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Supply Chains in Asia Turning to Air Freight After Tianjin Explosion

Aug. 18, 2015
The blast might impact 30,000−60,000 imports of 1 million total car imports for this year.

In light of last week’s blasts at the port of Tianjin, companies are looking to air freight to fill their transportation needs. (See photos from the blasts and the aftermath in MH&L's Tianjin slideshow gallery.)

“Factories in other cities which require parts from Tianjin factories are being affected,” a local source told The Loadstar. “Supply chains are beginning to get disrupted, and we are seeing demand for auto parts shipments, in particular to Japan.” He said that he expected the demand to last for a while, although there was already considerable air freight capacity on major routes, as reported by Alex Lennane and Sam Whelan.

Similarly, one feeder line representative told The Loadstar: “Some of outside depots were badly destroyed by this explosion – especially two big depots named Jinshi and Malun. A lot of carriers who cooperate with them are also suffering badly, such as Maersk, Wan Hai and Evergreen, but the specific loss need time to be confirmed, as mentioned, those areas are still prohibited to entry.”

The loss is estimated at 2,200 units per day according to Mark Fulthorpe, director, IHS Automotive.

Tianjin is one of the biggest automobile shipping ports in China and is widely used to ship vehicles within the country, especially northern parts. The port is also used for exports and imports, accounting for about 40% of China’s imported cars, the largest share of any port in the country, and vehicle imports in China are expected to be affected.

“The blast might impact 30,000-60,000 imports of 1 million total car imports for this year,” said Lin Huaibin, manager, IHS Automotive China light-vehicle sales forecast, adding that it is likely to take a couple of months before the port returns to normal operations.

Credit Suisse says a large number of Chinese insurance companies will be affected, with initial insured losses put at $1 billion to $1.5 billion as reported by the Financial Times. 

The Loadstar reported that John Deere said it was;suspending production in Tianjin indefinitely after some if its staff were injured and buildings damaged in the blast. Renault, which lost 1,500 cars, said its China deliveries this month and next would fall, while Volkswagen admitted 2,700 of its cars were damaged. Hyundai Motor said 4,000 cars were parked near the area and Mitsubishi Motors said it lost 600 vehicles, as reported by the Financial Times.

More on the supply chain effect of the blast on Loadstar.