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Japan Freight Transport Q1 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
Japan |
Published |
14 January 2009 |
Number of Pages |
49 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Freight rates for shipping liquid petroleum gas (LPG) by tanker from the Middle East to Japan continued to plunge in October. According to Platts Commodity News they fell to below US$30 per metric tonne from the middle of the month, down from record highs of US$82/mt in July. The drop contradicted earlier forecasts by traders who had said they expected the rates to stabilise at the US$30 level for the rest of 2008. ‘In summer, there were at least six cargoes a month from the Middle East, but after these ships returned to the Persian Gulf, the shipping market just collapsed’ a very large gas carrier (VLGC) ship broker was quoted as saying. A Hong Kong based VLGC broker said he expected the Baltic Dry Index to drop even further. The fall was attributed to a combination of low demand and increased shipping capacity. Going forward, we expect the global economic slowdown in 2009/10 to take its toll on Japanese shippingThe latest BMI Japan Freight Transport Report now forecasts average annual growth of freight carried by sea at 2.0% over the 2009-2013 five-year forecast period.
Our Japanese shipping forecast is based on various factors. Among them, the Japanese recovery seems to be going into reverse. We forecast average annual GDP growth of 1.5% over the next five years, after 2.0% in the preceding five. Second, the industry is mature and facing a global oversupply problem for the next couple of years. While Japan’s growing trade with China is a positive, the fundamentals still point to some rather tough years ahead.
In the current climate we are also relatively cautious over freight turnover forecasts for other transport modes. Fuel prices and safety concerns are holding back airfreight, but Japanese airports have reduced their very high landing fees. Road freight is expected to see lower fuel prices, but demand will be disappointing. As a result of these adjustments, we now expect average annual growth in total freight turnover to be 1.6% over the 2009-2013 period. The operating environment is good, but not spectacular.
Japan has a composite score of 62.8 out of a potential total of 100.0 in our freight transport rating. 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.
According to our latest estimates, the total value of transport and communications GDP will rise to US$321.6bn in nominal terms by 2013, representing 6.3% of Japan’s GDP. The transport and communications sector employed 4.03mn people, or 6.3% of the labour force, in 2008. We see the first figure falling to 3.79mn by 2013, while as a proportion of the total labour force, employment in the industry will continue at the 6.3% level.
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