The impact of the Japanese triple whammy – earthquake, tsunami and nuclear crisis – is now starting to reverberate through the global economy. More particularly, it's going to hit global supply chains.
The New York Times reports that some of the world's biggest shipping companies are shunning ports in Tokyo Bay. Ports in China are now imposing strict radiation checks on ships arriving from Japan. And in California last week, the first ship to reach the Port of Long Beach since Japan's earthquake was boarded and scanned for radiation by Coast Guard and federal customs officials before being allowed to dock.
The problem is that many of the world's parts and products are closely interconnected. Take for example this study by the Asian Development Bank Institute which shows that production of the iPhone involves nine companies from China, Korea, Japan, Taipei. Germany and the United States. A disaster in one area will hit everyone.
Japan is a big supplier of key parts used in industries ranging from car manufacturing to consumer electronics and data processing. With the crisis in Japan, things are going to get a lot worse for manufacturers around the world.
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