Contagion effect of natural disasters on international cargo flow by industries

This study examines whether natural disasters lead to spatial contagion when they strike a major trading country. Using the 2011 Japan earthquake as an example, the results show that spatial contagion is observed for China, Thailand, and Singapore to Taiwan linkages during the four-month post-disaster period, but not the U.S. to Taiwan linkage. We find the signs change (i.e., from positive to negative) in transnational trade linkage correlations in industrial cargo volumes after natural disasters, which may cause industrial cargo demand to transfer from the disaster country to another one. In addition, the spatial contagion accumulated for months on linkages may gradually disperse over a short-term period. We also analyze the relationship between the distance from disaster-affected countries and duration of disaster-affected months, and it is found that spatial contagion effect is more significant on neighboring countries for importing cargo volumes. The results of the spatial contagion effect offer a valuable reference for marine carriers to make adjustments in scheduling and fleet requirements in response to short-term fluctuations in industrial cargo demand when an unexpected disaster strikes a country.