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Japan Shipping Report Q4 2010
Business Monitor International, Sep 2010, Pages: 98
In August the authors commented that Japan was changing its port investment strategy in a bid to increase its market share in the Asian freight market. The country's port sector lags behind its peers in terms of throughput, and it is hoped that by building up specific ports rather than sharing investment around all facilities the country will develop into an international shipping hub. The Japanese government is set to funnel investment into Hanshin Port (consisting of the ports of Osaka and Kobe) and Keihan Port (the ports of Tokyo, Kawasaki and Yokohama).
To establish which ports will receive preferential funding the Land, Infrastructure, Transport and Tourism Ministry ranked the ports out of 1,000 based on how they would use state funding to develop. Hanshin and Keihan ports scored the highest at 769 and 729 points respectively, while the Ise Bay (Nagoya and Yokkaichi ports) and Hokubu-Kyushu (Hakata and Kitakyushu ports), which also applied for the project, were awarded just 553 and 277 points respectively.
The authors believe that the new investment strategy is a shrewd plan. Like most governments worldwide Japan is strapped for cash, but still needs to expand and upgrade its port sector. Japan asserts that by channelling money into specific ports rather than sharing it around the country will be able to build up its role in the Asian maritime market, with the country's Land, Infrastructure, Transport and Tourism minister Seiki Maehara stating 'We will restore Japan's status as a seafaring nation.'
The macro environment facing Japan's ports and shipping industry remains challenging as the country enters the fourth quarter of 2010. After over a year in office the new administration of the Democratic Party of Japan (DPJ) has failed to make significant headway to reform the Japanese political and economic system, and is immersed in internal leadership struggles. The stagnant economy continued to be a major source of concern. The authors continued to see a poor investment outlook, muted consumer spending, and a downturn in exports as Chinese and US demand was expected to falter. After falling by 5.8% in the recession year of 2009, they estimate that Japanese GDP will grow by 1.9% in 2010, but will dip down below 1% in 2011. The authors see what is happening as a rebound rather than a recovery.
At the Port of Yokohama (POY) the authors are estimating 5.7% growth in total tonnage this year to 122.093mn tonnes, representing a partial recovery after the very steep slump in 2009, when tonnage fell by 18.5%. However, growth will ease back again as the economy cools once more in 2011. At the Port of Tokyo (POT) this year the authors see total tonnage rising by 7.0% to 91.19mn tonnes, a slightly stronger but still only partial recovery from 2009's drop of 10.6%. The medium-term outlook at POT is for average annual tonnage growth of 4.1%, a little faster than in Yokohama.
Boxes handled at POT will rise by 5.2% this year to 3.94mn 20-foot equivalent units (TEUs), winning back just over half the volume lost in 2009, when business dropped by 9.4%. At POY containers handled this year will grow by 8.9% to 3.045mn TEUs, following a 19.6% contraction in 2009.
In real terms, Japan's foreign trade (imports plus exports) slumped by 21% during the global recession in 2009. The authors are predicting an 8.1% recovery this year, followed by lower growth of 4.8% in 2011 as the authors enter potential global 'double dip' territory. There is evidence of a rebalancing of Japan's trade patterns in the future, with imports outpacing exports, reflecting a number of factors including somewhat higher Japanese export production costs, an ageing population and an expected dip in demand from China and the US.
Japan Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's shipping industry.
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