Geographical circumstances dictating the most important cargo flowsLocated in the Pacific Ocean east off the coasts of Russia, the Koreas, and China, Japan stretches from Hokkaido in the North to Okinawa in the South over thousands of kilometers. The population concentrates on densely populated plains on the coasts of the main islands Honshu (especially the central and southern part), Shikoku, and Kyushu, where the people prosper due to good land and climate conditions. Not only do these three islands form an inland sea, but their proximity to the East Asian continent also enables continued economic and cultural exchange with Korea, China, and beyond. Consequently, many of Japan’s most important seaports are located there. A large part of Japan’s manufacturing industry has settled down around the axis between the most populous regions Kansai and Kanto, connecting Tokyo with the ancient capital Kyoto. Therefore, major railway freight flows concentrate in this area. Decentral groups of islands like Hokkaido and Okinawa have a stronger dependence on air freight transport, providing them foodstuff and postal services. Tokyo serves as a logistical hub. Ultimately, automobile transportation remains the dominant mode of transport, indispensable to maintain the level of consumption.
Differing industry structures with similar obstaclesThe industry structure of each transport segment varies profoundly. Overall, road freight transport generates by far the highest operating revenues, but at the same time, thousands of companies compete in it; more than 99 percent of them are small- and medium-sized enterprises (SME). Despite many market participants, express parcel delivery and other sub-industries are characterized by higher market capitalization, where big companies like Yamato Holdings compete with one another.
For domestic coastal shipping, the SME ratio is similar, although the industry is significantly smaller. In contrast, almost half of all international maritime shipping companies are large-sized enterprises. International maritime trading companies remain below two hundred, however, revenues are several times higher than those of domestic coastal shipping.
Domestic air freight transport is also stronger concentrated, with about two hundred companies engaged in freight forwarding and only around 20 participants constituting the basic air freight industry.
Railway freight transport is at the opposite end of the spectrum, where the public JR Freight Corporation holds a monopoly. However, the railway forwarding business is deconcentrated somewhat, with over one thousand industry participants. In particular, the railway and air cargo industries, as well as (air-)port operations remain highly regulated, while privatization progresses slowly if it does at all.
The highest obstacles are connected to the Japanese demographic and climate change. Firstly, the workforce engaged in transport is shrinking as the population rapidly ages and shrinks, threatening the price level of transport costs. Secondly, to reduce greenhouse gas emissions, freight transportation will need to be reformed. Unless Japan introduces cost- and emissions-cutting technology in the transport sector, keeping pace with world economies will become challenging.