Chapter 1. Changing International Society and Transportation

　 　 In the first part, we will study the issues in the field of transportation, which we have to consider in securing smooth exchange with other countries in the midst of a changing international society and we will examine necessary countermeasures to deal with those issues.
　 　 For that purpose, in this chapter, we will try to understand the global trend of transportation and describe the activation of international exchange around Japan and the transportation roles which have been played by our country.
[Note: In this report, a "country" includes such a region as Taiwan or Hong Kong].

Section 1. International Trends

1. Impact on transportation, which has been caused by the changes of the international economies and society in recent years
　 　 The international frameworks, which formed the world in the post-World War II era, such as the Cold War Structure, have been broken down in some cases, or have been transformed, and the world is now in transition seeking a new framework.
　 　 With such a global trend, there have been several changes in the recent world economies, including the development of the globalization of economies, the rise of new regionalism or economic nationalism and economic growth of the Asian countries, which have had various repercussions on the field of transportation, as well.
　 　 Along with the development of globalization, the active movement of people and goods across national boundaries has increased the need for international transportation and called for the creation of new rules in the field of transportation as well as in the other trade sectors.
　 　 Particularly, since the new framework of service trade has been formed in the wake of the GATT Uruguay Round which was concluded at the end of last year, it is likely that the move for international and multilateral liberalization will subsequently accelerate the movement of people and goods.
　 　 While the movement for regional economic integration are progressing in the EU and North America, another movement is seen in Asia such as the Asia-Pacific Economic Cooperation Minister Conference (APEC), in search of a new economic framework. These movements are expected to cause great impact on the field of international transportation in the future.
　 　 In fact, in the field of international aviation, for instance, the Open Sky Policy was proposed in the US, there is a movement for regional liberalization of aviation in the EU, and ICAO will also study an ideal future framework of international aviation.
　 　 Taking a look at the Asian countries, it is noticable that, along with rapid economic growth, the international transportation market has widely changed and the movement of people and goods has become more active, while the competition among businesses in each country has become much severer including the transportation businesses in rapidly-emerging, less-developed countries. And construction of large-scale infrastructures is also in progress to respond rapidly to the expanding movement of people and goods and the possible development in the future.
　 　 Japanese Transportation businesses are also deeply involved in the competition on the level of the international transportation market and face fierce competition with foreign corporations. In that context, for the purpose of securing a stable and sustainable supply of transportation services for domestic passengers, it is necessary for each company to make further management efforts, strengthen international competitiveness and overcome the tough market environment.
　 　 As to the Japanese Government, in order to effectuate the voluntary efforts of each company to increase its competitiveness, it is necessary to provide a proper transportation environment through actively participating in the formation of a new international framework and steadily reviewing a variety of regulations at present.
　 　 Furthermore, as the construction of infrastructures is in progress all around Asia, in order to make high-quality and stable transportation services available for domestic passengers on a continuous base, it is necessary to maintain the aviation and the navigation routes centering around Japan and it is of special importance to construct, improve and substantiate both the hardware and the software of infrastructures, especially the key airports and the key ports and harbors.
2. Trend of major transportation business in the world
(1) Aviation businesses
　 　 In the United States, since the second half of 1970's, deregulation has been gradually progressing concerning entries into the aviation routes and air fares, resulting in active new entries into both domestic and international aviation markets. This subsequently led to the low-air-fare competition mainly in the domestic aviation market, but finally resulted in redundant aviation companies. At present, three top businesses (American Airlines, Inc., United Airlines and Delta Air Lines, Inc.) occupy the majority of the market share.
　 　 Moreover, these three major aviation businesses have also made inroads into international air lines based on their vast domestic market shares. While other conventional major businesses, such as Pan Am or TWA, fell into financial difficulties or went bankrupt one after another, they have promoted active market strategies including the establishment of the powerful international and domestic aviation route networks based on "Hub and Spoke System", the global CRS (Computer Reservation System) networks through travel agencies and FFP (Frequent Flier Program) which is commonly available both in the domestic and the international markets. As a result, other foreign aviation companies are obliged to face severe competition against them [Fig. 1].
　 　 In Europe, on the other hand, in the midst of tough management situations, so as to respond to the coming liberalization of aviation and the strategies of those American corporations, merger and integration of aviation businesses on a domestic scale and capital and business affiliations on an international scale have occurred.
　 　 In Asia, along with continuously high-level of economic growth, many businesses are emerging remarkably, mainly among the NIES and ASEAN countries based on low labor and production costs. While aviation businesses in the rest of the world are in severe management circumstances as a whole, aviation companies in those countries have relatively good management performance.
　 　 In the Asian countries conventionally, there used to be only one national flag carrier in each country, but in recent years, there is more than one international aviation business in such countries/areas as South Korea, Taiwan and Hong Kong, greatly contributing to the diversification of aviation networks in the Asian region [Table 1].
(2) Marine transport business
(a) Intensification and restructuring of corporate groups among the major businesses serving on the regular marine routes
　 　 On the major marine routes in the world, since 1989, treaties for the marine route stabilization, the main purpose of which is to freeze transportation capacity including independent lines have been ratified so as to deal with intensified competition because of the rise of independent lines and the slumping marine transport fares owing to the excessive number of vessels. And for the purpose of enhancing services and rationalizing the transport cost, affiliations between major shipping companies have progressed. At present, including conference and independent lines, there are 6 consortia (consisting of 13 companies) on the North American routes and 8 (consisting of 18 companies) on the European routes.
　 　 Many of the consortia on the European routes will be terminated in 1995, so restructuring of those consortia is now under way involving the North American routes, as well, based on the viewpoint of establishing the global networks. In particular, it is notable that 3 major marine transport businesses in Japan (Nippon Yusen K.K., Mitsui O.S.K. Lines, Ltd. and Kawasaki Kisen, Ltd.) are playing major roles in this restructuring [Fig. 2].
(b) Rise of marine transport enterprises in Asia
　 　 In the Asian countries, where economic growth has been remarkable and the demand for cargo transport has also rapidly increased in recent years, marine transport enterprises have advanced into the major marine routes all over the world by taking advantage of the merits of low transport cost.
　 　 On the North American routes, marine transport businesses in the other Asian countries have recorded higher growth both departing-routes and returning-routes than those in Japan, the US and European countries and have expanded their market share. Furthermore, the number of orders for large-scale container vessels placed by those marine transport businesses in the Asian countries has lately shown conspicuous growth.
3. Transport policies in the world
(1) Aviation policies
(Moves around the international aviation framework)
　 　 The present framework of international aviation is based on the Convention on International Civil Aviation Treaty (Chicago Treaty) since 1944 and member countries have ratified bilateral agreements based on this treaty to carry on international aviation business. This so-called "Chicago System" has been effectively in operation for half a century and even in the recently concluded GATT Uruguay Round, which aimed at establishing multilateral trade system, the field of aviation has been m principle kept out of the scope of the "general agreement on service trade".
　 　 Compared to the multilateral system, the present framework of bilateral agreements has its own merits to make it easier to realize an ideal state of international aviation suitable for the actual conditions of each country including geographical conditions and needs for transport services, so this is expected to remain as a general rule to cover most of the world for the time being.
　 　 In recent years, however, some international moves have been evident to review the future state of international aviation. In the International Civil Aviation Organization(ICAO), for instance, at the Air Transport Conference to be held in November, 1994, it is planned to discuss the significance of today's Chicago System and the ideal state of international aviation in the future.
　 　 Among those moves to review the framework of international aviation, Japan is also going to actively participate in discussions to be held in various international organizations and exchange views with other countries over what the common rules of international aviation should be in the future. (Moves to liberalization in the US and the EU)
　 　 In August, 1992, the United States announced the "Open Sky Policy" to liberalize bilateral agreements and has called each country for ratification of an aviation treaty based on that policy. The rest of the major nations including Japan, however, have regarded the policy as a strategy of giant aviation businesses, which have gained power in the American domestic market, being almost equivalent to the vast international aviation market, to go into the international market and have been all the more wary of this policy. To date, the US-Holland Treaty has been the only example of liberalization of the treaty.
　 　 In the European Union, along with the progress status of the regional integration, a 3-step policy package has been agreed upon and the gradual liberalization of aviation has been promoted within the region. In particular, the Common Aviation Policy (Package III), agreed in 1992, is literally a final version of liberalized aviation and according to this policy, a series of measures have been put into practice since 1993, including the establishment of a common aviation licence within the region, liberalization of transport fares, accelerated opening of domestic air lines (cabotage transport) in the member nations and liberalized entries into the regional transport business.
(2) Marine transport policies
　 　 In the GATT Uruguay Round, marine transport was one of the topics, but the United States, holding the key to the success of the negotiations, has kept its negative stance toward the liberalization and no agreement has been made before the deadline. Therefore, negotiations in the field of marine transport are planned to continue by June, 1996.
　 　 Based on the policy of "the Principle of freedom of shipping" Japan has ever since played a major role to promote liberalization through the negotiations and will also try to promote the liberalization of marine transport in the continuing negotiations.
　 　 So as to protect the domestic marine transport industry, the United States has conventionally adopted a cargo reserving policy requiring the American nationality of ships for goods procured by the government and other protectionist policies such as imposing a unilateral retaliatory measure based on its domestic laws when it is judged that American businesses in foreign countries are treated unequally. Furthermore, a bill (Studs Bill) has been presented to the Congress, whose contents are to exercise subsidies to restore the international competitiveness of the domestic marine transport industry by means of increasing tonnage duty to be imposed on ocean-going vessels coming into the ports and harbours in the United States, so the moves centering around the U.S. continue to require due attention.
　 　 On the other hand, the EU Commission adopted in 1986 the first phase of the Common Marine Transport Policy Package to exclude the shipping conference from the applicable scope of anti-monopoly laws, but this policy has not been effective for enhancing competitiveness of marine transport businesses in the member nations. After then, the second package, including the introduction of EUROS System with second nationality of vessels, was proposed in 1989, but no agreement on this system has been reached to date and the agreement was made in 1992 only on the opening of cabotage transport within the region. Besides these moves, the Commission, in recent years, is likely to apply a more stringent scope of antimonopoly laws to such treaty acts as the formation of a consortium of marine transport businesses.
　 　 Moreover, reflecting the recent economic growth in the Asian countries, it has become all the more necessary to have dialogues on marine transport policies with those countries.
　 　 For this purpose, Japan invited an unofficial conference for the marine transport policy dialogues with OECD and DAEs (Dynamic Asian Economies: namely Hong Kong, South Korea, Malaysia, Singapore, Taiwan and Thailand) in April, 1994 and will try to promote mutual dialogues with those Asian countries.
4. Trend of air and marine transport in the world
(1) Trend of international air passengers
　 　 The number of international air passengers in the world, which showed a temporary decrease because of the influence of the Gulf War, has been continuously on the increase and it reached approximately 300 million people among all the member countries of ICAO in 1992.
　 　 As to the number of international air passengers in each region, that of passengers between North America and Europe is the largest, at one-fourth of the total passengers, but that of passengers departing from and arriving at the Asian countries has shown remarkable growth, reflecting high economic growth in the region and the number of passengers between Asia and other regions is more than 30% of the total passengers [Fig. 3].
　 　 The number of international air passengers departing from and arriving at Japan has lately shown less growth than before but it reached 34 million and 493 thousand people in FY 1992, more than 10% of international air passengers in the world (36 million people for FY 1993). But the rate of passengers handled by the Japanese airline companies has continuously declined since 1987 dropping to 32.2% in FY 1993. As for the regional distribution, the number of Japanese passengers on the trans-Pacific routes and that of foreign passengers on the European routes, handled by the Japanese companies, have particularly shown higher decline [Fig .4].

[Note: Second nationality of vessels: A system aimed at restoring international competitiveness of ships of Japanese nationality by means of deregulation of allocation of crew members without a ship owner changing the nationality of a vessel in order to prevent a ship of Japanese nationality from flagging out. In Europe, such nations as Great Britain, Germany, France and Scandinavian countries have already adopted this system and remarkable effects have been realized in Norway for example. For reference, the EUROS System means a special vessel registration system common to the EC nations to substitute the second nationality of a ship of each nation.]

(2) Trend of international air cargo transport
　 　 The volume of international air cargo transport in the world has recently shown relatively lower growth, but it reached 9 million and 110 thousand tonnes in 1992. 　 　 　 　 Following such a trend, the volume of international air cargo transport departing from and arriving at Japan reached 1 million and 544 thousand tonnes in FY 1992, occupying approximately 17% of the total international air cargo transport in the world. And the rate of air cargoes handled by the Japanese airline companies has shown a transition of around 40%.
(3) Trend of international marine cargo transport
　 　 The volume of marine cargo transport in the world has turned upward since the second half of 1980's to reach approximately 4.32 billion tonnes in 1993. In particular, the growth of the handling volume of container cargoes has been remarkable exceeding 100 million TEU in 1992. As to the volume of container cargoes on each marine route, while that on the trans-Atlantic routes has recorded only 1% average annual growth from 1985 to 93, those on the North American routes and the European routes, departing from and arriving at the Asian region whose economic growth has been rapid, have shown an average annual growth of respectively 5.2% and 11.5%. The average annual growth on the routes within the Asian region has been as high as 10.6%, revealing the fact that the volume of marine cargo transport is expanding centering around the Asian region [Table 2].
　 　 The volume of international marine cargo transport, departing from and arriving at Japan, has recorded a low rate of growth, but has been on the increase to reach 796 million tonnes in 1993. On the other hand, the share in the world as a whole has been slightly on the decrease in recent years and it was 18.4% in 1993.
　 　 As to the transition of the rate of the marine cargoes handled by the Japanese commercial fleets, it has remained at around 70% of imports, but in terms of exports, the handling rate has continuously declined since 1985 dropping to 42.7% in 1993. And the rate of marine cargoes handled by vessels with Japanese nationalities has been on the sharp decrease in both exports and imports and particularly in exports, it is now less than 5% [Fig. 5].

Section 2. Activated Exchanges between Japan and the International Society

　 　 The scale of the Japanese economy is large occupying approximately 15% of the world economy as a whole. Japan has established its stable position as the second largest economic giant next to the United States and this has caused an extremely great impact on world trade and international finance.
　 　 To a great extent Japan owes this position to the security of smooth exchange of people and goods between other foreign countries and so has realized such high economic growth and has improved the national living standard despite its small national land area and scarce natural resources.
　 　 Exchanges between Japan and the international society have been dramatically expanding for these 30 years, along with Japan's rapid economic growth [Fig. 6] and it can be said that active international exchange has sustained our present industries and economies and have enriched our national lives.
1. Activated international exchanges of people around Japan
(1) Increase of the number of travellers going abroad
　 　 The number of Japanese travellers going abroad was around 160 thousand in 1965 immediately after the liberalization of travelling abroad, but it reached ll million and 930 thousand in 1993, expanding almost 75 fold during those 30 years [Fig. 7].
　 　 From 1965 through 1974, with a background of high economic growth, the number of travellers going abroad marked a high annual growth at a level of 25%-40%. Among those travellers, the number of sightseeing tourists remarkably increased. It was less than 30% of the total number of travellers going abroad during the period from 1965 through 1969, but it exceeded 80% of the total during the period from 1970 through 1974. In response to such a trend, jumbo-jet airliners started their services in 1970 to expand the transportation supply.
　 　 During the decade from 1975 through 1984, even though the number of travellers going abroad showed less growth compared to the previous decade, the steady increase of the number of travellers continued and Narita Airport was eventually opened in 1978.
　 　 Since 1985, because of the appreciation of yen in the wake of the Plaza Accord, travellers have been aware of the comparative cheapness of going abroad and the Government has supported travelling abroad by means of the Ten Million Project and others, resulting in furthermore growth of the number of travellers going abroad exceeding 5 million people in 1986 and 10 million in 1990, 4 years later. After then, the growth showed a temporary slump because of the influence by the Gulf War and the economic depression in Japan, but owing to the sharp appreciation of yen since 1993, the number of travellers going abroad started increasing once again in the second half of the year and it has continued to show a high level of growth, renewing all-time-high records for each month.
(2) Structural changes in travelling abroad
　 　 While travelling abroad has become more popular than ever, various structural changes have been seen in the forms of travelling abroad, travelling destinations and so forth.
(a) Changes in the forms of travelling abroad
　 　 The forms of travelling abroad have been diversified, including the increased number of families travelling, the high popularity of travelling packages with more free time because of the increase of repeatvisits and so forth. And travelling expenses have become relatively lower with much cheaper travelling packages compared to the conventional ones and the substantial decrease of travelling expenses in yen thanks to the continuing appreciation of the yen [Fig. 8].
(b) Diversification of travelling destinations
　 　 In the past the most frequent destinations of Japanese travellers going abroad have been mostly the Asian countries with the North American countries next. For both areas, the number of travellers has continuously increased.
　 　 Travelling destinations, however, have been progressively diversified, so the share of the Asian countries has continuously declined since 1970's and that of the North American countries has leveled off and gradually declined since 1980's, after continuous increase before 1980's. In contrast, the share of the Oceanian countries has increased and that of the European countries has also shown slight increase after levelling off [Fig. 9].
　 　 As to the increase of the number of travellers going abroad in each regional destination since 1985, in terms of sightseeing tourists, which occupy more than 80% of the total, while the number of those going to Asian countries and North American countries has shown relatively low growth, that of those going to the Oceanian countries has remarkably increased partly due to their popularity for honeymoon trips [Fig. 10].
　 　 On the other hand, the number of business travellers going to Asia shows the highest increase, but reflecting the active advances of Japanese businesses in response to the EU integration, that of travellers going to Europe has increased as highly as that of those to Asia. Besides those, the number of travellers going to Oceania has also shown a high increase. In contrast with this trend, it is notable that the number of travellers going to North America has started to decrease [Fig. 10].
(c) Increase of the number of travellers going abroad from provincial areas
　 　 In Japan, travellers going abroad have continued to be mostly from the Metropolitan areas and especially those from the two major city areas, i.e. Tokyo and Osaka, have occupied the most of the share, also showing a high rate of travellers compared to the population.
　 　 But in recent years, while Chukyo Area has shown higher growth, those two major, Tokyo and Osaka Areas have shown relatively lower growth. On the other hand, in the provincial areas other than those Metropolitan Areas, along with internationalization of the local airports in response to the expanding needs for travelling abroad from those provincial areas, the number of travellers has shown much higher growth than that of the Metropolitan Areas as a whole, revealing the fact that overseas travelling has become popular all over the country.
　 　 In particular, such a trend is evident in terms of the travellers going such neighboring countries as South Korea [Fig. 11].
(3) Little growth in the number of foreigners visiting Japan
　 　 While the number of Japanese travellers going abroad has grown almost 75 times over approximately 30 years from 1965 through 1993, the number of foreigners visiting Japan has grown just 10 times for those years even though it has gradually increased as Japan's international status became more important [Fig. 12].
　 　 The transition of the number of foreigners visiting Japan from 1965 through 1984 shows continuous increase except for reactionary decrease in the wake of rapid increase because of the Osaka Expo '70 and another decrease with the influence of the 1st Oil Crisis.
　 　 Since 1985, the number has continued to increase except for a temporary decrease because of the appreciation of yen after the Plaza Accord. In particular, reflecting rapid economic growth and liberalization of travelling abroad, the number of visitors from the neighboring Asian countries has dramatically increased and the number of foreigners visiting Japan subsequently reached almost 3.58 million in 1992. But, in 1993, it went down to 3.41 million because of the sharp appreciation of yen among other reason.
(4) Structural changes of the foreigners' travelling to Japan
　 　 In terms of foreigners' travelling to Japan, various structural changes are evident in those visitors' origins, visiting destinations in Japan and so on.
(a) Change in the purpose of visit
　 　 In terms of the transition of the share of purposes of foreigners visiting Japan, the share of sightseeing trips has almost leveled off to be around 60%. In contrast to this, that of business trips has gradually increased since around 1980, when it was just about 10%, to reach almost 30% in recent years.
(b) Change in the origins of foreigners visiting Japan
　 　 In the past, foreigners visiting Japan were mainly sightseeing tourists from the Western countries, especially from the United States. The share of the Western countries, however, has been on a continuous decrease and that of the Asian countries has been remarkably increasing [Fig. 13]. Even in the ranking of the nationalities of foreigners visiting Japan, the United States, which occupied the first place until 1988, was surpassed by South Korea and Taiwan and has fallen to the third place. In contrast, 5 Asian countries are ranked within the top-10 countries.
　 　 Moreover, in terms of the growth of the number of foreigners visiting Japan from each region since 1985, that from the Asian countries has shown more growth than the other regions both in sightseeing tourists and business travellers [Fig. 14].
　 　 On the other hand, in terms of the rank of Japan among the overseas trip destinations in those top-3 countries (South Korea, Taiwan and the U.S.) in the number of foreigners visiting Japan, it is ranked the first in South Korea and the second in Taiwan, revealing the fact that Japan occupies the important status as one of the overseas trip destinations.
　 　 In the United States, however, the European countries occupy the higher places and the rank of Japan is as low as sixth-place [Table 3].
(c) Trend of distributed visiting destinations in Japan
　 　 In terms of the destinations of foreigners visiting Japan, the Metropolitan Cities such as Tokyo and Osaka and popular tourist spots such as Kyoto still occupy the larger percentage, but in recent years, they are showing a tendency to be distributed in the other areas than those cities.
2. Roles which have been played by transport to activate the international exchanges of people
　 　 The international exchanges of people centering around Japan, notwithstanding various fluctuations in terms of the number of travellers going abroad and that of foreigners visiting Japan, has been basically on the increase. With such a trend, the transportation sector in Japan has contributed to the activated international exchange of people, to a great extent, by supplying mass transportation services which are cheap, quick, secured and frequent.
(1) Tendency of travelling expenses to become relatively cheaper
　 　 The fact that travelling expenses have become relatively cheaper in comparison with the income level of the Japanese people has made it easier for the Japanese to travel abroad and has played an extremely important role in the activation of the international exchange of people.
　 　 Air fares have shown rather low growth, while the income level has been greatly improved, becoming remarkably cheaper.
　 　 As to the aviation route between Tokyo and Honolulu for instance, the ordinary round-trip air fare (economy class) was approximately 220 thousand yen in 1965, almost 10 times as much as the starting salary of salaried workers (approx. 23 thousand yen) then. After then, in 1993, it was around 240 thousand yen, going down almost 1.3 times as much as the starting salary (approx. 190 thousand yen) [Fig. 15].
　 　 The price of package tours provided by the travel agencies was extremely high in 1965, when they were first introduced, and they were literally far beyond reach. But, along with Japan's economic growth, while the household income has dramatically increased, the increase of the package tour price has become relatively lower, and in recent years, accompanied with sharp appreciation of yen and other factors, the price of those overseas tours has become drastically cheaper with a number of lower-priced package tours [Fig. 16].
(2) Advancement of the international aviation networks
　 　 Advancement of the international aviation networks with higher frequency between Japan and other major overseas cities has also played an essential role to activate the international exchange of people.
　 　 As to the international aviation networks, through bilateral aviation negotiations, establishment of new aviation routes and the increased number of flights are being realized responding to the international aviation demand [Fig. 17]. The expansion of supply is also being planned by introducing large-scale aircraft such as jumbo-jets.
　 　 Further advancement of the networks is also being aimed at by increasing the number of international airline companies in Japan and through strengthened business relations between foreign airline companies including joint flight services, code-sharing and so forth.

[Note: Code-sharing means a system to execute seat reservations and ticket sales for the flight of B company to be connected with that of A Company by adding the flight number of A company to that of B Company.]

(3) Shortening of the flight time required
　 　 Since the aviation-related technologies have progressed and the performances of aircrafts, such as cruising speed and flying distance, have been improved, the required flight time has been shortened recently to improve the convenience for passengers.
　 　 As to the European routes in particular, in addition to the progress of the aviation-related technologies, the establishment of direct flights between Tokyo and European countries flying over Siberia has been approved since 1986 after the agreement between Japan and the former Soviet Union, contributing to dramatic shortening of the flight time required [Fig. 18].
(4) Response to the diversification of travelling needs
　 　 With the activation of overseas sightseeing trips, the broader categories Japanese travellers, such as a couple with children and aged people, have travelled abroad and there have been many cases of company trips, training trips and school excursions held overseas [Fig. 19].
　 　 Travel agencies, in consideration of such diversification of travelling needs, have made efforts to plan and develop various travelling packages and have consequently created a number of courses travelling within the same region [Fig. 20]. And as the Japanese people wish for a more affluent life, cruising voyages on ocean-going passenger ships are gaining much popularity.
3. Activated international physical distribution centering around Japan
(1) Increase of the volume of exports and imports
(a) Expansion of exports
　 　 For approximately 30 years from 1965 through 1993, exports from Japan have expanded about 4.7 times in the cargo volume (based on metric ton) and about 43 times in amount (based on dollar) [Fig. 21].
　 　 The transition during this period shows that the volume of cargo for exports expanded almost 3 times, from 1965 through 1974, mainly because of the expansion of exports of heavy industrial products such as steel.
　 　 From 1975 through 1984, since major items of exports shifted from heavy industrial products to processed and assembled products, the export growth slowed down to 1.3 times.
　 　 After 1985, exports declined for 4 consecutive years with the export environment worsened by continuous trade frictions and the appreciation of yen in the wake of the Plaza Accord. After 1989, however, exports gradually recovered, especially after the end of the so-called "Bubble Economy," because of the depression of the domestic economy, some heavy industries such as steel put more emphasis on exports, causing a huge increase of exports which reached approximately 108 million tonnes, an all-time high.
　 　 The amount of exports, as the export products have become more highly value-added, recorded almost 6.6-times growth from 1965 through 1974 and about 3.1-times growth from 1975 through 1984, much higher than that of the volume of export cargoes. After 1985, in particular, export products became further value-added owing to the accelerated appreciation of yen, the amount of exports continued to grow, while the volume of export cargo recorded negative growth, showing about 2.1-times growth through 1993.
(b) Expansion of imports
　 　 Imports to Japan, for approximately 30 years from 1965 through 1993, have expanded about 3.6 times in the cargo volume (based on metric ton) and about 29 times in amount (based on dollar) [Fig. 22].
　 　 The transition during this period shows that the volume of cargo for imports expanded about 2.8 times, from 1965 through 1974, mainly because of the increase of imports of raw materials and fuels such as petroleum and iron ores owing to high economic growth and the development of the heavy chemical industries.
　 　 In contrast, from 1975 through 1984, since the Japanese economy shifted to stable growth and the industrial structures were changed, imports of raw materials and fuels did not grow as much as the previous decade, the volume of import cargoes continued to level off at around 600 million tonnes.
　 　 During the period after 1985, however, because of the lower import prices along with appreciation of yen in the wake of the Plaza Accord and the expansion of the domestic economy, the volume of import cargoes began to increase after 1987 and recorded an all-time high of about 730 million tonnes in 1991. Manufactured products and food products were the major items for the factor of import growth. After then, there was a decrease in 1992 on a year-on-year basis because of the depression of the domestic economy after the end of the Bubble Economy but started to increase in 1993 owing to the sharp appreciation of yen.
　 　 The amount of imports continued to increase from 1965 through 1974, because of the growth of the volume of import cargo and from 1975 through 1984, owing to the price hike of crude oil in the wake of the Oil Crises.
　 　 After those periods, there was temporarily decrease because of the lower price of crude oil and other factors, but it started to increase supported by the growth of the volume of import cargo, exceeding 230 billion dollars in 1990. After 1991, the growth has not been as much as the previous period, but it recorded all-time high of about 240 billion dollars in 1993.
(2) Structural changes in the international physical distribution centering around Japan
　 　 While the international physical distribution centering around Japan has continued to expand in quantity, it has been structurally changed, reflecting the changes in the international economic situations and the domestic industrial structures. In recent years, there have been major changes in the structure of international physical distribution across the East Asian countries, as well.
(a) Shifts in the trade structure of Japan for each partner country of exports and imports and accompanying changes in the physical distribution structure
(i) Change in the trade structure of Japan: shift to East Asia-oriented
　 　 As to the partner countries of exports from Japan, while the share of the Unites States has continuously declined since 1985 because of the acceleration of appreciation of yen and the expansion of local productions, that of the East Asian countries, such as China, ASEAN, NIES and so forth, has continued to increase, supported by the expansion of exports of machine parts, machine tools, metal products and so forth along with the advancement of industrialization in the region. As a result of this, East Asia surpassed the U.S. to become the largest export partner of Japan after 1991.
　 　 As to the other regions, the share of the EU has increased reflecting the activated investment for the regional integration, but that of the Middle East has been on the decrease [Fig. 23].
　 　 As to the partner countries of imports to Japan, the share of the Middle East has declined while the share of petroleum in imports has shrunk and that of the United States, the EU and the East Asian countries has expanded because of the increase of manufactured goods imports. In particular, East Asia is currently the largest import partner of Japan with increasing imports of manufactured goods from ASEAN and China as well as NIES [Fig. 24].
(ii) Growing importance of East Asia in the international cargo distribution centering around Japan
　 　 While the structure of Japan's international trade has become more East Asia-oriented, the importance of Asia has also grown higher in the international cargo distribution centering around Japan.
　 　 As to the volume of marine cargoes departing from and arriving at Japan, in terms of shipping destinations, the growth of Asia has been greater than that of the other regions such as North America and Europe [Fig. 25]. In terms of shipping origins, on the other hand, the growth of the Middle East has been the highest because of the increase of energy imports and that of the Asia-Pacific region has been next to this. As to the distribution volume of marine container cargoes, that on the Asian regional routes has been much more than that on the European routes and it is catching up to that on the North American routes. As to the volume of exports and imports of air cargoes, the Asian routes have grown more than the trans-Pacific routes and the European routes both in the absolute volume and the growth rate.
(b) Shifts in the trade structure of Japan for each trading item and changes in the physical distribution structure along with them
(i) Development of higher value-added in exports owing to accelerated appreciation of yen and other factors: increase of manufactured goods and food products imports
　 　 In terms of exports from Japan, major items shifted from the textile products to the heavy industrial products such as steel during the period from 1965 through 1974 and from the heavy industrial products to the processed and assembled products such as automobiles and electrical machinery during the period from 1975 to 1984, and export items have become continuously more value-added [Fig. 26].
　 　 And after 1985, because of the decline of cost competitiveness owing to trade frictions and the appreciation of yen, standardized products and ordinary products with lower additional values have been shifted for local production in the European countries, the United States or the East Asian countries, while the export products have become furthermore value-added.
　 　 As a result of this, the importance of processed and assembled products in exports has become much higher and so-called "high-tech" products, such as semi-conductors, computers, TV cameras and so forth, have become more important items [Fig. 26,Fig. 27]. Even among the same type of products, those in the higher price range have shown more export growth than those in the lower price range.
　 　 As to the imports to Japan, the major import items were raw materials and fuels such as crude oil and iron ore until 1984, but since 1985, owing to accelerated appreciation of yen and other factors, the importance of manufactured goods and food products has become higher [Fig. 28].
　 　 In terms of manufactured goods, the import share of machinery and equipment as well as textile products and chemical products has remarkably expanded. In particular, in terms of consumer electric appliances and audio & visual equipment, the number of the units imported exceeds that of exported for some products.
　 　 As to food products, imports of seafood products, meat products, vegetables, fruits and so forth have shown remarkable growth and those of seafood and meat products currently occupy almost the half of the total imports of food products.
(ii) Increase of handling volume of container cargoes for the marine cargo transport: remarkable advancement of air cargo transport
　 　 In terms of exports from Japan, the share of processed and assembled products has continued to expand, while, in terms of imports, the share of manufactured goods including machinery equipment and food products has become higher, triggered by appreciation of yen in the wake of the Plaza Accord. Since most of these export and import items are more suitable for container transport than bulk transport, the handling volume of container cargoes has increased for marine cargo transport .
　 　 In recent years particularly, the handling volume of import container cargoes has shown remarkable increase [Fig. 29].
　 　 On the other hand, reflecting the increased share of light-weight and highly value-added products, both in exports and imports, such as electronic parts including semiconductors, medical and pharmaceutical products, office machinery and so on, and the increase of imports of fresh food products, air cargo transport has remarkably developed. During the period from FY 1985 through FY 1993, on a weight basis, exports have grown approximately 1.5 times and imports about 2.5 times. The rates of export and import amounts by air cargo against the total export and import amounts respectively reached about 19% and 23% in FY 1993. And comparison between the export volume and the import volume (on a weight basis) shows that the import volume has exceeded the export volume since FY 1986 [Fig. 30].
(iii) Relative decline of the status of Japan in East Asia: Changes in physical distribution centering around East Asia
　 　 As the sole economic superpower in the Far East region, Japan has occupied a foothold of the production and physical distribution in East Asia for a long time. However, so as to respond to the accelerated appreciation of yen and continuous trade frictions, many of the production outlets for lower value-added products and ordinary products have been shifted overseas and internationally horizontal distribution of labor has been gradually established between the United States, the European countries and other East Asian countries. Also because of the recent sharp appreciation of yen, possible industrial hollow-out (deindustrialization) of domestic industries has been a matter of concern [Fig. 3l].
　 　 In contrast to this, the other East Asian countries have experienced rapid industrialization by accepting direct investment and technology transfer from advanced countries including Japan and it seems that economic growth of those countries will continue at a higher rate than that of the United States and the European countries and that their importance in the global economy will be increased [Fig. 32].
　 　 Along with these circumstantial changes, the status of Japan in East Asia has been relatively lower. Also NIES and, in recent years, ASEAN and China, as well have been gradually on the rise to take the place of Japan, causing structural changes in physical distribution centering around East Asia.
　 　 As to the handling volume of container cargoes, first of all, in terms of the achievement for 1992, four ports among the top-five are located in NIES countries and in particular, the handling volumes of Hong Kong Port, 1st place and Singapore Port, 2nd place were respectively about 8 million TEU and about 7.6 million TEU, being almost equivalent to the total handling volume of Japan (approximately 8.3 million TEU). As to the growth rate, too, those ports have shown extremely high growth rate of over 20%, exceeding those of major ports and harbors in Japan [Fig. 33].
　 　 Even in the ratio of transship cargoes (cargoes to be mutually transferred between international marine routes), Singapore Ports and other ports show higher figures than the major ports in Japan.
　 　 In terms of the movement of cargo on the North American routes, while the volume of cargo departing from Japan has leveled off, those from ASEAN, China and Hong Kong serving as the gate to China have shown higher growth. On the returning route, too, the volume of cargo arriving in Japan has shown lower growth, but those arriving in the other Asian countries, especially those arriving in ASEAN and China, have grown remarkably [Fig. 34].
Following such a trend, while the number of services between East Asia and the main land of the US including direct services not stopping at Japan has increased, that of direct services between Japan and the main land of the US has decreased, developing a rearrangement of the container routes connecting East Asia and the United States [Fig. 35]. On the other hand, so as to respond to the changes in international physical distribution, shipping firms in Japan have expanded services between three countries centering around East Asia. As a result of this, the volume of cargo transport between the three countries has become 4.6 times as much as that of 10 years ago, occupying almost 40% of the total transport volume by regular shipping.
4. Roles which have been played by transport for the activation of international physical distribution
　 　 Being surrounded by sea, Japan has poor natural resources, and depends on imports from overseas countries for most of the raw materials and energy sources supply and most of those are being transported by oceangoing vessels. Also in terms of exports of the products manufactured in Japan such as steel, automobiles and electrical machinery, marine transport by means of container ships and transport ships for automobiles is playing an extremely important role. Moreover, in recent years, as some of the export items have become more lightweight and higher value-added, cargo transport by air has also grown remarkably.
　 　 These oceanic marine transport and international aviation have greatly contributed to the activation of international physical transport, while responding to more sophisticated needs of the cargo customers and providing cheap, quick and assured transportation services.
(1) Reduction of transport fares
　 　 Since fares of oceanic marine transport are basically determined by the market principle, fierce competition has been conducted between shipping firms in Japan and abroad. For that purpose, oceanic marine transport firms have tried to reduce transport cost by expanding the scale of vessels and increasing the number of special ships and have rationalized their business by means of joint usage of the terminal facilities and joint services of vessels. As a result of these efforts, in the transition of container transport fares on the North American routes, they have become cheaper both in exports and imports partly because of the appreciation of yen [Fig. 36].
　 　 In terms of international air transport fares, increase of the fares has been relatively low owing to the management efforts of the transport firms and the transport fares have been actually reduced especially over the last 10 years.
　 　 This reduction of transport fares has enhanced the cost competitiveness of products, has greatly contributed to the development of the Japanese economy and has made it possible to obtain cheap imported goods to enrich our lives.
(2) Expansion of transport networks
　 　 In the oceanic marine transport sector, the regular container transport routes around Japan have been expanded by shipping companies in Japan and abroad. On the marine routes which Japanese shipping companies serve, the number of routes has not recently changed so much, but the number of voyages and the volume of shipment on the major routes have been on the increase. And while corporate activities have become more globalized along with the advancement of overseas local productions, globalization of container routes under the partnership with overseas shipping firms has also been progressing.
　 　 In terms of the international aviation sector, transport networks of cargo transport flights have been expanded. In particular, reflecting the shift of exports and imports to East Asia, both the increase of the number of flights and the transport volume growth rate on the Asian routes have been higher than those on the other routes.
(3) Development and improvement of transport means for fresh food products
　 　 In recent years, imports of fresh food products has much increased, to which the development of international air cargo transport has greatly contributed. In particular, imports of luxury fruits such as American cherries, fresh seafood products such as lobsters, sea urchin and shell fishes, matsutake (pine mushrooms), cut flowers and flower bulbs or tubers mainly depend on air transport. And tuna fish or meat products, which have been transported mainly by refrigerator ships, are being transported by air more frequently from the standpoint to furthermore keep their freshness.
　 　 On the other hand, in terms of oceanic marine transport, frozen or chilled meat products, fruits, vegetables and so on are being transported by refrigerator ships or refrigerating container ships. In particular, as a result of technological development carried out for refrigerating container ships to prevent the deterioration of product quality, highly precise temperature control and humidity conditioning has become possible in recent years and they are being widely utilized for transport of photo films, medical and pharmaceutical products, precision machinery and so on as well as food products.
　 　 Moreover, development of transport measures, such as ice-temperature containers, subzero chilling containers and CA system, has been progressed to keep the freshness of food products for a longer time and their full utilization is greatly expected as a breakthrough to transport luxury fresh food products cheaply and in large quantities by ships.
(4) Supply of transport services to respond to sophisticating and diversifying needs of the cargo customers
(a) Response to international just-in-time services
　 　 Along with the advancement of overseas local productions, demand for so called international "just-in-time" transport services, i.e. to transport the exact amount of parts or materials required according to each production process at an overseas production facility, has become higher. To meet such demand, shipping companies in Japan have introduced fixed-time services and fixed-day services on major routes, have rearranged inland transport networks and have started to build up "cargo tracking information systems" enabling to detect the location of cargoes and the status of customs clearance and fare payment.
　 　 Besides those efforts, at major ports and harbors in Japan, SHIPNETS and S.C. Net have been built up, as common usage on-line systems to exchange various information concerning item names, weight, loading and unloading places of cargoes between cargo customers, shipping companies and transport business firms at ports and harbors. And further studies have been conducted to integrate these new systems with other systems for cargo handling businesses which are already on-line programed.
(b) Development of international door-to-door delivery services
　 　 Along with globalization of corporate activities, demand for international transport services concerning corporate documents, product samples, parts and so forth, has become higher. Following such a trend, international delivery services, to transport documents or smaller items on a door-to-door basis by using an airplane, have developed remarkably. The number of firms has increased and the number of deliveries and the total weight handled have rapidly grown [Fig. 37].
(c) Development of international multi-modal transport
　 　 In the field of international transport, international multi-modal transport, in which only one carrier provides transportation services to cover multiple transport means such as ship, airplane, truck and so forth, has been on the rise. Such multi-modal transport has been mainly operated not only by shipping companies but also by freight forwarders (firms to handle freight transport). In particular, such freight forwarders have built up their own transport networks, including establishing overseas local firms, and have contributed to supplying well-prepared services to respond the specific needs of their users.