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Typhoon disrupts Asian supply chains, likely slowing Japan output

Image Credit: Business Insider

Typhoon disrupts Asian supply chains, likely slowing Japan output

While the skies are now clear over much of Japan, Typhoon Jebi has left a major scar on Asia’s supply chains. Jebi struck hardest at Kansai International Airport, Japan’s third largest by traffic volume, following Narita and Haneda airports, which serve metropolitan Tokyo.

With its runways and other facilities flooded, and a connecting bridge damaged after a tanker slammed into it, the main air transport hub in western Japan remains closed. An airport source said that if the damage is serious, it could take about a week for it to reopen.

The closure of the airport is a major hindrance for numerous Japanese companies. Chipmaker Renesas Electronics’ plants in nearby Shiga and Ehime prefectures handle preprocessing and export products to facilities in Malaysia for completion, using Kansai Airport on a near-daily basis.

Renesas has decided to switch to Narita for now. “We have enough inventory, so a manufacturing delay hasn’t happened,” a company official said.

Toshiba Memory decided to switch airports from Kansai to other regions for its shipments. Panasonic, Murata Manufacturing and Rohm are also thinking about exporting electronic components from other airports.

About 3,000 people, including passengers, were left stranded at the airport in the storm’s aftermath and 700 flights were canceled. A high-speed, 110-passenger boat that links the facility with nearby Kobe Airport was making special runs Wednesday morning to evacuate stranded people. Kansai Airport’s operator said buses are also helping with the evacuation, using undamaged lanes on the bridge. It is not clear when the airport will resume operation.

Products worth 5.64 trillion yen ($50.5 billion) were shipped abroad from Kansai Airport in 2017. Of these, 1.29 trillion yen’s worth were electronic parts, including semiconductors. The airport handled 3.94 billion yen of imports.

The damaged bridge is the main connection to the airport for trains and cars. “It will take a considerable amount of time to restore the bridge,” said road operator West Nippon Expressway, also known as Nexco West group.

A spokesperson from chip equipment manufacturer Screen Holdings said the company uses Kansai Airport to export its products, but would seek alternative routes if necessary. Precision equipment maker Disco said some shipments from its factory in Hiroshima may be delayed.

Logistics company Hankyu Hanshin Express said it will ship automotive electronics, electronic components and gaming machines from Tokyo’s Narita Airport or Nagoya’s Chubu Centrair International Airport, instead of Kansai Airport.

Toshihiro Nagahama, an economist at Dai-ichi Life Research Institute, predicts damage from the typhoon will slow Japan’s industrial production, affecting the economy as a whole. Nagahama said that output has already been affected by heavy rain in July, and that the typhoon would further depress production in the July to September quarter. “The impact on the economy would typically show up around November,” he said.

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