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Japanese Ports – A Paradigm Shift Towards An Asia-Centric Economy

The function of ports differs by geographical location and industrial structure. A further difference lies between hub and peripheral ports. Rotterdam, Singapore and Shanghai are without doubt hubs for the trades between Europe and the Far East. Shipping lines try to maximise the economies of scale by deploying large sized containerships into these trades to exercise hub-and-spoke operations. Port policy makers are struggling to attract those mega ships to call at their ports, as if acceptance of those ships in the trunk lines were a status symbol. Therefore, port competition arguments prevail, which urges more investment into port facilities, efficiency, connectivity and so forth. There seems to be a paradigm that a port should sharpen a competitive edge in order to be selected as a port of call by mega ships.

Japan grew its economy with enormous speed in the post-World War II period and expanded its production to export textiles, steel, ships, electric appliances, semiconductors, automobiles and so on. However, the end of Bretton Woods System (fixed exchange rate system) in 1971 drove the country to slow down its export, and further, the Plaza Agreement of 1985 eventually forced its manufacturing to transplant production to lower-cost countries as a result of sharp appreciation of Yen. Japanese manufacturers first shifted their production to the NEEDs countries, and then moved to China and to ASEAN countries. These movements actually helped Asian countries to grow their economy sequentially.

However, this situation also significantly affected the throughput of containerised cargo at Asian ports. From then on, export cargoes were increasingly shipped at ports where new production sites were located. In 1980, Kobe was proud to be the largest container port in Japan and the fourth largest in the world, but by 2010 the port was ranked as low as 45th and even Tokyo, then the largest in Japan, is now around 20th place. The biggest growth market was China, where ports such as Shanghai (now the world’s largest) boomed. China has grown to such an extent that now six of the top ten largest ports are Chinese. Henceforth, after some early domination, Japanese ports have been faced with a peripheral position.                

Author(s): Professor Masato Shinohara, The University of Fukuchiyama, Japan

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