Chapter 9  Signs of Recovery in Sight in Transport Economy
- Fiscal 1986 Overview



   In fiscal 1986, the transport economy experienced an increasing trend in passenger transport and leveling-off in freight transport. Excluding overseas shipping and shipbuilding industries, many transport businesses showed signs of improvement, although the condition of management differed from company to company.

 


9. 1 Trends in Transport


(1) Domestic Transport
   Domestic passenger transport in fiscal 1986 totaled 54,560 million passengers (an increase of 1.3% over the previous fiscal year) and 875,600 million passenger-kilometers (an increase of 2.0%). The situation varied from transportation mode to transportation mode, however. The growth rate of passenger transport and passenger-kilometers was both lower than that for fiscal 1985, which was 1.7% and 3.1%, respectively. (Table 11)
   One notable characteristic of passenger transport in fiscal 1986 was that air transport, which had shown a poor performance in fiscal 1985 due to the effect of the crash of JAL 123 flight in August 1985, turned into an increase and recorded a trend of revival. (Fig. 25)
   The share of private passenger cars, private railways and aircraft to the total passenger-kilometers in fiscal 1986 was greater than that in the previous fiscal year. The share of commercial passenger cars leveled off, while other modes of transportation declined. (Fig. 26) Since fiscal 1975, JNR and commercial buses have suffered decrease in share, whereas the share of cars for private use has continued growth since fiscal 1978, reaching 43.7% in fiscal 1986.
   An overview of trends in domestic freight transport in fiscal 1986 shows that the total tonnage of transport was 5,500 million tons (a decline of 1.8% from the previous fiscal year), registering a decrease for six consecutive years, while the total ton-kilometer of transport almost leveled off, recording 435,200 million ton-kilometers, an increase of 0.2%. (Table 12)
   In fiscal 1986, freight transport suffered a slower growth in general. In this situation, commercial automobiles and aircraft enjoyed a greater increase, while railways underwent a higher rate of decline and coastal shipping was stagnant. Thus, brightness and darkness grew more remarkable according to the mode of transportation. (Fig. 27) In addition, the share of automobiles in terms of ton-kilometers, which had become equal to that of domestic shipping in fiscal 1985 for the first time, exceeded that of this shipping in 1986.
   Several factors can be considered behind the recent sluggish growth of domestic freight transport. As the position of the service industry is growing more important in the economy as a whole and demand for service, as opposed to tangible products, is rising, service is getting a higher position in consumers' life. In addition, knowledge-intensive and high value-added industries are growing rapidly in the secondary industries, and products are being miniaturized. As a result, although Japan's real GNP has been increasing, industrial production has been stagnant in volume, which in turn has caused freight shipment to suffer leveling-off.
   In fiscal 1986, the share of railways to the total domestic freight transport decreased by 0.4points from the previous fiscal year to 4.7% (of which JNR suffered a decline of 0.4points to 4.6%). The figure of automobiles increased by 2.3points to 49.7% (of which commercial automobiles rose by 2.4points to 34.0% and private ones dropped by 0.1point to 15.7%), while that of coastal shipping recorded a decrease of 1.9points to 45.5%. Consequently, the share of automobiles, which came to rank with domestic shipping first in fiscal 1985, topped that of coastal shipping. (Fig. 28)
(2) International Transport
   In calendar 1986, the number of outgoing Japanese increased by 11.5% over the previous year (the growth rate was 6.2% in 1985), largely due to the effect of strong yen. For the first time, the figure exceeded the five-million-person mark, reaching 5,520,000 persons. Outgoing Japanese thus recorded an all-time high for the fifth consecutive year. (Fig. 29)
   The number of incoming foreigners dropped by 11.4% to 2,060,000 persons. Behind this was the impact of yen appreciation, too. Moverover, in 1985, the International Science and Technology Exhibition (Tsukuba Scientific Expo) attracted many tourists from abroad, contributing to a high growth in foreign visitors to Japan. This fact is also behind the sharp decline in these tourists in 1986.
   Since the Plaza Agreement, the appreciation of the yen has advanced rapidly, and this has affected both the number of outgoing Japanese and incoming foreign visitors greatly. The progress of yen appreciation has increased the purchasing power of the yen in other countries, and the number of outgoing Japanese has increased substantially. By contrast, strong yen has affected adversely the number of foreign tourists. Some extent of interrelation can thus be observed between the trends of outgoing Japanese and incoming foreigners and fluctuations of yen rates. (Fig. 30)
   The transport of international freight by sea for export declined by 7.4% from the previous year, following the drop a year earlier, as a result of rapid appreciation of the yen. The figure for this freight for import suffered a decrease of 0.4% reflecting sluggishness in domestic basic materials industries. In the air transport of freight, export turned into a drop of 1.5%, while import enjoyed a great increase of 35.2%. (Table 13)
(3) Transport Activity Index
   The composite transport activity index is an index obtained by evaluating the transport volume of each means of transport in consideration of the value-added created by the transport means. Year after year, this index is increasing, and its trend shows a high interrelation with the change of real private final consumption expenditure. (Fig. 31) This is because the transport by private passenger cars, which is closely related to private consumption, has an important position in the transport means consisting of the transport activity index. If consumption continues a steady growth, the composite transport activity index is likely to be on the increase in the future, too.

 


9. 2 Development of Facilities


   Public investments in transport-related facilities in fiscal 1986, which include special accounts, fiscal investment and loans and local independent projects, in addition to public works expenses of the general account, totaled \9,739,700 million, an increase of 6.5% over the previous fiscal year.
   The figure is broken down to \1,196,300 million for railways (up 10.4%), \660,200 million for ports and harbors (up 4.2%) and \271,400 million for airports (up 25.8%).
   According to a survey by the Ministry of Transport, transport-related private-sector equipment investments (3,716 firms with a capital of \50 million or more surveyed) for fiscal 1986 totaled \1,601,900 million on a work basis. This represents a growth of 1.5% over the previous fiscal year and the third straight increase. (Table 14)

 


9. 3 Business Conditions


   The trend of the current balance rate for the transport industry in fiscal 1986 indicates that as the growth of the Japanese economy slowed down, signs of recovery began to appear in many industries though the situation differed according to individual companies. Coastal shipping and shipbuilders experienced downward business results. Air transport was getting rid of the aftermath of the JAL 123 accident and turned into an increase in performance. (Fig. 32)
   As regards business conditions in the transport sector for fiscal 1986, the profitability headed for improvement as the operating expenses, chiefly expenses for power and fuels, were reduced thanks to strong yen and less expensive crude oil, though the operating income declined or leveled off. (Fig. 33) However, transport demand did not recover enough to bring about a substantial business revival. Moreover, since the operating balance was supported by power and fuel costs, whose future is uncertain, profitability may be deteriorated in the months ahead if yen rates and crude oil prices show an unfavorable movement. Therefore, transport companies should continue efforts to save personnel and other expenses. They will also have to redouble their endeavors to meet diversified and advanced user needs and to increase their operating revenue.

 


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