BMI's Executive Summary

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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.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Japan Freight Transport Industry SWOT

Japan Economic SWOT

Chapter 3 - Business Environment Overview

Asia Pacific Freight Business Environment Ranking

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity Index

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Chapter 4 - Industry Trends And Developments

Road

Rail

Air

Sea

Pipelines

Chapter 5 - Industry Forecast Scenario

Macroeconomic Activity

Table: Japan – Macroeconomic Forecasts

Chapter 6 - Country Snapshot: Japan Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education And Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Transport Outlook

Table: Japan Freight Carried (Domestic and International)

Table: Transport And Communications Sector Forecasts

Chapter 7 - Trade Environment

Table: Value of Imports by Category (US$mn)

Table: Value Of Exports By Category (US$mn)

Table: Top Export Destinations

Table: Export Trade, % y-o-y

Table: Top Import Sources

Table: Import Trade, % y-o-y

Chapter 8 - Market Overview

Multimodal

Road

Infrastructure

Competitive Landscape: Road

Rail

Infrastructure

Competitive Landscape: Rail

Air

Infrastructure

Competitive Landscape: Aviation

Company Profiles

Japan Airlines Corp (JAL)

Water

Infrastructure

Competitive Landscape: Maritime

Company Profiles

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Transport Industry

Sources

Chapter 10 - Appendix: Regional Demographic Data

Table: Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Asian Freight Transport Sources

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BMI's Asian Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: