At 5:46 am on 17 January 1995, a 7.3 Mw earthquake in the southern part of Japan’s Hyogo Prefecture killed 6,437 people (Government of Japan, 2011). Direct damage was estimated at US$100 billion (Chang, 2000a; Nagamatsu, 2007) and damage to Kobe’s port accounted for 10% of that total, affecting all 35 container shipping berths; 177 out of 186 non-container shipping berths; and all gantry cranes, warehouses, bridges and utility lines (Chang, 2000a).
When the port shut down, devastating impacts rippled outward—the port had provided 39 percent of Kobe’s income and employed 17 percent of its population (City Government of Kobe, 2010). Disruption of port services cost US$300 million per month—the equivalent of income loss for 40,000 employees in port-related businesses, manufacturing, wholesale and retail trade (Chang, 2000a). Businesses absorbed higher transportation costs, and only from March to December 1995, these secondary costs amounted to approximately US$4 billion.
Booming business never returned to the port despite efforts to improve competitiveness - efforts included reducing harbour dues, wharfage and land rental fees, and operating around the clock. It was like “pouring water into a bamboo basket” said Rinnosuke Kondoh, former deputy secretary general of the Tokyo-based International Association of Ports and Harbours (Containerisation International, 2003). Even without the earthquake, the port would have most likely gradually lost market share; but there is no doubt that its competitiveness was fatally weakened by the quake.