Chengdu Airport and Plants Closed Following Earthquake - Update

May 14, 2008
Information was slowly coming out of China after an earthquake of 7.8 on the Richter Scale struck Wenchaun County in southwest China's Sichuan Province. The Ministry of Communications said on the day following the earthquake that it allocated RMB 10 million ($1.43 million) in emergency funds to restore transportation to quake-hit areas.

Flights to the Chengdu airport in China were being diverted on Monday afternoon immediately after the earthquake. There were no immediate reports of damage to the airport and also no indication of when services would be fully restored.

Toyota Motor Corp. reportedly closed its factory in Chengdu while it inspected the plant for damage.

The road from Dujiangyan, a city northwest of the provincial capital Chengdu, to Wenchuan was blocked by rocks and mud slides, holding up rescue, medical and other disaster relief teams. Conditions in other 11 counties remained unknown as a result of communications outages.
According to the official China news service, many highways in the Tibetan-Qiang Autonomous Prefecture of Aba, Sichuan Province, where the epicenter was, were closed to traffic.

Minister of Communications Li Shenglin urged the restoration of traffic flows in these areas as soon as possible to guarantee rescue efforts.

The region has seen substantial investment recently and has been growing its manufacturing base. Many infrastructure projects were in their beginning stages. Construction was expected to start soon on the Chengdu Railway Container Center. The RMB 2 billion ($286 million) investment was expected to create a terminal with a throughput of over 2 million twenty-foot-equivalent units (TEUs) per year. It would open direct lines to Shanghai, Guangzhou, Shenzhen, Qingdao, Lianyungang and Tianjin ports and shorten transport times from the current five or six days to just 48 hours. Along with the Chengdu International Container Logistics Park, the development was slated to create the largest inland port in Western China when completed.

Linksys, a division of Cisco Systems Inc., had announced on April 24, 2008 that it established a logistics center in Chengdu with ModusLink Corp. The center had begun trial operations five weeks earlier, in mid-March. The center provides logistics services to five Linksys product change centers in Chengdu, Beijing, Guangzhou, Shenzhen and Shanghai. It's goal was to change problem products in five to seven days vs. the previous period of three weeks to one month. Through its trial and start up operation, the facility had improved customer service levels.

Chengdu boasts an industrial development zone that includes major multinationals such as IBM, Nokia, Alcatel, Motorola, SAP and Microsoft as well as local high-tech manufacturer Lenovo. Intel's Chengdu factory is its second after Shanghai and the first large-scale foreign investment in the electronic industry in the interior mainland of China.

From January to November of 2007, Chengdu approved 157 projects using foreign capital investment.

The city of Chengdu recently reported its gross domestic product (GDP) hit RMB 76.2 billion ($10.9 billion), up 15.1% year on year. While agricultural and meat production had increased substantially, the industrial sector showed a 25.8% increase over the prior-year period. Production volume in six key industries make up 77.4% of the increase.

Software and information service businesses increased by 50% in the period. Service industries were up 13%, and income from tourism rose 7.9%.

Foreign direct investment jumped 91.2% to $1.15 billion.

As initial rescue and relief efforts were mounted, the Chinese government was sending thousands of army troops and People's Armed Police to the region with medical supplies. However, the initial group was blocked by a landslide on a mountain road leading to Wehchuan.

With whole villages leveled, infrastructure issues will continue to plague the recovery. As Peter Lim of Supply Chain Asia observed, referring to the dual disasters in Myanmar and China, “Logistics is a major issue in our region already without these natural catastrophes and both the government of Myanmar and China are finding it hard to cope.” He noted that intitially access to Chengdu was restricted to a few points of entry through southern China and Shanghai.

He commented to Outsourced Logistics that, “Any aid or support that your audience can give to the region will be highly appreciated. The World Food Program (WFP) and companies like TNT and DHL have active programs to support the transporting of aid to disaster areas in this region, we only hope that more such logistics companies will come forward to help,” he concluded.

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