Posted on: Saturday, January 1, 2005
Disaster delays U.S. supply lines
By Alex Veiga
Associated Press
LOS ANGELES — U.S. businesses dependent on manufacturing and raw materials from southern Asia say that so far, there have been few major disruptions in their supply chain from the tsunami-devastated region.
Some firms, however, haven't tried yet to assess any possible damage or supply problems — they're still trying to determine whether employees and their families are safe.
"Let's see who is alive before we worry" about shipments, said Frank Spadaro, president of Spadaro International, a Jamaica, N.Y.-based custom freight forwarder.
Companies also are waiting to see what the possible long-term impact of disease might be on the work forces in South and Southeast Asia and whether the economies of battered nations such as Thailand, Sri Lanka, Indonesia and India can continue to function as they deal with the disaster.
"The major risk that is still out there is the disease fallout and any kind of disruption that causes," said Jim Duffy, an analyst who tracks Nike Inc., Reebok Inc. and other major manufacturers and retailers of sports apparel for San Francisco-based Thomas Weasel Partners.
The effect of the disaster on national economies is "still a wild card," he said.
Commodities trading since the disaster has reflected few serious worries over the delivery of rubber, palm oil and other raw materials the regions produce.
Importers of Indonesian coffee beans and Sri Lankan tea leaves could turn elsewhere to meet any supply shortages, said Scott Meyers, a senior analyst with Pioneer Futures in New York.
"I don't think people are going to start panicking over tea," Meyers said. "China has enough."
The region's manufacturing base was not devastated because many factories are on higher ground farther inland. Major transportation hubs such as airports and ports also have been largely unaffected.
Stephen Lamar, senior vice president of the Arlington, Va.-based American Apparel and Footwear Association, said the trade group has not received any reports of major disruptions.
"People have really been concerned primarily on the humanitarian side of this, trying to figure out if people are alive and locate employees," he said.
San Francisco-based clothing maker Levi Strauss & Co., which subcontracts manufacturing to firms in Indonesia, India and Sri Lanka, said the tsunami's impact on its operations had been minimal.
"There was no impact to the contractors that we work with in those three countries," company spokesman Jeff Beckman said.
However, the firm will have to adjust to shipping delays of three to seven days for orders already scheduled from India and Sri Lanka, he said.
"It's obviously an evolving situation," Beckman said. "What we were most anxious to hear is that there were no injuries to any of our staff or any of our contractors."
The timing of the tsunami — the day after Christmas — may have helped ease the impact on businesses, particularly the apparel industry, which schedules most shipments to accommodate big sales before the holiday.
"A lot of the big manufacturing deadlines that had to be met were met," said Marie Connell, spokeswoman for Irvine, Calif.-based BAX Global Inc., a logistics and freight forwarding firm that employs 3,800 people in 54 offices across 15 countries.
"There may be some minor delays with schedules, but we're not seeing anything significant at this point," she said.
Other companies were trying to determine what they could do to help in recovery efforts.
At apparel maker Liz Claiborne, spokeswoman Jane Randel said in an e-mail that none of the companies facilities or contractors had been affected.
"We are currently working with organizations on the ground to identify areas where we can provide aid," she said.
