting at my desk, our region was struck by what turned out to be a 5.0 magnitude earthquake.  With the epicenter a mere 25 kilometers from my office, the rolling build-up and corresponding shaking, was tantamount to a jet airplane flying through the building.

Needless to say, the above came into a proper context as I witnessed live on television the events surrounding the Japanese earthquake at 2:30 AM Thursday morning.  Watching the Tsunami tide roll inland in what I can only refer to as thunderous waves of destruction, I could not help but think how the connecting instancy of the 7/24 media machine creates a tangible means by which we can all experience to varying degrees events that are unfolding on the other side of the world.  Events I might add, that like the Tsunami following the initial quake, will be felt worldwide in many different areas including the far reaching impact relating to the inevitable supply chain interruptions that will ultimately ripple down to the everyday consumer in the form of product shortages and price increases.

For example, the data referenced in the Hugh’s News Blog provides a powerful reference point in terms of the significant role that Japan plays as a key cog in the global electronics marketplace.   So it is no surprise that any interruption of the supply chain in that part of the world will have a major impact on the everyday products we take for granted including the very technology upon which we depend as a means of staying connected with the outside world.

However, the fallout from supply chain disruptions in Japan may actually result in short term gains for other industry sectors such as US automakers.  In a March 11th article “Economic impact of Japan’s earthquake and tsunami,” WKTV’s Caroline Gable reported that Dr. Zhaodan Huang, who is an Assistant Professor of Economics at Utica College, believes that manufacturers like Ford and General Motors will actually benefit from the catastrophe.  Dr. Huang, who earned his Ph.D. in Economics from West Virginia University, would appear to be basing his observations on the fact that should auto shipments out of Japan be delayed as a result of the disaster, consumers would look to purchase cars from other manufacturers.  This is presumably where Ford and GM would step in to fill the void.

Once again these challenges (and opportunities) while worth noting, pale in comparison to the devastation caused by the earthquake and resulting Tsunami.  Even with multiple aftershocks, some of which were  reportedly as powerful as 7.7 on the Richter Scale, there are many who believe that the greatest dangers may materialize in the days ahead including a possible meltdown at the Tokaimura nuclear fuel-processing plant in north-east Japan.

Based on one BBC report, the country is facing an unprecedented nuclear emergency as a result of a major uranium leak that has rocketed radiation levels to 15,000 times their normal readings at the plant.  While the International Atomic Energy Agency “IAEA” called the situation serious, it also expressed its belief that the threat does not rank above three on a seven-level scale of nuclear incidents.  How this particular adjunct crisis will evolve is anyone’s guess at this point, but it nonetheless illustrates the intertwined complexities of a situation that for the most part remains unclear.

In the coming days and  weeks we will be reporting on the aftermath of the Japanese disaster, in which we will endeavor to provide you with updates on where supply chain interruptions are likely to occur or occurring, including their impact on the global marketplace.  During this period, we will also be welcoming industry experts to the PI Window on Business to talk about the steps that organization’s can take to address challenges as they arise.

One such individual who will likely join me for a special 30 minute broadcast next week is ADR International’s Bill Michels who was actually on an airplane that was set to take off from Narita Airport near Tokyo when the quake hit.

Besides recounting his first hand on the ground experience with you, Bill will discuss in detail the quake’s likely short-term and long-term impact on shipping.

Be sure to check out this blog for show specifics including day and time for the Michel interview.

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