Economic impact of blasts likely to be felt 'for months'

TIANJIN (China) • With a swathe of one of the world's busiest ports in ruins, more than a billion US dollars in losses, and some major multinational firms still unable to access their premises, the economic impact of the Tianjin explosions could reverberate for months.

More than 150 firms in the Fortune 500 - the US magazine's listing of the world's biggest firms - have operations in the city, and its port is one of the 10 busiest globally. The city has a population of 15 million people, almost twice that of London.

"Economic activity in Tianjin has yet to return to normal several days after the devastating explosions there," said Capital Economics, a research firm, in a note to clients.

"While most of the port has remained in operation, damage to warehousing and factory facilities has been severe," it added, warning that "disruption is likely to spread along supply chains".

Some of the world's biggest companies have had their operations in the area affected, including Japan's Toyota, the No. 2 global carmaker. Production at its plant in the area will remain closed, at least until Sunday, due to safety concerns, it said yesterday. More than 50 out of 12,000 employees at the factory were injured.

Pharmaceutical giant GlaxoSmithKline also has a plant in the area around the blast site, and a spokesman told AFP that it had been unable to access it to assess the damage.

European aircraft manufacturer Airbus has a giant assembly plant in Tianjin, its only such facility in Asia, and crucial to one of its most important markets. Its staff were safe, it said, but it has offered to move employees to downtown Tianjin, away from the port area, and was analysing "the logistics situation".

Soft drinks giant Coca-Cola and Japanese carmaker Honda both told AFP that they were evaluating the impact of the blasts.

In a statement, the American Chamber of Commerce in China said it anticipates that Tianjin authorities would "rapidly and transparently complete their assessments and investigations, rebuild the Tianjin port and brand, and restore trust in the city".

According to the American Association of Port Authorities' 2013 world ports rankings, Tianjin ranked third globally for cargo volume on 477 million tonnes, and 10th for container traffic, with nearly 13 million twenty-foot equivalent units.

Tianjin Port itself says that operations have returned to normal "except for those at the site or surrounding areas" - which could cover a significant section of the facilities.

Shares in Tianjin Port Development Holdings tumbled more than 13 per cent in Hong Kong on Monday - their biggest loss since 2009 - and were down 2.9 per cent to HK$1.36 yesterday.

Analysts say the long-term effect on Tianjin will depend on how long port operations are disrupted.

"The port is responsible for the area covering Beijing and the surrounding area, so it's very important," said Mr Tse Leung Yip, an associate professor at the International Centre for Maritime Studies at Hong Kong's Polytechnic University. "Ships could berth nearby, but it's not very convenient, especially because Beijing really relies on Tianjin's port."


A version of this article appeared in the print edition of The Straits Times on August 20, 2015, with the headline 'Economic impact of blasts likely to be felt 'for months''. Print Edition | Subscribe