Just Released: "Japan Freight Transport Report Q2 2013"

LDP Hits The Accelerator - But Growth To Remain Sluggish

Although BMI believes the LDP's return to office in Japan will boost the country's economic recovery, we also think the resulting stimulus will be relatively short-lived and will not be enough to push the GDP growth rate up past the 1.0% mark in this year. The new government has signalled its desire to follow an aggressive policy of fiscal and monetary stimulus. The LDP has its eyes on elections to the Upper House, due in July, and is hoping that by boosting the economy it will be able to win a majority in that chamber, currently controlled by the opposition. To that end it has announced that it is looking at new subsidies, public works, and investments in sunrise industries. It is also expected to apply pressure on the Bank of Japan to ease monetary policy. While all this will have an expansionary short-term effect, we note that the Japanese economy has in recent years responded only partially to stimulus measures of this kind. We also believe that after the elections, worries over the fiscal deficit will return. For that reason we are holding to our conservative estimate that GDP growth will accelerate to no more than 0.9% this year, up from an estimated 0.5% in 2012.

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While the freight sector remains constrained by slow economic growth, there are some positives. Japan's exports have started growing moderately. After sharp reductions in capacity, ANA and JAL - the country's two main airlines - are making profits again, and also reporting some monthly increases in airfreight carried. There are signs that the country's automobile exports are set to rise, boosting shipping companies active in this specialised area.

Headline Industry Data

* Air freight tonnes forecast to grow by 2.0% in 2013 to 3.145mn tonnes, continuing a recovery after the estimated 24.5% contraction in 2011.
* Road freight tonnes hauled in 2013 forecast to grow 1.9% to 4.740bn tonnes, with average annual growth at 1.5% through to 2017.
* Rail freight tonnes will edge up by 0.3% in 2013 to 41.064mn tonnes. We project average annual growth of 0.7% during our forecast period, slower than GDP.
* Port of Tokyo 2013 tonnage throughput forecast to grow 3.1% to 88.896mn tonnes, with average annual growth of 2.9% during our forecast period to 2017.
* Port of Nagoya 2013 tonnage throughput forecast to grow 1.2% to 188.918mn tonnes, with average annual growth of 2.8% over the medium term.

Key Trends and Developments

Nagoya Overtakes Narita

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