• Flooding in southwestern Japan disrupts production and logistics operations

    16 July 2020

    During the first week of July, large parts of southwestern Japan experienced record-breaking levels of rainfall which amounted to as much as three times the usual precipitation for the entire month of July. On July 4, the Japan Meteorological Agency elevated its weather warning to the highest level for the Kumamoto and Kagoshima Prefectures on Kyushu, Japan’s third largest island, which bore the brunt of the flooding impact. After several rivers burst their banks along more than 60 locations, flooding and landslides closed off major highways, cut off electricity supply as well as telecommunications and internet services, and forced a number of manufacturing facilities in the area to temporary halt operations.

    Intelligence received by Resilience360 indicates that companies in the automotive, chemical, steel, and technology sectors reported flood damages and temporary production halts since early last week, mostly on Kyushu Island. Damage and production stoppages have, however, also been reported on Honshu, Japan’s largest island. Affected facilities included multiple plants operated by some of Japan’s largest manufacturers such as Toyota, Mazda, Panasonic, and Renesas Electronics.

    While most business operations resumed after torrential rainfalls began to subside, officials have warned of sudden showers, thunderstorms, and landslides that could cause further disruptions as weather warnings for heavy rain remain in place in parts of the region as of July 14.

    Inclement weather halts factories across Japan’s industrial hub Kyushu

    Figure 1 A selection of impacted locations in Japan. Source: Resilience360

    The island of Kyushu currently accounts for around 10 percent of Japan’s overall economic output, making it the country’s fourth largest regional economy after the three major metropolitan areas of Tokyo, Osaka, and Nagoya. Both the automotive and semiconductor sectors are predominant in the region, with farming, chemicals, and food production representing other important economic sectors. Its northern prefecture Fukuoka, where the majority of production halts took place, drives around 40 per cent of the island’s total production output.

    Manufacturers across Kyushu faced a range of challenges during the recent flooding: damage from flood water, power cuts, as well as flooded roads that made it impossible for employees to get to work safely or move supplies in and out of a plant. While the extent of the damages and disruptions differed, production halts in the region averaged around 48 hours during the height of the flooding from July 4 to July 8.

    Several companies in the region were forced to shut down production after flood waters inflicted varying degrees of damage on their equipment and disrupted production processes. Tokai Carbon Co., Ltd.’s Tanoura facility sustained severe damages when flood waters triggered a fire in its graphitization furnace on July 4, while Denka Company Limited shut down after parts of its facility in Omuta were inundated around July 6. On the same day, Mitsui Chemicals suspended production after its transformer station suffered severe water damages that caused power supply interruptions at its Omuta plant. Operations at Mitsui Chemicals are expected to resume by mid-July, but Tokai Carbon Co., Ltd. announced that its production facilities will stay shut until late August.

    While Nippon Paper Industries Co., Ltd.’s production site in Tamana-gun did not suffer any major material damages, it was unable to continue production after dirty flood waters rendered the usually clean water of the Kuma River unusable for its paper production.

    Although flood water did not damage their facilities, Panasonic and Canon decided to halt operations after flooded or destroyed roads made it impossible for a sufficient number of workers to get to work safely. Others, such as Toyota Motor Corporation, Daihatsu Motor Co., Ltd., Bridgestone Corporation, and Kyushu Steel decided to close down pre-emptively to ensure the safety of their employees during the height of the flooding.

    Figure 2: Non-exhaustive list of plant shutdowns due to flooding in Japan in July 2020; Source: Resilience360

    Flooding and landslides cut off major highways across Kyushu Island

    In addition to these production halts, logistics operations in the region also faced severe disruptions following flooding and landslides that damaged Kyushu’s infrastructure. At least 11 bridges were destroyed and large parts of its road network damaged to various degrees, according to the Japanese infrastructure ministry.

    Between July 5 and July 9, a number of roads were closed for all traffic, including sections of the National Route Three, the Kyushu Expressway, and the Miyazaki Expressway in Kumamoto Prefecture. Other routes such as the Oita Expressway that travels across Kyushu from Tosu in the East to Hiji in the West were still closed on July 7 when authorities announced that repairs may take a while to complete without naming a concrete reopening date.

    Consequently, logistics firms such as Japan’s main postal operator Japan Post as well as door-to-door delivery service company Yamato Transport and logistics company Nippon Express were unable to maintain pickup and delivery services in areas such as Fukuoka, Kumamoto, Oita, and Saga after roads became impassable due to flood waters and structural damages. While all of Japan Post’s services remain suspended in these regions as of July 14, it was not clear whether other logistics operators have been able to resume any operations in the affected areas yet.

    Additional rainfall likely to cause further disruptions in Kyushu, Honshu, and Shikoku

    While the majority of factories resumed operations around July 8 when water levels started to recede, they continue to be at risk of further business disruptions as central and southern Japan are expected to remain exposed to a wetter-than-usual weather pattern throughout July.

    Figure 3: Rainfall forecast for Japan from July 16-30. Source: Riskpulse

    As of July 14, parts of the island remain on high alert for heavy rainfall and authorities continue to stress that conditions could suddenly deteriorate. Latest forecasts suggest that central and southern Japan will remain in a wetter-than-normal pattern throughout much of the rest of July with the islands of Kyushu, Shikoku, and Honshu and their associated prefectures particularly at risk for additional rainfall. A series of storm systems is expected to track from southeast China to Japan during the next two weeks. The two-week forecast totals for central and southern Japan are nearly twice the normal totals for the mid-summer period.

    In light of the forecasts, supply chain managers relying on suppliers or logistics operations in southwestern Japan are advised to keep abreast of the latest developments and to ensure that they understand the risks to their production and transportation networks in the area, for instance, by assessing the preparedness of key suppliers and carriers.

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