Thursday, Mar 28, 2024
logo
Update At 14:00    USD/EUR 0,92  ↑+0.0003        USD/JPY 151,36  ↑+0.109        USD/KRW 1.344,08  ↓-3.35        EUR/JPY 163,77  ↑+0.084        Crude Oil 86,32  ↑+0.23        Asia Dow 3.851,93  ↑+13.1        TSE 1.821,50  ↓-10        Japan: Nikkei 225 40.261,70  ↓-501.03        S. Korea: KOSPI 2.755,09  ↓-0.02        China: Shanghai Composite 3.025,89  ↑+32.752        Hong Kong: Hang Seng 16.660,76  ↑+267.92        Singapore: Straits Times 3,25  ↑+0.002        DJIA 22,75  ↑+0.17        Nasdaq Composite 16.399,52  ↑+83.823        S&P 500 5.248,49  ↑+44.91        Russell 2000 2.114,35  ↑+44.186        Stoxx Euro 50 5.081,74  ↑+17.56        Stoxx Europe 600 511,75  ↑+0.66        Germany: DAX 18.477,09  ↑+92.74        UK: FTSE 100 7.931,98  ↑+1.02        Spain: IBEX 35 11.111,30  ↑+119.8        France: CAC 40 8.204,81  ↑+20.06        
PORT OF KOBE, JAPAN

Ports look to regain competitiveness

Article - July 13, 2017

While many Japanese ports faced slowdowns in 2015, the Port of Kobe experienced its best year since 1995. Kobe is now looking to regain its position amongst with world’s busiest ports by “making logistics simpler and more effective,” says the Chairman of harbor logistics company Kamigumi, which has developed ‘smart’ terminals that have helped the firm’s revenues grow by almost 47%

THE PORT OF KOBE OVERTOOK NAGOYA TO BECOME THE COUNTRY’S THIRD-BIGGEST CONTAINER PORT

The year 2015 will not be remembered fondly by Japanese container port operators. With both exports and imports hampered by the slowdown in China and by anemic consumer spending at home, the ports of Tokyo, Yokohama, Nagoya and Osaka reported dwindling container traffic for the first time in six years.

Among the country’s five biggest ports, only Kobe managed to emerge unscathed from the 2015 malaise. It not only recorded positive traffic results, but overtook Nagoya to become the country’s third-biggest container port. It also managed to reach its best performance since 1995, when the port was devastated by the Great Hanshin earthquake, which destroyed almost all of its container terminals.

The effects of the earthquake–coupled, of course, with Japan’s economic problems– were severe and long-lasting: Kobe slipped from being the world’s sixth busiest port in 1994 to 56th position in 2013. But things look rosier now, with the port’s container traffic recovering pre-disaster levels.

The history of the port of Kobe is inseparable from that of Kamigumi, Japan’s leading harbor logistics company that was founded in 1867, just at the time of the port’s inauguration. Both have grown alongside each other and rendered a service to the national economy. “Kamigumi has always been at the forefront of Japan’s trade and cargo industry, and as such we believe that our company has largely contributed to enhance Japanese industrial competitiveness and exports,” says its Chairman, Masami Kubo, who is also Chairman of the Japan Harbor Transportation Association.

The government is fully aware of the importance of underpinning Japanese ports at this time of extreme competition, and is throwing all its weight behind them. In December last year the transport ministry announced that it would allocate 81.5 billion yen ($679 million) to shore up strategic Japenese ports and ensure that they can compete with rivals across Asia.  


“Japanese ports are not able to handle this strong logistics need right now. In the Japan Harbor Transportation Association, we are working with the government to figure out how to bring back this logistics capacity”

Masami Kubo, Chairman, Kamigumi and Chairman, Japan Harbor Transportation Association


Most ports in Japan are finding it hard to adapt to the new economic realities. In the absence of a strong domestic market, the Japanese companies are increasingly looking at fast-growing countries like The Philippines, Vietnam, Indonesia, Malaysia or India as both clients and manufacturing bases. However, the nation’s ports are currently unable to cope with the complex logistics needs that this pan-Asian activity generates.

“Japanese ports are not able to handle this strong logistics need right now. In the Japan Harbor Transportation Association, we are working with the government to figure out how to bring back this logistics capacity,” Mr. Kubo says.
In the meantime, foreign operators are benefitting from the lack of capacity of their counterparts in Japan. Huge volumes of manufacturing goods produced by Japanese companies in Asian countries that are then exported to America are using the port of Singapore instead of going through Japanese ports, which are located on major shipping lanes and are the last ports of Asia for ships travelling to the Americas.

If they want to compete with their overseas rivals, Japanese ports need to find their added value. “The business industry as a whole is working together with the government to make practical policies and create an adequate environment, in order to provide this added value to justify shipping companies using Japanese ports as transshipment hubs, rather than other Asian ports,” Mr. Kubo admits.

Putting the emphasis on quality over quantity could be the secret. Until now, port terminals have focused on loading and unloading as fast as possible, but this, according to Mr. Kubo, is not the best approach: “The major difference between our terminals is that our focus is making logistics simpler and more effective for our customers.”

Kamigumi is developing and using some of the breakthroughs that can help Japanese ports regain competitiveness. Perhaps the most important of them is the so-called ‘smart’ terminal, which allows for efficient customer-oriented processes that have led the company to record impressive results: since building smart terminals in Kobe and later in other ports, Kamigumi’s sales revenue have increased dramatically, reaching a record $2.2 billion in 2015.

With the introduction of cutting-edge techniques, in the ports as well as in hinterland logistics centers  for industries such as steel, chemical, automobile, consumer, retail, engineering, manufacturing and fruits and vegetables, Japanese port operators provide a wide range of logistics services to suit customers not only in the national market, but also in other countries. This is the reason why Kamigumi is expanding its operations to foreign ports, mostly in China, but also in countries like Thailand and Myanmar. The latter, however, poses diplomatic problems, as U.S. sanctions are still in place: “Working with companies on the black list means not being able to do business with the United States, which is a nerve-wrecking experience,” Mr. Kubo concedes.

Japanese operators are not confining themselves to Asia. The Pacific Ocean, which they share with other continents, offers opportunities in countries like Mexico, a strategic gateway to the United States and many other nations. Once the Trans-Pacific Partnership enters into force, bringing together both sides of the ocean into a colossal free trade platform, foreign expansion will only increase.

The eyes of Kamigumi are now on the U.S., where it is currently operating with two partners in Los Angeles after closing its office there in the 1990s. The company contemplates re-opening its L.A. office and establishing other U.S. offices in the locations that fit its commercial needs and will eventually function as the axes of its U.S. business. Its Mexican base could be used as a launching pad to the American market.

Japanese ports operators need a differential and value-adding edge and a sensible plan for international expansion to withstand competition from other Asian actors. This is how Kobe has recovered after the devastation of the Great Earthquake. Now it remains to be seen whether, inspired by Kobe’s resurgence, other ports are ready to proceed with the same recipe.

  0 COMMENTS