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Home > Business/Finance > Diversified Services > Shipping & Logistics
Japan Freight Transport Report Q1 2008
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The outlook for Japan’s major shipping companies was improving in late July. Nippon Yusen Kaisha
(NYK) and Kawasaki Kisen Kaisha (K-Line), two of the market leaders, reported increases in quarterly
earnings and said they were optimistic over the future trend in freight rates and demand. K-Line
managing executive officer Takashi Saeki said that conditions in the shipping market were extremely
good. K-Line said it expected full-year profit to reach JPT71bn, 13% higher than its previous forecast.
NYK lifted its full-year net profit forecast to JPY100bn (US$830mn), which would represent a 54% gain
on year-earlier levels. One area of concern, however, was freight to North America, affected by worries
of a cooling in the US economy. BMI’s Japan Freight Transport Report acknowledges that there have
been signs of weakness in global shipping markets, with the big increases in capacity pointing to
oversupply. But we are forecasting average annual growth of maritime freight carried at a rate of 3.2%
over the 2008-2012 five-year forecast period.
Our Japanese shipping forecast is based on various factors. Among them, the Japanese recovery should
continue at a moderate but still significant rate. We forecast average annual GDP growth of 2.3% over the
next five years, after 1.8% in the preceding five. Companies like NYK and its competitors are well
organised and able to adapt: NYK, for example, is introducing a series of energy-saving programmes and
restructuring to offer clients an integrated global logistics service. In addition, Japan’s commodity
imports, manufactured exports, and growing trade with China underpin expected maritime freight
demand.
That said, we are relatively cautious over freight turnover forecasts for other transport modes. High petrol
prices, although coming down, have exerted a dampening effect on road-haulage volumes. Fuel prices
and safety concerns are also holding back airfreight, but Japanese airports are beginning to reduce landing
fees. As a result of these adjustments, we now expect average annual growth in total freight turnover to be
2.6% over the 2008-2012 period. The operating environment is good, but not spectacular. Japan has a
composite score of 44.0 out of a potential total of 70.0 in our freight-transport business environment
rating. This places it just below the average score for the region as a whole (44.5). Japan scores highly for
long-term economic and political risk, transport infrastructure growth and for the regulatory and
competitive environment. But its overall score is lowered, due to weaker performances for freight growth
and on the transport intensity index, which is a measure of foreign-trade dynamism. This is not unusual
for a more developed economy like Japan, where growth rates are much more moderate.
For the 2008-2012 forecast period, we expect the transport and communications sector to outpace the
economy as a whole. It will achieve average annual growth of 2.5%, versus 2.3% for overall GDP. The
total value of transport and communications GDP will rise to US$309.1bn in nominal terms by 2012,
representing 6.3% of Japan’s GDP.
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