The Aftermath of the Strait of Hormuz Doesn't End - Germany's Material Shortage Reflects Japan's Supply Chain Risks

The Aftermath of the Strait of Hormuz Doesn't End - Germany's Material Shortage Reflects Japan's Supply Chain Risks

The Intensifying "Material Shortage" in Germany is Not Just a Foreign Issue for Japan

The latest survey published by Germany's ifo Institute has once again highlighted the concerns facing European manufacturing. In June 2026, the percentage of German companies reporting material shortages rose to 17.2%, up from 15.9% the previous month. While the numbers do not indicate a dramatic surge, the critical point is that "even once maritime routes reopen, it does not immediately lead to the normalization of supply chains." The ifo Institute believes that even if the Strait of Hormuz becomes passable again, the ripple effects of the disruption will linger in international supply chains.

This material shortage is even more acute when viewed by industry. In the chemical industry, 29.5% reported shortages, while in electronic and optical equipment, it rose from 25.5% to 34.2%, and in electrical equipment, it increased to 27.7%. The automotive industry also worsened from 10.0% to 15.7%, whereas the rubber and plastic products sector improved from 23.7% to 11.3%, and there were no shortage reports in the beverage industry. This indicates that not all industries are suffering equally, with those heavily reliant on upstream materials and precision components being more severely affected.

This news is significant for Japanese readers because Germany, like Japan, is a "manufacturing powerhouse." The industrial structures of automotive, machinery, chemicals, and electronics overlap significantly, and any disruption in the flow of materials can similarly delay the production and export of finished products. Moreover, the German economy is not in a robust state, and according to JETRO, Germany is expected to continue experiencing negative growth in 2024, with declines in exports and road vehicle trade. In such a weakened economic phase, intensified material shortages could weigh more heavily on the economy than anticipated.


Supply Chain Issues Are Not Just About "Component Shortages"

When people hear the term material shortage, they might imagine something like the semiconductor shortage. However, the focus this time is not limited to that. More noteworthy is the strong sense of shortage in fields closer to chemicals and energy. The chemical industry supports other industries with raw materials such as resins, solvents, paints, adhesives, and pharmaceutical intermediates. If this sector is clogged, delays and cost increases will ripple across a wide range of areas, including automotive, electronic devices, packaging materials, and daily necessities.

The ifo Institute's research also indicates that material shortages can act as a macroeconomic shock, not just an inconvenience at the operational level. If material shortages unexpectedly intensify, Germany's industrial production could be immediately reduced by 2.4%, and the upward pressure on consumer prices could persist for a long time. The research suggests that consumer prices could still be elevated even two years later, highlighting that this is not a "temporary procurement issue" to be underestimated.

What Japan should learn here is that supply chain disruptions manifest not only as quantity shortages but also as complex costs such as price, delivery time, alternative procurement, insurance premiums, and changes in transportation routes. The crisis is not just when no parts arrive at the factory. Even if the necessary quantities arrive, if they come at higher costs, slower, and more unstable than usual, it is a significant management issue.


Why Japan Should Be Sensitive

The issue of the Strait of Hormuz is serious for Japan because its energy import structure is extremely vulnerable. The Agency for Natural Resources and Energy states that over 90% of Japan's crude oil is dependent on the Middle East, and as of February 2026, Japan has about eight months' worth of oil reserves. While diversification of LNG procurement sources is progressing, Middle East dependency still accounts for about 10%. Furthermore, as of March 1, 2026, the agency reports that power and gas companies hold just under 4 million tons of LNG inventory, equivalent to a year's worth of LNG imports via the Strait of Hormuz.

At first glance, Japan seems protected by its reserves. Indeed, the government's response has been quite swift, with the release of national oil reserves underway. However, it is too early to be complacent. Reserves are a cushion to soften the shock but do not restore the cost structure to normal during peacetime. What truly weighs on Japanese companies is the gradual increase in costs, difficulty in procurement, and unpredictability of delivery times for intermediate goods that support manufacturing, such as naphtha, chemical raw materials, lubricants, resins, and specialty gases. What is happening in Germany should be seen as part of that future scenario.

In particular, Japanese automotive, electronics, and chemical manufacturers may appear to have supply chains that are self-contained domestically, but in reality, they are deeply connected to overseas raw materials, energy, maritime networks, and European customer demand trends. If Germany's automotive and machinery industries are shaken by material shortages, it will gradually impact Japanese suppliers and the revenue plans of Japanese headquarters. Conversely, if Japan's raw material procurement is stalled, it will have a chain reaction on supplies to Europe. Today's manufacturing cannot be considered in isolation by country.


The Question of "Why Hasn't It Returned Even Though the Strait Has Reopened?"

A common question arising from this news is, "Why are shortages still occurring even though the Strait of Hormuz is now passable?" The answer is simple: supply chains do not return to normal the moment they are reopened, like a faucet. Shipping involves many post-crisis processes, such as reallocating detained shipping capacity, resolving port congestion, revising insurance conditions, redesigning routes to avoid dangerous areas, restocking by shippers, and adjusting contracts with alternative procurement sources. Moreover, during the crisis, companies are forced to use unusual routes and procurement sources, so the "emergency world" continues for some time even after the crisis.

In Japan, similar discussions are already spreading on social media. On X, logistics and energy expert accounts are sharing points like "The essence is not whether the strait is open, but whether your supply chain can withstand it," "The decrease in import volume and domestic supply shortages should be considered separately," and "Bottlenecks in upstream materials like naphtha and lubricants are what most strain the field." There are also posts emphasizing the direct impact on Japanese logistics and production due to the Strait of Hormuz situation and the need to redesign supply chains.

These reactions on social media are closer to "rules of thumb" than emotional arguments. For business people who have experienced the COVID-19 pandemic, semiconductor shortages, and soaring container freight rates, supply chain disruptions are no longer unusual. Therefore, they do not view it as "we can manage with current inventory." The concern is what comes after the few weeks that can be managed with inventory, how far cost pass-through is possible, and how delivery delays will affect orders.


Three Ripple Effects Japanese Companies Should Be Wary Of

The impact of Germany's material shortages on Japan can be considered through three main channels.

First, the ripple effect of energy and material prices. The situation in the Strait of Hormuz affects not only crude oil but also petrochemical raw materials and related products. The heightened sense of shortage in the chemical industry is not coincidental, as the instability in raw material procurement spreads as cost pressure across a wide range of manufacturing industries. Japan also has a high dependency on Middle Eastern crude oil, and rising chemical raw material prices can easily rebound as a burden on corporate prices and households.

Second, the downturn in European demand. If material shortages themselves suppress industrial production, German companies are likely to become more cautious in their production and investment plans. Germany is already grappling with economic weakness, with exports and manufacturing slumps being pointed out. For Japanese companies, Germany is not only a sales destination but also an important partner for technology, materials, and equipment collaboration, so the local slowdown will gradually have an effect.

Third, the cost of supply chain reorganization. Companies diversify procurement sources, increase inventory, and disperse logistics routes during each crisis. While this is correct in the long term, it pressures cash flow and profitability in the short term, especially for small and medium-sized enterprises. While trading partners demand stable supply, companies are forced to procure expensive raw materials, and price pass-through is delayed. This dilemma is the most precarious.


From a Japanese Perspective, "Peacetime Design" is More Important Than "Crisis Response"

How should Japan interpret the news from Germany? What I find important is to use it as a material to question whether the design can minimize damage even if a crisis occurs, rather than focusing on "what to do when a crisis hits."

One point is not to let the diversification of procurement sources end as a mere slogan. It is not enough to have a list of alternative sources; a relationship that can be maintained during peacetime, including quality, price, logistics, and contract conditions, is necessary.

The second point is to reassess the meaning of inventory. In recent years, inventory reduction has progressed in the name of efficiency, but in an era where supply shocks become the norm, inventory is not just a cost but also insurance. Of course, it is not about stocking everything, but the perspective on intermediate goods that would be fatal if stopped needs to change.

The third point is not to separate energy security from industrial policy. The issue of the Strait of Hormuz is often consumed as news of diplomacy and security, but in reality, it is also an economic issue directly linked to factory operating rates, price pass-through, consumer prices, and employment. The re-expansion of material shortages in Germany clearly illustrates this point.


The "True Nature of Anxiety" Reflected on SNS

 

What stood out on SNS this time was not mere pessimism but voices trying to specifically identify "what is most dangerous." Many posts focused on the costs of naphtha, lubricants, resins, logistics insurance, alternative routes, and the difficulty of price pass-through, rather than crude oil prices themselves. This indicates that supply chain disruptions are now perceived not as abstract macro issues but as problems affecting business operations and living costs.

On the other hand, there is also optimism that "if there are reserves, it's okay." However, even on SNS, this view was often qualified. There is a growing understanding that reserves are for emergencies and do not solve the persistent high-cost structure, and market participants and practitioners are more concerned about the "normalization costs" after the crisis than the presence or absence of a crisis. This is a very realistic perspective.


The Message Japan Should Receive Now

The re-worsening of material shortages in Germany is not just a distant European statistic. It shows that even a core manufacturing country can reveal its vulnerabilities with just a disruption in part of international logistics, and that the chaos does not end on the "day the strait reopens," but continues to affect prices and production for months to years afterward.

Japan has a high dependency on Middle Eastern energy and a broad manufacturing base. Therefore, this news should not end with "Germany is having a hard time." The question is how well Japanese companies' procurement strategies, inventory policies, price pass-through capabilities, and the government's energy security policies can withstand the next supply shock.

Even if the Strait of Hormuz reopens, supply chains do not automatically return to normal. The 17.2% figure from Germany underscores this obvious but often forgotten reality. And that lesson is particularly relevant for Japan.


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