Japan may be showing the very real physical and traumatic effects of last week’s earthquake, but the shipping industry will demonstrate the ripple effect of globalisation as the economic impact of damaged port infrastructure on the island takes hold.
With some 1020 ports in Japan, it may not seem significant that Reuters is reporting damage to only six major ports, but a closer look at the trade as well as commodities handled by these ports should point to an even larger impact.
Consider too Japan’s current ranking as an economic superpower. Third only to the US and China – Japan’s ability to trade will impact on the global market and consequently the wheels (or more accurately the propellers) that drive that trade.
To put this in perspective, Lloyds List predicts a $3.4 billion a day loss in seaborne trade each day the ports remain closed in Japan and attributes a total of $1.5 trillion to maritime trade in 2010 for the island.
And so at a time when the global shipping industry debates freight rates in an environment of overcapacity, some economists are predicting an increase in dry bulk rates as Japan attempts to replenish stocks of coal and imports materials required for the rebuild process.
Indeed, there is no doubt that certain companies will already be mobilising for a piece of the very large pie that will most certainly result from the world’s third most economically active nation preparing to rebuild its port infrastructure to ensure that it remains economically connected to its trading partners.