Japan Disaster to Affect Global Supply Chain

In the aftermath of last week’s massive earthquake and tsunami that rocked Japan and sent shockwaves around the world, questions linger regarding the impact on the global economy and supply chain.

All major ports in Japan were closed last Friday after the 9.0 magnitude earthquake. And with many Japanese ports damaged, warehouse and inventory issues could have a profound effect on the U.S. economy, says Rob Martinez, president/CEO of Shipware Systems Corp.

“The infrastructure is undoubtedly damaged, so there will likely be a disruption to manufacturing and production,” he says.

As airports from Japan to Hawaii shut down, freight cargo looms as another potential obstacle for U.S. companies. FedEx issued a release on March 11, suspending all pickup and deliveries in East Japan.

Companies that rely on technology products, such as 3M and Apple, will be affected most by problems or delays in production, says George Mollo, president of consultancy GJM Associates.

“Tech companies like Toshiba and Sony could impact consumer prices in almost every tech product (TVs, phones, batteries, etc.), as they have issues with production as part of the aftermath of this event depending on how badly they were affected,” Mollo says. “Supply chain movement could also be impacted from smaller companies who may not have been as prepared for the devastation.”

From a direct response perspective, the impact could affect all manufacturing conducted in Japan, says Steve Edelstein, CEO of brand management/marketing consultancy The Logical Step. “We all should be aware of the current and future impact of this horrible disaster.”

As for what it means to U.S. merchants, most products sold through multichannel direct response are created and manufactured in Asia, he says. “This could have an effect on not only the raw cost of developing product, but the import expense that comes with bringing product into the U.S. from that part of the world.”

Not only would this potentially pose a financial effect on the product sold – and the profitability of these products, Edelstein says it could impede the amount of time necessary to expedite a purchase order, and subsequently the time of delivery to the U.S.

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