Kobe Quake Stalls Transport, Trade

Shipping into some ports is hampered, but demand for scrap to rebuild the infrastructure is increased.

The earthquake that severely damaged parts of Kobe, Japan, in January has create some logistical problems for scrap metal recyclers looking to move material into the country. On one hand, the quake destroyed a large portion of the region’s infrastructure, but at the same time, the catastrophe may create opportunities for ferrous scrap exporters as the region begins the process of rebuilding.

The earthquake resulted in significant damage to the Port of Kobe. In addition to being a large container and breakbulk shipping center, it is one in which large vessels have their cargo broken down and placed aboard smaller vessels for further shipment to other port facilities.

According to a number of reports, damage is severe enough that repairs to the port facilities and surrounding areas could take anywhere from six months to several years to complete.

In the short term, damage to the port leaves a number of containers sitting at the dock. While container shortages are not expected to create serious turmoil in the market, delays in getting containers are expected. Another problem is the need for vessels to find other ports in which to stop. The ports of Tokyo and Osaka are both being used for shipments of various materials. While these ports have responded quickly, space considerations could create further delays .

Officilas from a number of shipping lines indicate that while the port of Kobe is mainly inaccessible, other ports are operating as usual, and shifting deliveries to these locations is not posing insurmountable problems.

Frank Butters, a spokesman for K Line America, a container shipping line, says his company has been able to use the port of Osaka for shipments that previously were dedicated to the port of Kobe, although he adds that the K Line terminal is smaller than the Kobe port. Overflow is then shipped to Tokyo.

If there is any problem with moving scrap to other Japanese ports, it will be felt by nonferrous exporters. Data from the U.S. Bureau of Mines shows that aluminum scrap exports to Japan, for the first 11 months of 1994, totalled nearly 92,515 metric tons -- roughly a third of all aluminum scrap exported from the United States. But even with sizable damage in Kobe, as well as uncertainty over container availability, most exporters feel business will remain primarily unchanged.

Shane Grice, a non-ferrous trader with Sims-LMC, Richmond, Calif., notes that while movement on nonferrous scrap into Kobe is impossible, "there is an influx of material into Osaka." As for containers being unavailable, Grice notes some containers have been tied up, although most scrap nonferrous metal was not shipped to that port.

Although ferrous scrap exports to Japan constitute only about six percent of all the ferrous scrap exports for the first ten months of last year, the total is still significant enough that any changes in the markets are closely watched.

The author is senior editor of Recycling Today.