Volcanic Ash In Europe Halts Airfreight In Asia
Korean Air cargo planes sit idle on the tarmac at the Incheon International Airport in Incheon, west of Seoul, South Korea, on Monday. Every day, on average, 10,000 tons of goods are airfreighted between Asia and Europe. But none of that has moved for the past week after Iceland's volcanic eruption. Lee Jin-man/AP hide caption
Korean Air cargo planes sit idle on the tarmac at the Incheon International Airport in Incheon, west of Seoul, South Korea, on Monday. Every day, on average, 10,000 tons of goods are airfreighted between Asia and Europe. But none of that has moved for the past week after Iceland's volcanic eruption.
Lee Jin-man/APAs Europe's skies begin to open up, stricken businesses are starting to tally the cost of the volcanic ash plume. The airspace closures have snarled global supply chains, with knock-on effects all the way down the line, including in Asia.
Every day, on average, 10,000 tons of goods are airfreighted between Asia and Europe. But none of that has moved for the past week, and huge stockpiles are clogging up freight forwarding centers and warehouses.
For some exporters, such as Simon Aliband in Shanghai, the volcanic ash plume has paralyzed business-as-usual.
"It's had quite a significant impact," says Aliband, the regional director of Otto International. Otto International is the world's biggest long-distance retailer, selling clothing online and to catalog companies.
At the moment, Aliband says, the company has 292,000 garments stuck in airfreight warehouses in China, waiting to be flown to Europe.
Otto International is a "just in time" business; it produces and ships goods to order, rather than having large stocks. So the freeze on flights has had a particularly dramatic effect: If end customers don't receive the goods they've ordered in time, they may well cancel.
"We can imagine that our customers in Europe are losing millions per week," Aliband says.
In Asia, the worst-affected companies include cell phone and semiconductor makers. Japanese carmaker Nissan has suspended production at two plants, for lack of parts imported from Ireland. In South Korea, one trade association put the cost of lost exports at more than $100 million.
Michael Song of the European Chinese Enterprise Investment Promotion Association says members of his group fear unplanned production delays could result not only in monetary losses but also in damage to their reputations.
Asian gourmets may also suffer: Hong Kong is running low on its stocks of Belgian chocolates, French cheese and Norwegian salmon.
But it's not just about fast fashion and food. The crisis could end up pushing up prices for consumers, according to Greg Knowler, editor of Cargonews Asia in Hong Kong.
"It will cost shippers -- the factories -- a lot more to send their stuff by air to Europe," Knowler says, adding that those costs traditionally get passed on to consumers.
And some are warning that, even if the volcano does stop spewing ash, the backlog of cargo could take up to a month to clear.