May 17, 2010, 6:09 AM EDT
By Chris Cooper and Kiyotaka Matsuda
May 17 (Bloomberg) -- Port of Tokyo, with 13 percent of the annual container volume of Singapore, today competed with other Japanese cities for state funds as the government strives to create a harbor able to challenge the world’s busiest.
Tokyo, Japan’s biggest container port, teamed up with Kawasaki and Yokohama for its presentation to the committee that will pick as many as two groups to develop. Bids were also made by Nagoya-Yokkaichi, Osaka-Kobe and ports in northern Kyushu.
The government created the competition as Japanese ports have lost traffic to Chinese, South Korean and Singaporean terminals that have lower costs. Japan’s ports have also suffered from exporters such as Sony Corp. and Mitsubishi Heavy Industries Ltd. shifting production to low-wage China.
“Japanese ports are losing market share,” Takashi Nagayasu, parliamentary secretary for Land, Infrastructure and Transport and a member of the selection committee, said on May 13. “That’s hurting Japanese business, so we have to fix it.”
The winning ports will be decided next month, according to Transport Minister Seiji Maehara. The main selection criteria will include costs, location and security. The government is yet to say how much funding will be made available.
“Japan’s port business is a long way behind other Asia countries,” Maehara said last week. “The selection process should stimulate ports to improve the efficiency of their operations and attract private money.”
Singapore, Shanghai
Singapore, the world’s busiest container port, handled 25.9 million twenty-foot equivalent units last year, beating out Shanghai with 25 million and Hong Kong with 21 million, according to figures from the Hong Kong Port Development Council.
The Port of Tokyo moved 3.4 million boxes last year. Port of Yokohama, Japan’s second busiest, handled 2.8 million containers last year, according to its website.
“It’s not that Japan’s ports are bad, it’s that they’re expensive,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo. It may be “too late” to win customers back.
Japan is holding the port competition as the global economic rebound revives container traffic. Industrywide volumes on transpacific routes will likely rise as much as 5 percent this year, with Asia-Europe demand growing even faster, Ron Widdows, chief executive officer of Neptune Orient Lines Ltd., the owner of Asia’s largest container line by fleet size, said in March.
In 2009, Asia shipped 15 percent fewer boxes to the U.S., following a 7.7 percent slump a year earlier, according to the Japan Maritime Center, as the global recession sapped demand for Asian-made toys, furniture and auto-parts.
“Cheap land prices are a big reason to choose Nagoya, " Takashi Kawamura, Mayor of Nagoya City, told reporters in Tokyo today, while discussing the merits of Ise Bay, home to Nagoya and Yokkaichi ports. The Nagoya-Yokkaichi bid “should be chosen for the export industry of Japan,” he said.