Chapter 3  Responses to Changing International Transport Situation


3. 1 Changing International Transport Situation


   Regionally Japan is strengthening ties with the United States and other Pacific countries in the interchange of people and goods.
   The volume of transport between Japan and China is noticeably increasing in both shipping and air transport, and Japan is making positive cooperative efforts in the development of transport facilities. Japan is also strengthening ties in the exchange of personnel with medium-developed nations (territories) of the Far East where international transport is making rapid progress. Since Japan imports large quantities of iron ore, coal and other raw materials from Oceania, Japan's maritime transport in this region has a greater share than that of the United States.
   The United States, which has large shares in Japan's shipping and air transport markets, is pursuing liberalization policy in these fields. This policy has had a great effect on maritime transport in this region. For instance, competition has intensified on the North American route, since the tariff adjustment function of the liner conference has been weakened.



3. 2 International Transport at Turning Point


(1) Oceangoing shipping
   @International environment
   Japan is one of the few countries which has completely opened its oceangoing shipping market to foreign vessels. Since many countries, mostly developing countries, adopt various restrictive policies, such as reservations for their own vessels, Japan's oceangoing shipping is losing room for free activities. The Iran-Iraq dispute threatens the safe navigation of Japanese vessels.
   Japan's oceangoing shipping companies are placed in a increasingly difficult position on the North American regular route where competition is intensifying. The international competitive power of Japanese vessels, mostly greater coasting vessels, is weakening. One encouraging report is that an international accord may be reached to settle the longpending questions related to flag-on-convenience vessels.
   ASlump in oceangoing shipping
   The world's oceangoing shipping continues to suffer stagnant market conditions simultaneously in three divisions: the oil tanker division is suffering a slump caused by the overtonnage in the face of substantial cuts in oil transport: the tramper division is also suffering a slump caused by the supply of more vessels than needed: and the liner division faces intensified competition as a result of the participation of medium-advanced countries (territories) of the Far East and the enforcement of America's new shipping act. Japan's oceangoing shipping is also placed in a difficult position. Combined, Japan's 10 major oceangoing shipping companies have registered losses in their current accounts since fiscal 1982. To overcome these difficulties, it is urgently necessary to do away with the overtonnage throughout the world. Japan's shipping industry also faces the task of trimming its management by scrapping worn-out, uneconomic vessels. (Figs. 6 and 7)
   BRecommendations by Council for Rationalization of Shipping and Shipbuilding Industries
   In these circumstances, the Council for Rationalization of Shipping and Shipbuilding Industries made an interim recommendation (August 1984) and a final recommendation (June 1985) on the future of oceangoing shipping, dealing with such subjects as the formation of an internationally competitive fleet and revitalization and rationalization of these industries.
   These recommednations emphasized that the regulations concerned with the shipping concentration system should be relaxed in order to maintain an internationally competitive fleet and that business relations should be established through talks among those concerned in accordance with their respective circumstances on the basis of their judgment and responsibility. The recommendations also suggested that flexibility should be given to the space charter system on the North American route to enable companies to operate on a free commercial basis. The recommendations also stressed the need to cope with various international problems, including the worldwide overtonnage bottoms. (Fig. 8)
   CEnforcement of measures based on recommendations
   Is accordance with the above-mentioned recommendations, the Ministry of Transport has taken the following steps: 1) to promote the modernization of vessels, the Japan Development Bank's loan rates for super labor-saving vessels were raised; the special depreciation rates for modernized ships were also raised; 2) to reactivate business operations, the restrictions on dividends were relaxed; and 3) the shipping management system and liner operation system were reorganized in response to the recommendations. (Fig. 9)
(2) International multimodal transport
   As mentioned in the section dealing with oceangoing shipping, international competition is intensifying among business firms, and the international business climate is becoming increasingly severe. At the same time, demands for transport are undergoing major changes against the backdrop of changes in the industrial structure featuring soft economics, e.g., computerized services. There are increasing numbers of enterprises in which oceangoing shipping and air cargo transport are combined with land transport in foreign countries. Such international multimodal transport is making rapid progress particularly in the field of small lots, and both Japanese and foreign air transport operators place emphasis on the parcel delivery services by trucks. The contents of this type of service duffels-from one country to another because of the special character of international multimodal transport in which different modes of transportation are combined, and internal and external transport systems are combined. It has therefore become an important task for the Government to take adequate steps for the operation of this system, so that international multimodal transport can develop without trouble.
(3) Promotion of personnel interchanges through tourism
   There has been a marked increase in personnel interchanges between Japan and foreign countries in recent years. By international standards, however, the number of immigrants to or from Japan is only about 15% of that of the United States, Britain, France and West Germany on the average. Compared with Japan's economic scale and trade volume, its personnel interchanges remain on a considerably low level.
   To eliminate the lack of mutual understanding, which is thought to be one remote cause of today's economic friction, it is necessary for Japan to unfold a new outbound policy, including cooperation with foreign countries in the promotion of tourism and the promotion of Japanese trips abroad through the dispatch of survey teams to foreign countries. At the same time, it is also necessary to pursue an inbound policy, including the promotion of international model zones to encourage foreign tourists to visit Japan.
(4) Expanding international air transport
   With recovery in world business, demands for international air transport are in the process of recovery. The volume of international regular air transport departed from and arrived in Japan during fiscal 1984 increased in both passengers and cargoes by 8% over the previous fiscal year. (Fig. 10) In May 1985, Nippon Cargo Airlines began flying into the United States against the backdrop of noticeably increased demands for cargo transport on the pacific route.
   Inequality in air interests between Japan and the United States was corrected to some extent in April 1985 when an interim agreement was reached between the two nations, which provided for the participation of Nippon Cargo Airlines in the Pacific route, the exchange of the Japan-Micronesia route for the equal number of designated companies, and the opening of three new routes. This agreement, which aimed at expanding the two nations' air interests in the form of maintaining equal opportunities and a fair transport order, marked a step forward in the negotiations for revising the Japan-U.S. aviation agreement. The operation of this interim agreement will be carried out on the basis of studies of the business system of Japanese air companies by the Council for Transport Policy. Japan has to make continued efforts to achieve an overall equilibrium in air interests between the two countries. In relations with the Soviet Union, a direct Tokyo-Europe route over Siberia will be opened after April 1986. Thus, various air routes and interests have been expanded or will be expanded to enhance user's convenience.
   Keeping in mind the promotion of personnel interchanges, and the establishment of equality in air interests, Japan will endeavor to maintain transport capabilities in accordance with the demand.

 


3. 3 New Responses Reguired of Shipbuilding Industry


   Although the tonnage of vessels built in fiscal 1984 increased over the previous fiscal year, it remained only half that of the peak year (1975). While the share of west European shipbuilding countries has been reduced to half from that of the peak year, Third World shipbuilding countries are increasing their share. Since a continued slump is predicted for the shipbuilding industry, the international situation is bound to become increasingly complex and difficult. (Fig. 11)
   In these circumstances, Japan and European countries exchange views and information at the OECD working party on shipbuilding and other forums. Dialogue has also begun with the Republic of Korea on a governmental basis.
   Domestically, the Ministry of Transport has taken various steps, including restrictions as far as possible on the development and expansion of facilities, adjustment of operations and promotion of scrapping. The Ministry also plans to carry out various long-term programs to develop the shipbuilding industry on a stable basis.



3. 4 Increasing Importance of International Cooperation


(1) Promotion of external economic measures
   In the field of transport, various requests have been made recently from the United States and Europe in connection with their efforts correct trade imbalances, such as participation in the Japanese trucking industry as part of international multimodal transport, improvements in the certification system related to automobile safety and antipollution standards, and reexamination of various regulations related to the Civil Aeronautics Law to promote the import of small-size aircraft. At the same time, Asian and Oceanian countries have made strong requests to promote tourist interchanges.
   In response to these requests, the Ministry of Transport has incorporated into its action program improvements in the certification system for automobiles, reexamination of the regulations related to aircraft and promotion of steps to encourage Japanese tours abroad. The Ministry is determined to carry out the action program speedily and adequately, while tackling external economic problems in a positive way.
(2) Expansion of international cooperation
   Since transport facilities are important foundations for socioeconomic activities, Japan has received many requests for cooperation from developing countries. This type of cooperation takes a large percentage in Japan's economic aid. (Figs. 12 and 13)
1 Financial cooperation
   n fiscal 1984, a total of \87.7 billion in yen credit (lending contract basis) was extended to 22 projects in China, Indonesia and other countries. Particularly, China has become the largest yen credit recipient country on a net disbursement basis. Most of these funds were targeted for transport facilities (railways and harbors).
   2 Technical cooperation
   To help developing countries develop their transport infrastructures, it is necessary to provide them with adequate guidance and advice in various stages from planning and construction to maintenance and management after completion.
   The Ministry of Transport in fiscal 1984 conducted feasibility surveys on a total of 47 projects through the Japan International Cooperation Agency. The Ministry also dispatched 76 experts on a long-term basis, and 125 experts on a short-term basis, to 23 countries, and accepted 359 trainees from 53 countries, through the Agency.
(3) Future tasks
   To smoothly promote international interchanges, including economic cooperation, in the field of transport, it is necessary to accurately ascertain the nature of problems the developing countries face, and endeavor to enhance mutual understanding regarding their transport policies. In particular, economic cooperation should be extended in compliance with the needs of recipient nations from a long-term point of view. The Ministry of Transport plans to promote high-level interchanges from the standpoint of increasing mutual understanding and cooperation regarding transport policy.

 


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