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Japan Freight Transport Report Q4 2009Published by: Business Monitor International Published: Aug. 27, 2009 - 53 Pages Table of Contents
AbstractIn July, doubts were cast on the profit forecasts of Japan’s largest bulk carrier Mitsui OSK Lines (MOL).According to Bloomberg, Nikkei cautions that MOL’s profits for the first half of FY2009 may be as lowas JPY9bn (US$96bn) - substantially lower than the company’s JPY24bn (US$256) forecast - whilekeeping its full-year forecast for the company unchanged. BMI notes that MOL’s dry bulk fleet remainsits largest source of revenue, accounting for 29% of total income in FY2008. Much of the company’sstrength lies in its dominance of the iron ore shipping market in which it is the largest carrier worldwide,servicing supplies of the commodity between producers Brazil, Australia and China. However, despite arally in demand for shipments to China in H109, which bolstered rates, observers expect a decline in thesecond half of the year, which should affect MOL’s profit margin. For the 2009-2013 forecast period, we are projecting that overall freight traffic carried growth will dropmarginally, with an average annual change of -0.4%. This is based on various factors, a main one beingthat the Japanese economy has virtually gone into reverse. Once the effect of the recession in 2009 istaken into account, we forecast average annual GDP growth of 0.2% over the next five years, after 1.7%in the preceding five. Another factor is that the transport industry is mature and facing a globaloversupply problem for the next couple of years. Also, demand for air freight has slumped and roadfreight is likely to have disappointing levels of demand as well, despite the lower fuel prices that areexpected. Another factor is that while Japan’s growing trade with China is a positive, the fundamentals ofthe situation are still challenging. The operating environment is reasonable, but not spectacular. Japan hasa composite score of 56.1 out of a potential 100 in our freight transport rating. Japan scores highly forlong-term economic and political risk, transport infrastructure growth and the regulatory and competitiveenvironment. However, its overall score is lowered due to weaker performances for freight growth and onthe transport intensity index, which is a measure of foreign trade dynamism. This is not unusual for amore developed economy like Japan, where growth rates are much more moderate. According to our latest estimates for the 2009-2013 forecast period, we expect the transport andcommunications (T&C) sector to follow the economy as a whole in value terms, with growth of 0.2%.The total value of T&C GDP will rise to US$289.3bn in nominal terms by 2013, representing 6.3% ofJapan’s GDP. The T&C sector employed 4.02mn people, 6.3% of the labour force, in 2008. We see thefirst figure falling to 3.97mn by 2013, while as a proportion of the total labour force, employment in theindustry will continue to be 6.3%. Get Full Details About This Report >> |
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