Tianjin Explosion Creates Logistical Hurdles in Chinese Port City
Port resumes operations after blasts, but some company executives say bottlenecks remain
Deformed containers pile up at the site of an explosion at a warehouse in Tianjin, China on Friday. Authorities and companies near the blast site said operations there were returning to normal. PHOTO: ASSOCIATED PRESS
The explosion in eastern China that rocked one of the world’s busiest ports still poses some logistics problems despite resuming operations, as some executives and analysts report hurdles to getting goods and commodities where they are needed.
Authorities and companies near the blast site in the eastern Chinese city of Tianjin said operations there were returning to normal. Still, some executives said bottlenecks remained for industries from steel production to oil refining.
“The whole area near the Tianjin port has been blocked because of the blast,” said Rahul Goel, head of projects planning at General Nice Group, a commodities trader with operations in Tianjin. “There is no transportation. The seaborne material can still come into port, but it cannot go out.”
The big question now is how long the transport challenges drag on in the aftermath ofWednesday night’s explosion, which killed at least 56 and hospitalized some 700 others.
“There are a lot of steel mills in the area that are unable to get their supply of iron ore,” said Mr. Goel.
Authorities blocked one company’s access to 16,000 tons of iron ore stored near the explosion, while it diverted another 170,000 tons set to arrive in Tianjin on Saturday to the port of Rizhao just south of the city, said one Singapore-based trader at the company. But the trader said the company was confident it could get shipments to customers. In an apparent reference to China’s slowing trade sector, the trader said, “Have you seen the ports in China? They’re huge, and perhaps there is now some use of all this capacity.”
Other companies that depend on the port at Tianjin were more upbeat. Anglo-Australian mining giant BHP Billiton Ltd. said Friday it didn’t anticipate any direct impact on its shipments through the port. It said iron-ore berths at the port were operating, and that customs clearance there had resumed.
Chevron Corp. said it had resumed operations at a lubricant facility located about 5 kilometers from the accident site, which it had suspended following the blast. A Chevron spokesman said the facility sustained minor roof damage. Technology firms with manufacturing operations in Tianjin, including Lenovo Group Ltd., said business had been unaffected.
A spokeswoman at Mediterranean Shipping Co. said the container ship the MSC Fabiola, which had been docked at the port about six miles from the explosion scene and wasn’t damaged, left Tianjin on Friday. Operations had resumed at the container terminal the carrier uses, she said, but customs officials told the carrier they wouldn’t accept routine export and import paperwork until Monday.
About 40% of imported cars sold in China come through Tianjin, said Wang Cun, an analyst at China Automobile Trading Co. But inventories are high—enough to last 2½ months according to official auto data—because China’s auto market is softening. Some car makers affected by the explosions, such as Volkswagen AG, said they would ensure timely deliveries via the southern ports of Shanghai and Guangzhou.
Tianjin’s maritime authority said in an online post Friday that besides oil tankers and ships carrying what it termed hazardous materials, the port was operating normally. Berth operators reached by phone said the flow of goods had resumed. The port operator, Tianjin Port (Group) Co., referred questions to government officials.
The accident came as China prepares for major celebrations in Beijing to mark the 70th anniversary of the end of World War II next month. Security is already running high in the regions around the capital, and nervy officials may further tighten or restrict the flow of goods to avoid a repeat accident, analysts said.
The death toll from the two massive blasts in the Chinese port city of Tianjin has risen to 50, including 12 firefighters, while the cause is still unknown. The WSJ’s Menglin Huang has the latest. Photo: Reuters
“The biggest impact will be on the independent refineries,” said Li Li, an analyst at information-provider ICIS C1 Energy.
Unlike big state-owned oil companies like Sinopec Corp. that can transport imported oil directly from ports to refineries via pipelines, China’s independent refiners rely on trucks to transports oil feedstock, according to Ms. Li. Many of the independent refineries—known as “teapots”—are clustered in the province of Shandong, south of Tianjin.
Representatives at several Shandong refiners couldn’t be reached for comment Friday. Ms. Li said the facilities likely had spare oil inventory for the moment.
Damage assessment in Tianjin was well under way by major Chinese and foreign companies.China Eastern Air Holding Co. said its facilities and a staff dormitory located about a mile from the warehouse blast were seriously damaged. Four helicopters were also damaged.
Logistics companies meanwhile were assessing the blast’s impact. Hong Kong-listed Tianjin Binhai Teda Logistics (Group) Co. said operations at a subsidiary and two associate companies had been affected, but said damaged assets had been insured, according to a securities filing.
In a statement, Maersk Group said it was still trying to assess the extent of damage to its containers at Tianjin, and that it expects “some disruptions and delays” to its services to and from the port. It said access to some affected areas was still being restricted by the authorities.
