Japanese Ports Sustain Major Damage

Japanese ports handling as much as 7 percent of the country's industrial output sustained major damage from last week's earthquake, disrupting global supply chains and causing billions of dollars in losses, industry officials said.

Japan has begun assessing the damage to port infrastructure, vital to receiving aid, commodities and goods for rebuilding areas devastated by the 8.9 magnitude quake and tsunami that are likely to have killed more than 10,000 people.

The box shipping industry was seen as the most strongly affected by the disaster as the destroyed ports handled containerised cargo for Hitachi Ltd., Daikin Industries, and dozens of other companies.

"The short-term impact on economic activity could be greater than after the Kobe earthquake," said Jiyun Konomi, Tokyo-based analyst with Nomura Securities, referring to the 1995 disaster which killed 6,000 people.

"Following the Kobe earthquake ... activity did not return to pre-earthquake levels within three months for freight transportation."

Tokyo and all ports south of Japan's capital were operating normally after briefly shutting down operations following Friday's disaster, while the rest of the country's ports were being assessed for damage, a shipowner and port official said.

"Ports south of Tokyo are all operational, ports north of Tokyo are still under evaluation," said a shipowner based in Tokyo.

The closure of the ports was expected to cost Japan more than $3.4 billion in lost seaborne trade each day, according to shipping trade publication Lloyd's List Intelligence. Maritime trade in the world's No. 3 economy totalled $1.5 trillion last year.

WORST HITThe northeast coast ports of Hachinohe, Sendai, Ishinomaki and Onahama were so severely damaged by Friday's disaster that they were not expected to return to operation for months, if not years.

The ports were medium-sized facilities that handle mostly container freight, which includes everything from cars and steel to sporting goods and furniture.

At Hachinohe, the port also supplied fuel to the local fishing fleet and to U.S. military installations in Japan and South Korea.

"These ports will need a lot of time until they can be fully restored," said Tetsuya Hasegawa, operation manager at Heisei Shipping Agencies in Tokyo, told Reuters.

Japan's ninth-largest container port, Kashima, and the smaller port of Hitachinaka sustained milder damage and both could be back in operation within weeks, he said.

The tsunami also destroyed and grounded dozens of vessels, including three of Kawasaki Kisen Kaisha's panamax ships and another chartered by Mitsui O.S.K Lines.

The disaster was expected to delay oil shipments and cause major port congestion.

"Our channels indicate that crude currently en route to Japan will likely be discharged in India or elsewhere in Asia, with the refined products carried on to Japan once ports re-open," said Michael Webber, analyst at Wells Fargo Securities.

One of Japan's largest crude oil and LNG ports, Chiba, has resumed some operations with at least one of 10 terminals remaining shut, industry sources said.

A fire broke out at Cosmo Oil's 220,000 barrels per day Chiba refinery after the earthquake, forcing the company to shutdown the facility and the area around it.

A damage assessment was being conducted for the facilities and results were expected on Wednesday, a Japanese refinery official said.

The port of Chiba handled around 31.4 million tonnes of crude (248 million barrels) and 20.4 million cubic metres of LNG last year, according to Lloyd's List Intelligence.

Grains shipments, however, were not yet affected following the quake.

"Of Japan's some dozen major ports where bulk carriers or tankers can dock, only two are damaged," said Nobuyuki Chino, president of Unipac Grain.

"Imports of grain to Japan therefore are not affected."