Chapter 3  Changes in International Environment and Transport


3. 1 International Transport Services Facing New Turning Point


(1) Ocean-going Shipping

(a) North-south Problems Surrounding Oceangoing Shipping
International shipping order has been established mainly by advanced maritime countries under the "Free Shipping Principle," which calls for a minimum intervention by government. In recent years, however, some developing countries have intervened in their shipping activities and granted their vessels preferential treatment as part of the campaigns to develop their commercial fleets. At the same time, these developing countries have been trying to reexamine the free shipping principle and establish a new shipping order at the UNCTAD and other international meetings. In the field of liners, Convention on a code of Conduct for Liner Conference was adopted in 1974 and took effect in October 1983. The developing countries have strongly requested that they be allowed to join in bulk transport operations and that the activities of ships flying flags of convenience be restricted. To counter these moves, Japan and other advanced maritime countries have maintained that it is the most efficient way for shipping activities to be left to the market mechanism and that this is also necessary for the development of trade by developing countries. This is a sort of North-South problem in the field of shipping. Japan has been trying to solve these problems in a reasonable way at the UNCTAD in cooperation with other advanced maritime countries. At the same time, there is the need to carry out various steps to coordinate relations with developing countries to enable their shipping industry to develop on the basis of the sound economy.
(b) Changes in Flow of Maritime Cargoes and Instability of Shipping Routes
A glance at the recent environment surrounding Japan's maritime transportation shows that the content of Japan's export and import items has changed in response to changes in industrial and trade structures, leading to a slack in the quantitative expansion of exports and imports, while structural changes in transportation, including increase in the movements of related cargoes, can be observed as a result of the economic growth of newly industrializing countries (regions) in the Far East and infiltration of Japanese enterprises into overseas markets. Considering this, it may be said that the time has come for Japan's shipping enterprises to move actively into the field of transportation of subsitute energies, including LNG, in order to cope with structural changes in transportation, and simultaneously to study the diversification of their activities, including the establishment of joint ventures and infiltration into the field of transportation of substitute energies, including LNG, in order to cope and penetration of newly industrializing countries (regions) and communist bloc countries into the shipping sector have made transportation order unstable on North American/Pacific, European and other principal routes related to Japan, in recent years. The situation is considered to reflect a gradual drop in the functions fullfiled over the past years by the liner conference in stabilizing transportation order. Hence, Japan's shipping industry, for its part, should do all it can to solidify its structure by saving cost in every operational aspect, to survive fierce competitions, and simultaneously exerts efforts to improve transport services so as to meet the needs of consigners whenever necessary and also wrestles vigorously with international multimodal transport services.
(c) Securing of maritime transport capacity
For Japan, a trading country, the maintenance and expansion of the merchant fleet, which is capable of providing stable maritime transport services, are indispensable to the maintenance and development of the national economy. Viewed, also, from the standpoint of ensuring comprehensive national security, there is the pressing need for Japan to secure a given number of ships manned by Japanese crew, as the nucleus of the Japanese merchant fleet. In the middle of fiscal 1982 the component ratio of Japanese vessels in the Japanese merchant fleet stood at 56 percent (Fig. 12). In these circumstances, in order to maintain a certain tonnage of vessels of Japanese registry and further expand it, it is necessary to help Japanese vessels restore their international competitive power or to help shipping agents strengthen their business structure, so that they can have bottoms built on a stable basis.

(2) Shipbuilding

(a) Second Advent of Recession and Rise of Third Shipbuilding Nations
The demand for new vessels sharply decreased after the latter half of 1981, adversely affected by stagnation of the world economy and further progress of energy-saving. As a result, the volume of orders received for construction of new vessels in 1982 dwindled to 11,360,000 gross tons and the world shipbuilding industry faced again a severe slump. It is expected that the shipbuilding market will continue sluggish for the time being. Meanwhile, the so-called third shipbuilding nations, including the Republic of Korea, have replaced Western countries and begun fast gaining ground. They are expected to continue developing, hence it is speculated that international competition surrounding shipbuilding will intensify further (Fig. 13).
Because of this, in February 1983 the OECD Working Party No.6 of the Council on Shipbuilding met and passed resolutions calling for revision of the "General Principle of Guidance." In consequence, Japan was compelled to take pertinent countermeasures, including restraint on the shipbuilding capability and adjustment of shipbuilding operations.
(b) Future direction of Japanese Shipbuilding Industry
   In these circumstances, the Ministry of Transport has implemented steps to control construction of new facilities, adjust shipbuilding operations, etc. and countermeasures for employment as well as small and medium enterprises. The future of the shipbuilding industry does not warrant optimism for the following reasons:
i)
The demand for shipbuilding is not expected to grow in future as in the past;
ii)
Productivity has dropped as a result of a long-term restraint on equipment investment, which has made facilities obsolete, giving rise to apprehension about a delay in the switch of the shipbuilding industry from the labor intensive-to knowledge intensive-type;
iii)
Compared with other industries, the manpower has advanced in age;
iiii)
Competition is expected to intensify, quantitatively and technically, among Japan, Western countries and third shipbuilding nations.
 
Viewed in this light, it is necessary for Japan to have approach to its future perspectives from the standpoint of technical development and production administration.

   
(3) International Aviation

(a) International Air Transport Surrounding Japan
A look at the international air transport surrounding Japan shows that Japan forms one of the major aviation markets in the world. In fact, flag carriers of many countries in the world have served routes surrounding Japan, and are desirous of setting up new flight routes to Japan. At present fierce competitions are in progress on routes linking Japan and Southeast Asian countries and also on Japan-U.S. routes (Fig. 14).
Meanwhile, a study of international air freight transport surrounding Japan shows that 14 enterprises, including Japan Air Lines, operate exclusive cargo flights since Japan is a point handling the departure and arrival of a large quantity of international air cargoes. The demand for air cargoes is showing an upward trend, and a tendency also is in evidence for foreign airlines operating in Japan, chiefly U.S. airline, to be stepping up their hauling capacities a great deal.
(b) Air Talks
Because of the important position Japan occupies in the international air service network, many countries, which desire to operate flights anew to Japan, are seeking to step up their transportation capacities for routes surrounding Japan, and air talks are often held every year between Japan and various countries concerned.
In recent years aircraft has improved vastly in performance and also became wide-bodied, enabling direct flight between two far-off countries. Because of this, the Japanese flag carrier attaches importance to shuttle services between Japan and the destination country, from the viewpoint of better serving the conveniences of the traveling public, economizing on fuel and reducing flight hours, whereas many foreign airlines give weight to triangular flight services with Japan. In the case of service routes between two countries, the transportation capacities are set on a relevant level centering around the airlines specified by the two countries. Considering this, allowing any airline of a third country to serve the bilateral air route involved can pose problems from standpoints such as securing of well-balanced airline interests and ensuring smooth operation of the bilateral route by the airlines involved. In regard to triangular flight services by foreign airlines, there is the need for Japan to have thoughtful approach to such services, including reexamination of the transportation capacities set in the past. At the same time, it is desirable that Japan's flag carrier should exert greater efforts toward the rationalization of its operations and improvement of its services to passengers so that it may sustain a highly competitive share on a commercial basis against the offensive of foreign airlines.
Indications are that the aviation authorities of various foreign countries will press the Japanese government to approve new flight services to Japan now that the problem of fuel supply to the New Tokyo International Airport, which was one of the factors restricting new flight services or additional flight services to Japan, has been solved. In the conduct of future air talks, there is the need for the Japanese negotiators to primarily consider what will best serve the conveniences of passengers, with the demand for air transport between Japan and the destination country in mind, and also pay due attention to an exchange of well-balanced interests between the Japanese flag carrier and its foreign counterpart.


3. 2 Approach to Car Market Liberalization Problems


   Frictions of late between Japan and the US and between Japan and European countries regarding automobile standard and certification systems stem primarily from an extreme imbalance over the several past years in their car trade (1982 ratio of Japan's automobile trade is 108 units exported as against 1 unit imported). Also, adoption of different automobile standard and certification systems in different principal industrialized countries forms a background factor of the trade imbalance (Fig. 15).
   In Japan and overall reexamination was made of the standard and certification systems in March 1983. As a result, in regard to cars, the government decided its policies for revision of the Road Vehicles Act in order to clarify the possibility of direct application for type designation by foreign motor vehicle manufacturers, significant simplification of certification procedures and requirements, harmonization of Japanese standards with those in European countries and the US
   It is held desirable that dealers in imported automobiles should handle cars adapted to the needs of the Japanese market and exert greater sales efforts by exploiting the new standard and certification systems. Meanwhile, it is important that the Japanese side should continue efforts to promote communication with people abroad who are concerned with the auto industry and obtain deeper understanding of overseas auto makers toward Japan's automobile standard and certification systems. At the same time, it is urged from a long-range perspective that Japan will also actively take part in international activities adjusting automobile standard and certification system at the United Nations Economic Commission for Europe.


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