WASHINGTON — While it is not a major shipping hub for apparel and textiles, U.S. importers could be facing some residual delays and disruptions following the massive explosion at the port complex in Tianjin, China, last week.
As companies try to assess the damage and impact, IHS Global insight released a report on Monday saying the massive explosion at one of China’s key ports will certainly impact trade flows.
A large chemical explosion rocked the Tianjin port complex last Wednesday, leveling buildings, forcing massive evacuations and claiming the lives of as many as 112 people, according to news reports. Chinese authorities are still assessing the damage as the death toll could rise.
In addition, Chinese officials have apparently created an “exclusion zone” around the port complex due to contamination concerns related to reports that the warehouse contained toxic materials, which could further delay any clean-up efforts.
Tianjin is a major port, accounting for about 3 percent of China’s total merchandise trade by value and 7 percent of China’s coast port tonnage, according to IHS. Brian Jackson, a China economist at IHS, said landlocked Beijing accounts for 8 percent of Chinese merchandise trade by value, “a majority of which would transit by land via Tianjin or Hebei.”
“Thus, any extended closures or delays at Tianjin’s ports may result in weaker trade data for the region and possibly boost neighboring regions that pick up the slack,” Jackson said.
While it is a major port for industrial bulk products, such as iron ore, steel and coal, Tianjin also handles a large amount of containerized consumer products.
Charles W. Clowdis Jr., managing director of global trade and transportation at IHS, said the port is the 10th-largest container port in the world.
“This is a major import-export location,” Clowdis said. “It is the fourth-largest port in the world by tonnage, based on ore, coal and steel. But everyone will be affected by this, simply because millions of containers come through it every year and that means retailers will also ship things like coats, hats and dresses out of there.”
China is the top supplier of apparel and textiles to the U.S., controlling a 48.4 percent share of the U.S. apparel and textile import market by volume, according to the U.S. Commerce Department. For the year ending June 30, apparel and textile imports to the U.S. from China reached $42.5 billion.
Nate Herman, vice president of international trade at the American Apparel & Footwear Association, said: “It’s a terrible situation that we are watching closely. We continue to keep in touch with our members on the potential impacts to their operations. The two main impacts right now will be related to individual companies directly affected if they use the port and/or have containers that were damaged or trapped, and the impact to other ports as cargo is temporarily diverted [to other ports] while they work to restore operations at Tianjin.”
Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, said retailers are still trying to determine the scale of the damage and potential impact.
“They are trying to figure out what terminals might be open and what has been affected,” Gold said. “They are focusing on the situation itself, the cleanup and trying to determine how long it will take for the port to be back up and running.”
Gold said Chinese Customs officials have said cargo movement will be slowed down as a result of the explosions, which completely shut down at least two terminals in Tianjin.
“They think some things will have to be rerouted,” he added.
Gold likened the impact to what happened in the aftermath of Hurricane Sandy, which shut down the Port of New York-New Jersey for several days and forced companies to reroute merchandise to other Eastern seaports.
A spokeswoman for Wal-Mart Stores Inc. said the retailer has “limited shipping from Tianjin.”
“Our only issue currently is traffic congestion with minor delivery delays to local stores,” she said. “We are actively supporting relief and rescue efforts.”