Japan quake: Infrastructure damage will delay recovery
- 17 March 2011
- From the section Business
The extensive damage to Japan's infrastructure in the north and east of the country are expected to delay its economic growth.
The Bank of Japan had been projecting that Japan's stalled economy would pick up pace again in the next few months.
However, the damage to roads, rail lines, ports and power plants is inevitably affecting economic activity.
Along with plunging millions of families into darkness at home, the effects of the earthquake and tsunami last week are being felt on Japan's infrastructure.
"The timing for infrastructure to come back to previous conditions before the earthquake will be several months," said Nezu Risaburo of the Fujitsu Research Institute in Tokyo.
"At the moment, the priority is to rescue people, recover human bodies. Then get rid of rubble, and then real work of reconstruction will begin," he added.
The reconstruction is bound to be extensive given the scope of the damage.
Electricity is now in short supply as Tokyo Electric struggles to offset a drop in power capacity.
Two million households have been left without power.
Millions more, including parts of the capital, are being hit by rolling blackouts and reduced train services.
"Three of their nuclear power stations have been written off, those will never work again," said Kilbinder Dosanjh of the Economist Intelligence Unit.
"The nuclear industry represents about 30% of electricity output and about 10% of that was these power stations.
"So in effect, 3% of the power supply has been taken offline permanently," said Mr Dosanjh.
And it is not just nuclear power plants that have been affected.
Oil and gas plants have also been shut down while safety and security checks are carried out.
Adding to the problem is the issue of distribution which makes the impact much wider than the area hit by the earthquake and tsunami.
The government has said that there will be power shortages until at least the end of April.
Road and air
However, not all the damage will have huge effects across the country.
The impact on roads is quite localised, covering about 4% of Japan's geographical area.
For some companies, that allows them to operate in other parts of the country with few delays.
"Because of disruptions to infrastructure, [delivery company] UPS is suspending all services from northern and eastern Japan," said a UPS spokesperson.
"However, services to west Japan continue with minimum impact."
Damage to air freight should also be minimal for the time being.
The airport in Sendai has suffered extensive damage, but other major airports have not been directly affected by the natural disaster.
Stephen Badger, operations director at TNT Asia-Pacific said there had been some delays to deliveries, but the company was now operating at about 90-95% capacity.
At least six Japanese seaports have seen major damage.
The biggest port in the north-east, Sendai, has been destroyed and will not be operational for months.
The impact of this on the global supply chain and international trade is considerable.
Factories have been closed because of delays in the shipments of parts.
"Many companies are struggling with the disruptions in roads, railways as well as power supplies being cut. All those are coming together to create a difficult situation for manufacturing companies," said Nezu Risaburo of the Fujitsu Research Institute.
The closure of the ports is estimated to be costing Japan $3.4bn (£2.1bn) in lost sea-borne trade each day, according to the Reuters news agency.
Analysts agree that the damage to infrastructure will inevitably hit economic output for the next three to six months.
And depending on how long the uncertainty continues around power shortages and supply chain disruptions, it could have a longer lasting impact.
"The worse the dip is in the second quarter, the worse the impact will be on overall gross domestic product this year," said Kilbinder Dosanjh of the Economist Intelligence Unit.