The President's Blog
UPDATE - Japan's Recovery

Sarasota, FL -Thursday, April 21, 2011 - We are at seven weeks and counting from the Tsunami and Fukushima Reactors debacle. It would seem that progress is being made in bringing conditions at Fukushima to a manageable stage. I would also believe that people are still searching the debris field for the thousands of missing people, most of whom were probably washed out to sea along with the immediate reversal surge of sea water.

What is difficult to assess is what effect this will have on specialty chemical production. Many of our suppliers are still uncertain of exactly what their “real” supply position is as neither they nor their raw material suppliers are really willing to define just how acute the situation really is. My feeling is that everyone is vying for time, hoping that they can ride out the short fall in raw material availabilities. Overall demand for much of their products will be reduced as a result of reduced domestic demand even as their export business continues. The general feeling is that things may get back to “normal” sometime in August.

All major Japanese companies will be closing down for Golden Week starting on the 28th of April and ending on the 5th of May at the earliest or the 9th at the latest, depending on the supplier.

In general Esprix’s suppliers appear to be running normally with odd difficulties in securing totes and some back-ups at the piers.

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Japanese Tsunami and Esprix Suppliers

ESPRIX TECHNOLOGIES ANNOUNCEMENT

Sarasota, Florida – March 17, 2011 - As you are well aware, the tsunami that hit northern Japan has caused unbelievable damage and destruction to both person and property. Esprix’s subsidiary in Japan, K. K. Xevex, has canvassed all key suppliers. For the most part, the plants that supply Esprix, are either west of Tokyo or well south near Osaka and Kyoto; one plant is in western Japan.

Dainippon Ink and Chemicals (DIC), Dia-Nitrix, Meisei Chemical Works, Morita Chemical Industries, Nippon Shokubai and Soken Chemical Company, have no damage to their facilities and continue to operate normally. Toyo Gosei Kogyo Company (TGK) had slight damage and will be soon returning to normal operations. The Sanwa Chemical Company plant was severely damaged and is very close to the nuclear power plant. Esprix only purchases one product from this facility, and currently, we have inventories in both the U.S. and Japan.

What we cannot assess at this time: is whether or not there are any raw material issues, what affect the rolling black/brown out will have, and what type of delays there will be in the main ports. Certainly, Yokohama and Tokyo are affected; however, most of our materials ship from Kobe, Nagoya and Osaka. As a result, currently there are no delays. However, as cargo is being diverted from the Tokyo area ports south, we do expect some delays as a result of this increased activity. If there are any changes to the above, we will alert you accordingly.

Based upon this assessment, I would strongly suggest that you review both your immediate and near term requirements and initiate purchase commitments in order to compensate for Japanese port congestion as well as possible production disruptions.

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Following this report is a notice from Panalpina, which further explains the current situation.

Panalpina U.S Trade Intelligence

March 2011

Dear Valued Customer,

Following last week's earthquake/tsunami disaster which left Japan crippled, the nation has begun to assess the damage to their port infrastructures.  Ports south of Tokyo resumed normal operations after briefly shutting down after Friday's earthquake, including the ports of Tokyo, Yokohama, Nagoya, Kobe, Moji, Osaka and Hakat, which are operating normally with congestion.  However, northern ports such as; Hachinohe, Sendai, Ishinomaki, and Onahama were severely damaged and are expected to be out of operation for months.  Kashima and Hitachinaka ports sustained less damage, but will not be opening for weeks.

Chiba, one of Japan's largest crude oil ports, resumed some operations with at least one terminal still closed.  Crude oil that is currently on course to Japan will most likely be rerouted to India or elsewhere in Asia, with the refined products carried on to Japan once ports re-open.

Please refer to the below information for Air and Ocean operations.

Air Operations

  • Narita airport (NRT) - Terminals are congested and unable to store any more cargo. In addition, cargo stored at the terminal cannot be transported out due to fuel and track shortages. Panalpina Japan has started to check with importers to gain their consent to divert their shipments to Kansai (KIX) and/or Nagoya (NGO) airports to avoid delays. Several airlines have declared a temporary embargo for Narita destination cargo.
  • Kansai airport (KIX) – (Import) KIX airport is still operating normally with no problems for the delivery to Osaka or Western parts of Japan. For the deliveries to Tokyo, there is still a shortage of trucks and cargo will not be accepted if the delivery is to Tokyo. (Export) KIX is operating normally and no delays have been reported.

Ocean Operations

  • Tokyo / Yokohama / Shimizu - Experiencing backlog due to delays of vessels.

Overall the biggest problems for daily operations are fuel and truck shortages. Contingency plans are in place should conditions worsen.

At this time, there is no sign of an embargo for ocean freight to/from the Tokyo/Yokohama area. In addition, several destination countries have inquired about pre-screening of radiation on cargo. Please be aware that no carriers at this time have the equipment to pre-screen cargo for radiation before exporting.

Should you have any queries about your shipments, please contact your local Panalpina representative.

Source: reuters.com, JOC