It’s going to take a long time before the damage caused by the Aug. 12 explosion at the Port of Tianjin, China, can be fully understood, much less cleaned up, according to a white paper produced by Resilinc, a Silicon Valley-based supply-chain intelligence company.
The Resilinc report says not to believe official media reports that things will return to normal shortly at the port of Tianjin. “People need to be prepared for a scenario – that these things take a long time,” said Bindiya Vakil, founder and CEO of Resilinc. “We really don’t know what’s going to happen.” Vakil said that the use of airfreight as a modal alternative to the ailing port, or going to other ports that are not as convenient, are both viable options, but not necessarily economical for many providers.
“We see companies going to other ports, but it’s going to get crowded. Our data show they are not going to be able to absorb all this excess capacity,” Vakil said. She said some airports might see more air freight, particularly carrying small consumer electronics, electronics components, pharmaceuticals, and bio-tech cargo all which can ship by air and be economically feasible. “It will be a significant shift in the near time,” Vakil added. Additionally, road and rail infrastructure in the area were damaged.
Industrial accidents in China happen with alarming frequency, the Resilinc report said, claiming approximately 70,000 lives each year. Vakil said that when industrial accidents like this occur, the Chinese government has a habit of “shutting down.” Already it has cracked down on other companies with storage facilities, closing them down or asking them to close. Shipments by ocean coming from the coastal area of Tianjin are being monitored closely, with the U.S. Coast Guard considering additional inspections, she said.
Vakil said Toyota had a factory in the explosion zone that relied on the car maker’s Lean manufacturing system, which is based on “just-in-time” inventory, so parts were coming into the plant by the hour at times. Clearly, that’s not going to be the case for awhile, she added. Other large companies that have been impacted include Motorola, Panasonic, Caterpillar, Deere, Volkswagen, Airbus and more.
The worst-case scenario, Vakil said, is that the IT systems and central processing facility at the port could take months to get up and running again. More than two weeks after the blast, trucks were not allowed into the area, as it was still considered an “evacuation zone.” Tianjin is the fourth largest port in the world, by throughput tonnage, and the ninth in container throughput. It’s part of the Binhai New Area district of Tianjin Municipality, the main special economic zone of Northern China. The port’s total cargo throughput in 2014 was 445.78 million tonnes, including 14 million TEUs of containerized cargo and 280 million tonnes of non-containerized cargo.
The death toll from the blast now stands at 158, a number that includes 94 firefighters, 11 police officers and 53 civilians. The missing include 10 more firefighters, said the Voice of America.
On Aug. 27 Chinese authorities detained 12 people in connection with the deadly chemical explosion, according to National Public Radio. Top officials with Ruihai Logistics, the company where the explosions occurred, have been detained and 11 government and port officials are under investigation.
The New China News Service said the investigation is focusing on how Ruihai was able to get approval to handle dangerous chemicals so close to residential properties. Ruihai was closer than the required 1,000 meters to homes; in fact the warehouse was within 500 meters of both an expressway and a 100,000-square-meter apartment complex. The investigation is also trying to determine whether government officials colluded with Ruihai – those officials include the head of the city transportation commission and the president of the company that operates the port. Investigators have already found that a senior Ministry of Transport official illegally helped the company obtain approvals for handling hazardous materials.
Resilinc said the warehouse where the explosion occurred contained calcium carbide, potassium nitrate, ammonium nitrate, sodium cyanide, toluene di-isocyanate and other hazardous chemicals potentially including CNG and butanone. One report said that a sodium cyanide reading in one spot was more than 356 times the allowed amount. Cyanide levels in the waters around the Tianjin port were 277 times the acceptable level, resulting in thousands of dead fish that washed up on the shores of the Haihe River near Tianjin in the days after the blast.
“Once something is caught, regulatory scrutiny increases,” Vakil said. Chinese authorities tend to use rumors and misinformation as a way to keep the truth from getting out she added. “Take everything you hear from the Chinese government with a grain of salt. Hope for the best but prepare for the worst is what we are telling our customers.”