ＩＳＳＮ１３４６－７８３２

国立研究開発法人海上・港湾・航空技術研究所

港湾空港技術研究所
報告
REPORT OF
THE PORT AND AIRPORT RESEARCHINSTITUTE

VOL.55

No.4 December

NAGASE,YOKOSUKA,JAPANNATIONAL INSTITUTE OF MARITIME,PORT AND AVIATION TECHNOLOGY

2016

港湾空港技術研究所報告（REPORT OF PARI）
第 55 巻 第 4 号（Vol. 55, No. 4）, 2016 年12月（December 2016）目

次（CONTENTS）

1. 港湾運営の生産性および持続可能性の向上のための研究視点··································································································· 高橋浩二 ·······

1（Research Perspectives for Improving the Productivity and the Sustainability of Port Management·············································································································· Koji TAKAHASHI）

REPORT OF THE PORT AND
AIRPORT RESEARCH INSTITUTE
Vol.55, No.4 (Dec.2016)

Research Perspectives for
Improving the Productivity and the Sustainability ofPort Management

Koji

TAKAHASHI*

Synopsis
In 2011, the National Diet of Japan passed a law to implement the policy of International Container
Strategy Ports, which would be applied to public-built private-management system and privatecompany financing methods to container terminals at the main ports operated by Port Management
Bodies which are local governments. It would also establish the port management corporation at eachport in order to improve the productivity of container terminals throughout Japan. Port management
corporations have already been established at several ports such as “Kobe-Osaka International Port
Corporation” and “Yokohama-Kawasaki International Port Corporation”.
The purpose of establishing port management corporations for container terminals is to amend therigid port management system by local governments, and to be prepared to provide a quick response
to global economic changes and the wills of cargo owners and shipping companies. Current port
management corporations, however, are facing various problems of management.
On the other hand, under the current economic environment, port management needs to make newcapital investment to cope with the issues such as the tightening of carbon dioxide (CO 2) emissions
regulations, and the improvement of an industrial safety and health environment for port workers.
Therefore, in this report, the author would like to first analyze the issues that current port
management face, and then propose solutions for them, followed by proffering effective methods andscenarios to implement the solutions. At the end, a process will be proposed, as research perspectives
for improving the productivity and sustainability of port management.
This report is based on the author’s research in seven fields of geography, engineering, finance,
administrative law, business administration, risk management and politics. This report is the firstsystematic research on port management system as well as a groundbreaking one in the researchhistory of port management.
Key Words: Port Management, Management Corporation, Productivity, Sustainability* Senior Director for International Affairs and Research
3-1-1 Nagase, Yokosuka, Kanagawa 239-0826, Japan
National Research and Development Agency, National Institute of Maritime, Port and Aviation Technology,
Port and Airport Research Institute
Phone：+81-46-844-5062
Fax：+81-46-844-0575
e-mail: takahashi-ko@pari.go.jp-1-港湾空港技術研究所報告第 55 巻第 4 号（2016.12）

港湾運営の生産性および持続可能性の向上のための研究視点
高橋

浩二*

要

旨

日本政府は、2011 年、日本全体のコンテナターミナルの生産性を向上するため、港湾管理者たる地方公共団体が管理する主要港のコンテナターミナルに公設民営および民間運営会社による港湾運
営方式を導入し、港湾運営会社を設立する方針を出した。この方針を受けて、阪神港、横浜川崎港
等ではすでに港湾運営会社が設立されている。
コンテナターミナルの港湾運営会社の設立の目的は、港湾管理者たる地方公共団体による港湾運
営体制に代わり、世界的な経済変化や荷主・船社の意向に素早く対応できる港湾運営体制を整えることである。
一方、港湾運営は、二酸化炭素排出規制の強化や、労働安全環境の改善等に対応しなければならない経済環境に置かれている。
このため、筆者は、本報告で、まず、現行の港湾運営制度を、地勢学、工学、財政学、行政法学、
経営学、危機管理学、政治学の 7 つの観点から分析し、課題を明らかにした。最後に、これらの効
果的な解決策および港湾運営の生産性および持続可能性の向上のための研究視点を示した。
なお、筆者は、港湾運営に関し、上記の7つの分野における最新の研究を取り入れ、国内外のジャー
ナルや学会に多くの査読審査付き研究論文（主筆13編）を発表してきた。本報告はこれらの研究成果
を体系的網羅的に取り纏めたものであり、同時に期せずして港湾運営方式を体系的網羅的に研究した研究成果となった。
筆者は国外の多くの港湾経営者や研究者等から研究成果を英文で公表するよう強い要望を受けたた
め、本報告を英文で執筆した。
キーワード：港湾運営、運営会社、生産性、持続可能性* 国際主幹兼特別研究主幹〒239-0826 横須賀市長瀬3-1-1 国立研究開発法人 海上・港湾・航空技術研究所
電話：046-844-5062
Fax：046-844-0575
e-mail: takahashi-ko@pari.go.jp-2-

港湾空港技術研究所

REPORT OF THE PORT AND
AIRPORT RESEARCH INSTITUTE
Vol.55, No.4 (Dec.2016)

Contents
Synopsis ............................................................................................................................................. 1
1. Introduction ................................................................................................................................... 7
Note: Productivity and Sustainability........................................................................................................ 10

2. Analysis on Geographical Characteristics .................................................................................. 11
2.1 Overview and Issues .............................................................................................................................. 11
2.2 Current Status of the Placement of Container Ports throughout the World ............................................ 11
2.3 Classification by Economy Density......................................................................................................... 12
2.4 Classification by Sea Distance between ports ......................................................................................... 12
2.5 Classification of International Container Ports ................................................................................... 14
2.6 Growth Scenarios toward International Container Hub Ports ................................................................ 15
2.6.1 Growth scenario to improve the structure of cargo collection for land transportation ................................ 16
2.6.2 Growth scenario to improve the structure of cargo collection for marine transportation ............................ 16
2.6.3 Growth scenario to improve the structure of cargo collection for land and marine transportation ............. 16

2.7 Structure of Cargo Collection for Land Transportation ......................................................................... 17
2.8 Evaluation of Japan’s Strategic International Container Port Policy ................................................. 20
2.9 Conclusion on Geographical Characteristics .......................................................................................... 21

3. Analysis on Increased Construction Costs .................................................................................. 22
3.1 Overview and Issues .............................................................................................................................. 22
3.2 Gap between the Internalized and Externalized Costs within the Port Construction Costs ..................... 22
3.2.1 Prerequisite for verifying the gap between internalized and externalized costs ................................................. 22
3.2.2 Comparison between port construction costs inside and outside Japan ............................................................. 22

3.3 Factors Increasing Port Construction Costs ........................................................................................... 23
3.3.1 Offshore Deployment to Support Larger Ships ................................................................................................ 23
3.3.2 Countermeasures against earthquakes ............................................................................................................. 24
3.3.3 Countermeasures against soft ground .............................................................................................................. 24
3.3.4 Increase in administrative and maintenance expenses ...................................................................................... 25

3.4 Efforts to Reduce Port Construction Costs ............................................................................................. 25
3.4.1 Approach to technological development in Japan ............................................................................................. 25-3-

Koji TAKAHASHI

3.4.2 Reducing construction costs using performance definitions in the Technical Standards .................................... 26
3.4.3 Reduction in Administrative and Maintenance Expenses by Introducing Lifecycle Management ...................... 27

3.5 Elicitation of New Risk .......................................................................................................................... 27
3.5.1 New Risks Revealed by the Great East Japan Earthquake ............................................................................... 27
3.5.2 Lateral Flow of Landfilled Areas Caused by Liquefaction ................................................................................ 28

3.6 Verifying Increase in the Construction Costs: The Storm Surge Breakwater of the Port of Nagoya ........ 29
3.7 Conclusion on Increased Construction Costs .......................................................................................... 30

4. Analysis on Financial Condition ................................................................................................. 31
4.1 Overview and Issues .............................................................................................................................. 31
4.2 Management Forms of the ports in the world ...................................................................................... 32
4.2.1 Classification of the port management forms ................................................................................................ 32
4.2.2 Trend analysis of management form of the world’s ports ............................................................................. 33

4.3 Capital Cost and Recovery Ratio of Capital Cost of the Landlord Port ............................................. 33
4.4 New Type of Concessions ...................................................................................................................... 34
4.5 Port Facilities and the Structure of Port Management in Japan ......................................................... 35
4.6 Financial Conditions of Port Management bodies ............................................................................... 35
4.6.1 Issues with FB and RB .................................................................................................................................. 36
4.6.2 Tendency of Construction Costs .................................................................................................................... 36

4.7 Port Management body’s Finances Constrained by Redemption of RB .............................................. 37
4.7.1 Case study of RB of Hakata Port .................................................................................................................. 37
4.7.2 Compensation of Financial Sources for Redemption by Local Tax Revenue ................................................. 39
4.7.3 Attracting Businesses through Incentive Assistance ...................................................................................... 39
4.7.4 Case Study of RB of Kitakyushu Port ........................................................................................................... 40
4.7.5 Comparison between Hakata Port and Kitakyushu Port .............................................................................. 40

4.8 Conclusion on Financial Condition ...................................................................................................... 41

5. Analysis on Legal Problems ........................................................................................................ 42
5.1 Overview and Issues .............................................................................................................................. 42
5.2 An Overview of the Japanese Port Management ................................................................................. 42
5.3 Striving for Regional Port Management .............................................................................................. 42
5.3.1 The First Period: Management by Public Corporations ............................................................................... 44
5.3.2 The Second Period: The Introduction of Private Management through the Super-hub Port System ........... 44
5.3.3 The Third Period: Private Regional Management through the Port Management Corporation System ...... 44

5.4 Remaining Challenges for Port Management ...................................................................................... 44
5.4.1 Creative Management and Quick Decision-Making ...................................................................................... 44
5.4.2 The National Government’s Involvement in Building Infrastructure ........................................................... 45-4-

Research Perspectives for Improving the Productivity and the Sustainability of Port Management
5.4.3 The National Government’s Involvement in Management and Operations .................................................. 45

5.5 Port Management in Disaster ............................................................................................................... 45
5.5.1 Lessons .......................................................................................................................................................... 45
5.5.2 The National Government’s Involvement in Disaster Response .................................................................... 46

5.6 Legal Problems ..................................................................................................................................... 47
5.6.1 The limitation of Port Management/Operations by Local Governments Bordering the Sea ......................... 47
5.6.2 The Port Management System is divorced from the Spirit of the Local Autonomy Law............................... 47
5.6.3 The Risk of the Breakdown of Port Management and Operations ................................................................ 47
5.6.4 Creative Management, Pursuing Economy of Scale while Safeguarding the Public Interest ........................ 47

5.7 Solutions to Legal Problems ................................................................................................................. 48
5.8 Conclusion on Legal Problems ............................................................................................................. 50

6. Analysis on Large-Scale Natural Disasters ................................................................................. 51
6.1 Overview and Issues .............................................................................................................................. 51
6.2 Response to Large-Scale Natural Disaster Risks ................................................................................. 51
6.2.1 Overview of the Sacrifice Model ................................................................................................................... 52
6.2.2 Simulation Results ......................................................................................................................................... 53

6.3 Backup scenario for Establishing Backup Systems .............................................................................. 53
6.4 Conclusion on Large-Scale Natural Disasters ...................................................................................... 56

7. Analysis on Leadership of National Gov’t .................................................................................. 57
7.1 Overview and Issues .............................................................................................................................. 57
7.2 Switch of the Port Policy by the Administration Change of Government: Canadian Case ................. 57
7.2.1 Reform of the Canadian Port System ............................................................................................................ 57
7.2.2 Characteristics of the Canadian Federal Government's Leadership for the Port Management/Operation .. 59

7.3 Switch of the Port Policy by the Administration Change of Government: Japanese Case .................. 60
7.3.1 Reform of the Japanese Port Management System ....................................................................................... 60
7.3.2 Characteristics of Japanese Government's Leadership ................................................................................. 62

7.4 Management/Operation Integration Case of the Ports of Denmark/Sweden ....................................... 64
7.4.1 Formation of Transnational Economic/Living Area ...................................................................................... 64
7.4.2 Structure of Port Operations ......................................................................................................................... 64
7.4.3 Involvement of National Government in CMP .............................................................................................. 64

7.5 Comparison of the Participation of the National Government ............................................................ 65
7.6 Conclusion on Leadership of National Government ............................................................................ 66

8. Analysis on Stakeholders ............................................................................................................. 67
8.1 Overview and Issues .............................................................................................................................. 67-5-

Koji TAKAHASHI

8.2 Changes in a Social Economy ................................................................................................................. 67
8.3 Stockholder structure and the strengths ................................................................................................. 68
8.4 New National Targets and Solution Policies ......................................................................................... 74
8.5 Forming Public Opinion by Third Party.............................................................................................. 74

9. Three possible scenarios .............................................................................................................. 77
9.1 Overview and Issues .............................................................................................................................. 77
9.2 Possible scenarios .................................................................................................................................. 77
9.2.1 Scenario 1 ....................................................................................................................................................... 77
9.2.2 Scenario 2 ....................................................................................................................................................... 77
9.2.3 Scenario 3 ....................................................................................................................................................... 77

9.3 Process for the Realization of Scenarios .............................................................................................. 78
9.4 Remaining Issues for Research ............................................................................................................ 78

10. Conclusion ................................................................................................................................. 81
Acknowledgements .......................................................................................................................... 83
Afterword ........................................................................................................................................ 83
References ........................................................................................................................................ 84-6-

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

the labor unions in USA such as International Longshore and1. Introduction

Warehouse Union: ILWU and International Longshoremen's
Association: ILA.

To get this report started, the author presents an overview
of the current state of stakeholders concerned with port
management in Japan. Stakeholders of Japan are very
complicated as well as more numerous than those of the world

Table 1.1 Stakeholders of Port Management

as shown at Table 1.1.

Source: The author created this table based on author’s
research.
U.S.A.
Port Authority
Terminal Operator
Labor Union
EU
Port Authority
Terminal Operator
Labor Union
U.K.
Terminal Operator
Labor Union

The Port and Harbor Law of Japan gives the authority andresponsibility of Port management to the “Port Management
Body”. According to this law, the Japanese “Port Management
Body” is classified into “Prefecture”, “Municipality”, “Port
Authority” and “Administrative Association” which consistsof two or more local governments.
Table 1.2 and Figure 1.1 show the calcification, numbers
and locations of ports in Japan. As shown at Table 1.3, there
have been established 166 port management bodies in Japan.
The breakdown of them is as follows: 39 are prefectures, 120
are Municipalities, 1 is Port Authority and 6 are
Administrative Association. As all of them are local

Japan
National Government
Port Management Body
Port Authority
Local Government
Administrative Association
Port Management Cooperation
Terminal Operator
Port Corporation
Port Transport Business
Prime Provider
Shipping company
Warehousing company
Pure-play company
Sub Provider
Pure-play company
Labor Union

governments, no port management bodies have ever been
independent from the local government systems. Although

Table 1.2 Classifications and Numbers of Ports“Port Authority” has the same name as ones in U.S.A.,

Source: “List of Port Management Bodies” of MLIT (2016)
Classification
International
Extremely Significant Role
5
Strategic Ports
for International Trade
Major
Significant Role for
18
International Ports
International Trade
Significant Role for Mainly
Major Ports
102
Domestic Trade
Local Ports
Role for local area’s trade
808
Article 56 Ports
Designated Water Ares
61
Total
994

Canada and EU, Japan’s is significantly different from others.
Unless it is necessary to discern them exactly in this report,
the author describes “Port Management Body” as “Local
Government”.
Figure 1.2 shows that there are many stakeholders interminal operations. A terminal operator contracts port
transport companies to handle container cargo. Terminal
operators are composed of three business groups historicallywhich are affiliated with a shipping company, a warehousing
company and a port transport company. When port workers
are short, these companies may contract with sub providers as
an original prime provider.
Port workers have organized an industrial labor union.
They are employees of port transport companies, warehousing
companies, port truck companies and so on. As port workers
are employees of these private companies, Japaneseemployment form is different from that of U.S.A. and otherFigure 1.1 Locations of Ports in Japan

foreign countries. The industrial labor union does not dispatch
port workers to container terminals, which is different from-7-

Koji TAKAHASHI

Table 1.3 Type of Ports and Port Management bodies
Note: (*) shows numbers of “Ports of Refuge”. Total includes number of “Ports of Refuge”.
Port Management Bodies governing several types of ports are classified into the high rank division.
Source: “List of Port Management Bodies” of MLIT (2016)
Port Management Body
Municipality

Port Authority

Administrative
Association

Int’l Strategic Ports
Major Int’l Ports
Major Ports
Local Ports

5
18
45
98

1
11
25
2

4
4
16
96

0
0
1
0

0
3
3
0

Total (*)

166 (29)39 (23)120 (6)

1 (0)

6 (0)

Lease
SupportSupervise

Investors
Lease
Cooperate
Supervise

Contract

Port Transport
Business Providers
Fees

Services

Fees

Terminal
Operators✔Local Public Assets(Land, Facilities)✔Port Use Plan
✔Management Policy✔Usage Fees

Services✔National Assets(Land)✔Reduction of
Taxes✔Loans without
Interest✔Land Use

Land
Lease

Fees

Port Management
Corporations

Shippers
Shipping Companies
Land Transport Companies
Figure 1.2 Correlation Diagrams of Concerned Parties of Port Management
Source: The author created this figure based on Acts of Japan.

-8-Port Management bodies（Local Governments)

Prefecture

Investment

Total

National Government

Division

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

The local government has to plan, construct and manage its

port management corporations to repay the debt owed to theports by the law. If the local government needs the national

local/national government and commercial banks with theirgovernment’s support and the national government determines

operating profits.

that it is necessary to intensively support based on the
What kinds of advantages are these port management

national strategic policy, the local government can receive

corporation systems expected to have?

subsidies for construction of port facilities such as deep-sea
breakwaters, deep-sea quays and so on.

The port management corporations borrow the real estateandIt does not mean that the national government has neverportfacilities

constructed

by

the

national/local

done anything, but its participation in port management isgovernment cheaply and lend them at a reasonable price tolimited to providing subsidies for construction of various port

terminal operators. In other words, this corporation is the realfacilities and to examining whether the port plan is suitable

estate lease business to run with a profit margin by subletting

for the national strategic policy.

lands and port facilities. As the only one port management

Insofar as container terminals, port management by the

corporation managing all container terminals in one port, thislocal government is not productive. Therefore, many policies

corporation is expected to improve the productivity not only

for improving the productivity of container terminals haveby concentrating investment on the latest container terminal

been carried out in Japan such as spinning off profitable

but also by cleaning up surplus container terminals. Thisbusiness, privatization, and concession which is the so-called

corporation‘schemeterminals in Japan. In the future, through the integration ofofseparating

infrastructureownershipandmay promote

reorganizationofcontainer

port management corporations, one corporation will become

management’.

able to manage the productivity of all container terminals inInternational Strategic Ports, Major International Ports andMajor local governments established “Public/Private Port

Major Ports.

Corporations” to construct and manage container terminals
instead of doing it themselves. However, Port corporations
were limited to constructing container terminals and leasing

On the other hand, a new policy was necessary for thethem to terminal operators individually. This situation caused

National Government to participate in port management anda result to be unproductive. The first reason was that theseto realize the scheme of separating infrastructure ownershipcorporations had to construct deep-sea container terminals

and management by the leadership of the national government.

with their own resources, but they could not get sufficient

In 2011, the National Diet of Japan passed a law to implement

income in spite of immense construction costs. The second

the policy of International Container Strategy Ports.

reason was that these port corporations and local governments

As thus far described, Port management corporations have

had the overlapping role in a port to lease terminals tobeen established as private stock companies for earning aterminal operators. As a result, some port corporations such as

great deal of money as well as realizing the policy ofKobe Port Corporation fell into absolute insolvency.

International Container Strategy Ports by playing a role inmanaging container terminals. However, now, they face thevarious managing issues as mentioned in this report, which

With the purpose of improving this situation, a system

make their initial objectives difficult to achieve.

wherein one port management corporation manages all
container terminals in the same port has been establishedbased on a scheme of separating infrastructure ownership andHowever, there have not been many exhaustive analyses

management (the so-called “public-built private-management

focusing on the issues and scenarios that provide specificsystem”) by the leadership of the national government. In thesolutions for them. Therefore, the author has been undertaking

background where local governments had agreed to thecomprehensive analyses on port management, and its various

establishment of port management corporations, there wereresearch that has been presented as the following series of thecircumstances where local governments were plagued by theauthor’s past research on port management.

absolute insolvency of port corporations and had expected-9-

Koji TAKAHASHI

Takahashi et al. (2013e, 2013f) stated the need to integrate

Chapter 2 to Chapter 8, to the issues on the current port
management system of Japan.

facilities for container terminals by reducing surplus facilities,
in accordance with Japan’s geographic characteristics fromthe perspective of physical geography, in order to improve theThis report aims to specify the issues that stakeholders face,

productivity of container terminals in Japan. Takahashi et al.

social economic problems to be dealt with, strong points and(2013b, 2014d) and Kasugai et al. (2013) argued that thechallenges of the port management corporations, newfiscal conditions of local governments, as port management

objectives and solutions that the national government

bodies had been deteriorating due to an increase in the capital

advocates, the necessity of third parties, several scenarios incosts and administrative and maintenance expenses of thewhich the founding purposes of the port management

ports to be reduced and integrated. Takahashi et al. (2013c,

corporations are realized, and the process of integration of the2015b) pointed out that a rise in the capital costs andport management corporations into one corporation in Japan

administrative

as their business strategies. The author verifies them inandmaintenanceexpensesshouldbecompensated by injecting local taxes. Takahashi et al. (2013d)

Chapter 8 and Chapter 9.

also verified the current port management system operated by
Finally, the author shows conclusion and summary of thislocal governments with the objective of Japan’s legal system,and pointed out the situation of a global port operation being

report in Chapter 10.

constrained by the Local Autonomy Act of Japan.
Furthermore, Takahashi et al. (2013a, 2013g, 2014a) insisted

Note: Productivity and Sustainability

that an integrated operation of container terminals throughout
Japan is necessary, in order to build the sustainability in port

‘International competitiveness’ is non-existent concept inmanagement, which is resistant to large-scale natural disasters

this report and is frequently used wrongly instead of

expected to occur in the future. According to Takahashi et al.

‘productivity’ or ‘sustainability’ in Japan. The author uses

(2014b, 2014c), what is inevitable to implement solutions for

productivity and sustainability in this report according to thethe issues is not leaving it to the initiative of local

definitions by Business Dictionary (2016).

governments but the powerful leadership of the national
government.
On the other hand, in the current economic environment,
port management needs to make new capital investment tocope with the issues such as the tightening of CO2 emissions
regulations, a lower birth rate with longer longevity, and theimprovement of an industrial safety and health environment
for port workers.
For this reason, the author conducted intensive surveys on
cargo owners, shipping companies, port transport businessproviders, the Ministry of Land, Infrastructure, Transport andTourism (MLIT) and port management bodies, in order tospecify the factors that were hurdles to resolving the issues
and to clarify the current economic environment of port
management. Based on the analyses, finally, Takahashi(2015a) proposed

the management

strategy for

port

management corporations.
This report shows detailed solutions in Chapter 9, as wellas conclusions of the author’s past research mentioned in- 10 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

U.S.A. is in third place, the number of ports that these

2. Analysis on Geographical Characteristics

countries possess is reasonable, because of their huge land

2.1 Overview and Issues

areas and trading volumes. Germany has a large number of

Shipping companies consider two types of factors wheninland-river ports along the Rhine water system, but only four

setting up trunk shipping routes for international container

ports in direct contact with the open sea at which largetransportation. The first is geographical factors, such as

container ships can call. Spain has mooring facilities forgeographical positions on a global scale, sea area conditions

containers at many ports on the Canary Islands, resulting in ato set up shipping routes, economic sizes of port hinterlands,

relatively large number of ports. Relative to these countries,

and international affairs. The second is factors related to

the number of ports in Japan is extraordinarily large given its

means of transportation, such as scales and functions ofland area.

container ships and container terminals. Fujita･Krugman･
Venables (1999) showed why ports and other transportation
hubs become sites for cities. By focusing on the “economic
activity density” and “vertical depth” of the port hinterland,
which are the least studied among geographic characteristics
so far, an analysis of the geographical characteristics of ports
throughout the world clarified that three types of ports exist interms of port placement:
a. “Continental hub port type,” which has dense economic
activity and is large in vertical depth;

Figure.2.1 Locations of Ports Holding Mooring Facilities,
Dedicated to Containers

b. “Marine hub port type,” which has low density economic

Note: Top 100 Ports Handling Container Cargo Volume

activity and is small in vertical depth; andc. “Japanese-type,” which has dense economic activity andis small in vertical depth.

50

The analysis also clarified that, to prevent further decreases

40

in the shares of economic activity in other countries,

Number of Ports

30

Japanese-type ports are required to implement a balanced
indexes of overseas transshipment ratios but on the integration

10of port facilities.

0

2.2 Current Status of the Placement of Container

China
Japan
U.S.A.
GermanSpain
Indonesia
Italy
Korea
RussiaIndia
BrazilUnited…
Australia
FranceMalaysia

20

minimization policy that does not depend on improved

Ports throughout the World
Visual checks of aerial views in Google Maps confirmed

Figure 2.2 Number of Ports by Country Holding Mooring
Facilities Dedicated for Containersthat mooring facilities exist that are dedicated to containers inmore than 435 ports in 125 countries around the world.
Figure 2.1 shows the locations of top 100 ports confirmed asholding container facilities.

Figure2.3 shows, for each region of the world, the status of

Figure 2.2 indicates, by country, the number of ports withports holding mooring facilities dedicated to containers. In

mooring facilities dedicated to containers, particularly in thethis summary, inland-river ports limiting the calling of large

15 countries with a relatively larger number of ports. China

container ships are separately counted. Overall, East Asia andhas the largest number of ports, followed by Japan, U.S.A.,

Europe have the largest number of container handling ports.

Germany, and Spain. Considering that China is at the top and

As of 2010, the East Asian regions including China had the- 11 -

Koji TAKAHASHI

largest proportion of the approximately 100 ports that handledshoreline is known to vary depending on the measurement

1 million TEU (Twenty Foot Equivalent Unit) or more perscale used, which is a classical fractal problem. Although

year, followed by European regions, North American regions

stating that the absolute values directly represent the values ofincluding the Atlantic and Pacific regions, and Southeast

the depth of national lands is difficult, using the indexes for a

Asian regions. Likewise, the East Asian region including

relative comparison of countries or regions may be possible.

China, Japan, South Korea, and Taiwan has the largest share

For example, according to Figure 2.5, the national land areaof the approximately 20 ports in the world that handle 5

per shoreline of Japan is 1/100th that of Brazil, the largest,

million TEU, followed by Southeast Asia and the Atlantic

and 1/50th that of China, the second largest. Converting thesecoast region of Europe. A review of America shows thatvalues into relative relationships of ports and their hinterlands

large-scale container ports exist on both the Pacific side andshows that the hinterlands of the ports in Japan are extremely

the Atlantic Ocean side. The Middle East region’s large-scalenarrow and have almost no depth compared with ports locatedport is in Dubai.

on continents.

As previously mentioned, East Asia, the Atlantic coast

As previously described, compared with lands of otherregion of Europe, and North America are aggressively

countries, Japan’s land is high in the density of economic

engaged in economic activities; thus, against this background,

activity but spatially narrow considering the extension of its

that large-scale container ports are thriving is fully

shoreline; therefore, Japan’s land is viewed as having quite aunderstandable. However, large-scale container ports haveunique geographical and spatial structure. As a result, Japanemerged in Southeast Asia and the Middle East because theyhas established many ports as its basis of local economic

handle not only import and export cargo generated from theiractivity.

hinterlands but also many transshipment cargo.

2.4 Classification by Sea Distance between ports

Moreover, in relation to those container ports, noticing that
relatively large-scale container ports are economically viable

Figure 2.6, Figure 2.7, and Figure 2.8 show the number ofis important even in areas in which no large islands andcontainer ports for every 500 km of distance within a total

economic activity islands exist and in which the generation of

distance of 5,000 km in the three regions of the Atlantic coastcargo cannot be expected because of their sluggish economies.

of Western Europe, Southeast Asia, and East Asia. These

Therefore, the ports are running smoothly only throughfigures are regarded as showing the patterns of distancetransshipments between container ship routes.

distributions in which the targeted major ports have their own

In addition, many inland river ports are seen handling

centeredness.

containers along the Rhine water system, the Chan Jiang

Distribution patterns by distance range of major ports inRiver water system, the Danube River, the Amazon, the Rio

Europe shown in Figure 2.6 and of those in Southeast Asiade la Plata, the Congo River, and others. These inland rivershown in Figure 2.7 are relatively uniform and no significant

ports, at which large-scale container ships call, contribute todifference exists among them. Almost no geographicalthe formation of their hinterlands and are reasonably regarded

distance advantage exists for container ports among the major

as complementing and replacing land transportation.

ports in Europe; therefore, their current relationships are
deemed likely to be maintained.

2.3 Classification by Economy Density
Figure 2.4 shows the nominal values of GDP per
inhabitable land area in the 15 top countries with more than
U.S. $1 trillion in GDP for fiscal year 2012. In Japan, GDP
per inhabitable land area was prominently high among thesecountries.
Furthermore, Figure 2.5 shows the value gained by
dividing the national land area by the shoreline. Thisdimension as a distance is viewed as representing the depth ofthe country for the shoreline. However, the length of the- 12 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Number of Ports

Figure 2.5 National Land Area per Shoreline
Source: THE WORLD FACT BOOK, CIA

Figure 2.3 Number of Ports by Region Holding
Mooring Facilities Dedicated to Containers
Source: Containerization International Yearbook 2012.

Figure 2.6 Distances to Container Handling Port from
Major Ports (Atlantic Coast of Western Europe)

Figure 2.4 GDP per Inhabitable Land Area
(Nominal Value)
Source: World Economic Outlook Database 2013, IMF
THE WORLD FACT BOOK, CIA
State of the World’s Forest 2009.FAO

Figure 2.7 Distances to Container Handling Port from
Major Ports (Southeast Asia)- 13 -

Koji TAKAHASHI

covered.
An analysis of the patterns of the distances among these
ports showed that the strategic international container policythat aims to attract overseas transshipment cargo from, forexample, Busan Port to Japanese ports is contrary to Japan’s
geographic characteristics. Thus, this analysis indicates thatnot much of an effect is expect from the strategic international
container policy.

2.5 Classification of International Container Ports
Table 2.1 shows the result of the classification of ports
around the world based on geographic characteristics. Broadly,
the number of continental hub ports is the largest. Many of

Figure 2.8 Distances to Container Handling Port fromthem have wide-area, low-density hinterlands that are

Major Ports (East Asia)

structured to collect the cargo generated in those vasthinterland areas. The ports in Japan have the extreme opposite
Regarding Southeast Asia in Figure 2.7, the Singapore

characteristics of such continental ports. Although Japan’sPort is far advanced in terms of expansion of scale, followed

ports have very narrow hinterland areas, the economic activity

by other ports. These four ports are far from one anotheris extremely dense and many container handling ports are

relative to those in Europe. Nevertheless, these ports have noplaced there. The hinterlands of the ports in Europe aredifference in geographical advantage because few ports exist

classified into an intermediate position between these twoin the vicinity of Southeast Asia, and many ports in the region

extremes.

are larger in scale and, therefore, distributed across long

Regarding the classification of the world’s leading

distances rather than at short distances. Regarding futureinternational container ports by whether they depend

competition among ports, a good possibility exists that the

primarily on land transportation or marine transportation toports in this region that compete with those in East Asia,

collect cargo, the representative ports depending on land

Europe, North America, and other regions are located at longtransportation are those along the Atlantic coast, such as

distances in an attempt to acquire positions of hub ports in the

Amsterdam and Antwerp in the EU, almost all major ports inglobal network by collapsing the existing pattern.

U.S.A. including Long Beach, Los Angeles and NYNJ, andFigure 2.8 shows the major ports in East Asia, which aremajor ports in China such as Shanghai and Dalian. The samevery different from one another in terms of geographic

point is relevant for the major ports in Japan, such as Keihinadvantage—quite different from ports in Europe andand Hanshin, and the ports of Melbourne and Sydney inSoutheast Asia. A comparison of Busan Port in Korea andAustralia. Characteristically, the ratio of transshipment is low

Keihin Port (Tokyo, Kawasaki and Yokohama) in Japanfor the volume of containers handled at any of these ports,shows that quite a number of ports are within a 1,000-km

and their hinterlands have sizable economic activity. However,distance to Busan Port in the eastern part of China and Japan,such a large-scale economy in the hinterland can be

and this port is clearly in a position to more easily collectsubdivided into the following three cases:

cargo through short-distance feeder transport. In addition, theport also faces Tsushima Straits, which converges shippinga. the area of the hinterland is wide;

routes. Clearly, Busan Port is in a more advantageous positionb. the area of the hinterland is narrow but the economic
activity is dense; andfor cargo collection for marine transportation than Keihin Portc. the area of the hinterland is wide and economic activity

in Japan, which is located at the far-east end of the East Asianis dense.

region. Kaohsiung Port covers a distance of 1,500 to 2,000
km, whereas Keihin Port covers a distance of 0 to 5,000 km
but offers no geographical advantage for this specific distance- 14 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

In contrast, representative ports that heavily rely on marine

Table 2.1 Number of Container Handling Ports

transportation include those in Singapore and Marsaxlokk
Classification(Malta), Salalah (Oman), and Freeport (Bahamas). Any ofRepresentative Ports

Continental hub port type
LA/ LB, NYNJ,
Wide-area, low-density
Virginia, Melbourne,
type
Shanghai.
Rotterdam, Hamburg,
Wide-area, high-density
Le Havre,
type
Felixstowe,
Southampton
Keihin(Tokyo,
Kawasaki,
Yokohama),
Hanshin(Kobe,
Narrow-area,
Osaka), Isewan
extra-high-density type
(Nagoya, Yokkaichi),Northern
Kyushu(Hakata,
Kitakyushu,
Shimonoseki)

75

Marine hub port type31

Obstructingterrain type

Narrow-terrain type
Protruding-terrain
type

Remote isolated-island
type

Singapore, Dubai,
Tanger, Balboa, Port
Said
Gioia Tauro, Salalah,
Jeddah, Algeciras,
Port Elizabeth
Marsaxlokk, Freeport,
Las Palmas,
King Stone.

Container/Marine hub port
type
Locally demand type
Total

Busan

these ports belong to either one group of ports with land areas
such as straits, canals, or protruding land terrain that converge

56

shipping routes by obstructing geographic features toconstrain the cruising of ships or the other group of ports on
islands far from continents, making them appropriate for

15

connecting shipping routes.
Therefore, major container handling ports in the world
appear to be classified into two types: the continental hub portthat has a hinterland, is located on a continent, and engages inlarge-scale economic activity, and the marine-hub port that4

forms a shipping route hub located in a sea area with highgeographical advantage. Busan Port, which has a large-sized
hinterland and the geographical advantage of facing theTsushima Strait, represents both types of ports and accepts
numerous transshipments.
12

In addition, small ports that handle a relatively small
number of containers have minimal volume in response to
demand for marine transportation by the hinterland. Such10

ports and island ports, if classified, are ports responding toregional demands.

9

A comparison of the geographical advantages of ports based1

on distance between ports shows that ports in Europe and

328
435

Southeast Asia are not different given their balanced
geographicaladvantages.

Incontrast,

Japanese

ports

Note: Boundary condition

represented by Keihin Port have no geographical advantage.

a. Hinterland GDP: Over $500 billion

As was shown, relative to other countries, land in Japan has

b. Wide-area, low-density:

specialOver 3 million km2, bellow $0.1million/km2

geographicalcharacteristics,

such

as

being

conspicuously high in economic activity density and spatiallyc. Wide-area, high-density:

narrow to the coastline, and the ports have no geographical

0.03-1 million km2, bellow $0.5million-3million/km2

advantage in terms of the distance between them. The resultsd. Extra-High-Density:of this research enabled the author to clarify that Japan has

Bellow 0.05 million km2, over $3million/km2

special geographical characteristics compared with the manye. Remote Isolated Island type is far more than 50 nautical

ports in the world that are viable as the base of regional

miles from the ports and routes

economic activity. Thus, the author credibly presented thisf. Narrow-terrain type is located in the waterway where allworld’s first research result.

container routes are concentrated.
g. Protruding-terrain type is located in the waterway where at

2.6 Growth Scenarios toward International

least one route detours around.

Container Hub Ports
For international marine container transportation, hub ports
exist at which large container ships call and non-hub ports
exist in the main trunk sea route networks. The author
considers the type of growth scenario of the ports that have

- 15 -

Koji TAKAHASHI

established themselves as international container hub ports.

sea at first, transshipment handling volume is generally low.

TheshouldThrough this development process, the likelihood of

appropriately enhance their “port services” and secure a

becoming a hub port increases, and if shipping routes are“certain scale of container handling volume at all times on thedensely disposed with an increase in container handlingpremise of their geographical conditions.” As previously

volume, further efforts to become a hub port are madedescribed, the container handling volume of a port greater

through an increase in transshipment cargo volume by taking

than that of other competing ports increases the likelihood ofadvantage of converging shipping routes. The expansion of

a port becoming a hub port in the region. This concept can be

major ports of China in recent years is viewed as conforming

simply expressed by Equation (2.1).

to this growth scenario.

authorarguesthat,in

Qp = Qg + Qt ≥ Qpc

principle,

ports

2.6.2 Growth scenario to improve the structure of cargo(2.1)

collection for marine transportation
The promotion of invitation of shipping routes for selected

where Qp refers to the port’s container handling volume,use of the port and realization of the convergence of shipping
routes by using the geographical advantage of being locatedQg refers to the containerized cargo volume generated innear straits, alongside canals, or on islands enables theformation of a marine network hub to enhance the likelihood

the hinterland, Qt refers to the containerized cargo volume
by transship, andof becoming a hub port. In particular, efforts need to be madeto secure an institutional advantage to strengthen the relay

Qpc refers to the containerized cargo

function for marine transportation. Because transshipments

volume required for an international container hub port to be

are done primarily between sea and sea, transshipment

established as such. If Equation (2.1) is assumed, the growthhandling volume is generally high at first. Then, increasing

scenario for the port to become a hub port is that for which

the volume of cargo generated in the region behind the portby securing new economic activity space and leveraging the

Qpc is increasing yearly with an expansion of the world

advantage of the location for industrial sites for international
logistics against this background will enhance the likelihood

economy, the growth scenario to improve the cargo bookingof the port becoming a hub port. This growth scenario is seen

structure for land transportation aims primarily at increasingin the Singapore port and the Dubai port.

Qg , and the growth scenario to improve the cargo booking
structure for marine transportation aims primarily at

2.6.3 Growth scenario to improve the structure of cargocollection for land and marine transportation

increasing Qt .

Growth scenarios 2.6.1 and 2.6.2 are to be promoted inparallel. The corresponding case is Busan port.

2.6.1 Growth scenario to improve the structure of cargocollection for land transportation

Qp is represented in the following equation:

As a whole, the growth scenario involves the attempt to
expand the scale of the port by implementing expansion

Qg = ∫ qdA = A ⋅ qmeasures to improve the scale of economic activity such asApromoting the efficiency of cargo collection networks,(2.2)

including the development of roads, railways, and rivertransportation facilities into the hinterland and preparing
where

conditions to establish new business facilities there, while
taking advantage of the larger scale of the hinterland andA refers to the land area of the hinterland, q refers

to the generated volume of container cargo at any position inmaintaining a certain distance from other neighboring ports.
the hinterland, andBecause transshipment is done primarily between land and- 16 -

qrefers to the average generated

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

volume of container cargo per hinterland land area.
According to Equation (2.1) and Equation (2.2), for

2.7 Structure of Cargo Collection for Land

Qp

Transportation
Figure 2.10 shows GDP values per inhabitable land area into exceed Qpc in the growth scenario to improve cargo

Figure 2.4, indexed to a world average of “100”. Thus,

collection for land transportation, attempting to increase any
one or more of Qt , A andJapan's density of economic activity is still one of the highest
in the world but, relatively, is on a declining trend.

q is necessary.

Increasing container cargo volume generated in thehinterland requires an increase in either container cargovolume per land area generated in the hinterland or the spatial

Figure 2.9 indicates changes in the ratios of GDPs bysize of the hinterland. Container cargo volume per land area

region of the world, including projected ratios, and shows adepends on the density of the economic activity and the

downward trend in the scale of economic activity in Japan,

efficiency of transportation in the hinterland. However, asNorth America, and the EU relative to that of the world.

shown in Figure 2.10, Japan’s density of economic activity is

Simultaneously, the ratio for the Asian region excluding Japanon a relatively declining trend. Therefore, no other way exists

is significantly increasing. In the East Asian region in which

to realize a growth scenario to improve the structure of cargo

the economic activity ratios of countries other than Japan

collection for land transportation except to work on thehave been relatively increasing, only Japan has experienced aexpansion of the spatial size of the hinterland. Achieving thisdecrease in its ratio, which is significantly different from thegoal by reorganizing port functions is possible, as mentioned

overall downward trends in the ratios for the EU and North

in “International Strategic Container Ports,” Japan’s current

America. These patterns reflect the increasing trend inpolicy on its major ports. However, “International Strategictransshipments of international cargo coming from and goingContainer Ports” aims to acquire direct transshipment cargo.

to Japan through other countries in East Asia.

In contrast, the main target of the growth scenario to improve
the structure of cargo collection for land transportation is toacquire hub port positions.
In actuality, reducing the number of candidates forcontainer handling hub ports to concentrate on and integrate
the hinterlands is necessary. Port policies developed to datethroughout the world are all premised on economic growth,and no predecessors exist in the reorganization of portfunctions by selective concentration.
If the hinterlands are integrated by reorganizing portfunctions, their depths from the coastline remain the same but
their expansion will follow the direction of the coastline. By
simplifying this matter into the relationship between the depthof the hinterland and the intervals between ports, the author

Figure 2.9 Trends in GDPs by Regions of the World

experimentally attempted to discuss integration of port

Source: World Economic Outlook Database 2013, IMF

functions and the horizontal to depth ratio of the hinterland.
As the simplest model, suppose that ports are placed at thesame interval along the country’s monotonous straightcoastline. The author then considers the effects of integrating
the hinterlands in the directions of the coastline. Figure 2.11
graphically represents all of these prerequisites.

- 17 -

Koji TAKAHASHI

hinterland is expressed as follows:

Cl = ∫ α ⋅ r ⋅ qdA = α ⋅ q ∫ rdA = α ⋅ q ⋅ S
A

A

(2.4)

Cp = ∫ β ⋅ qdA = β ⋅ q ∫ dA = β ⋅ q ⋅ A
A

A

(2.5)

In Equation (2.4), S forms the primary moment thatdefines as the pole the position of the rectangular port
representing the hinterland. To calculate this S, thecoordinates are set up as in Figure 2.12.
Figure 2.10 GDP per Inhabitable Land Area
Source: World Economic Outlook Database 2013, IMF
THE WORLD FACT BOOK, CIA, State of the World’s
Forest 2009.FAO

Figure 2.12 Definitions of Coordinates

If the average transportation cost throughout the hinterland

Figure 2.11 Simplified Image of Hinterland

is represented by c t and the average transportation distance
Cargo volume per unit area q is generated at a certain point
throughout the hinterland is represented byin the hinterland of a port, as previously mentioned, and thecost required to ship the volume via the port is ct, which isr , then equations

are set up as follows:

represented in the following equation:

ct = cl + cp = α ⋅ r ⋅ q + β ⋅ q = (α ⋅ r + β ) ⋅ q

δ =

(2.3)

r
D

(2.6)

β
α ⋅D

(2.7)

δp =

where cl refers to the cost related to the workload including
land transportation distance; cp refers to the cost related to thecargo volume including cargo handling at the port; r refers
to the land transportation distance; α refers to the cost

Then, Equation (2.3) can be expressed as follows:

required for a unit-distance transportation of a unit cargovolume; and β refers to the total sum of the costs required toct= δ + δpα ⋅q⋅D

handle a unit of cargo volume at the port. If the area of theregion of the hinterland of the port is represented by A, thecost for cargo transportation related to the port in the entire- 18 -(2.8)

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

In addition, if equations are set up as follows:η=

Figure 2.13 graphically represents the relationship betweenWDη and δ(2.9)

η does not exceed 1, the effect of the change in η is2

φ = Tan −1  η (2.10)

minimal because the depth of the hinterland D is a dominating
factor for average transportation distance δ . In contrast, if

and if the definite integral of S in Equation (2.4) is calculated
and the result is applied to δ , δ

the depth of the hinterland

is calculated in thefollowing equation:δ =in Equation (2.11). If the depth of the hinterlandη exceeds 1, the port placement

interval W becomes a dominant factor and δ 1 + cos φ  1 + sin φ   1 cos φ
2 η 3  1 sin φ
11+ ⋅ ln+ ⋅ ln ⋅ +  ⋅2
3 ⋅ η  8  2 cos 2 φ 4
 1 − cos φ  1 − sin φ   2 sin φ 4(2.11)

drasticallyη

increases with an increase in . In general, the depth of thehinterland of the port located on the continent is long in
distance compared with the port placement interval, ensuring

Equation (2.11) makes it possible to determine thethatdimensionless amount of average transportation distance δη does not exceed 1. Therefore, port improvement isunderstood to have been made irrespective of the portηplacement interval. In contrast, the depth of the hinterlands ofby using the horizontal to depth ratio of the hinterland , thatJapanese ports is quite short as previously mentioned, andis, the ratio between the distance from one port to anotherη

adjoining one and the depth of the hinterland. Further, δp isoften takes a value of 1 or larger. Therefore, if the land area ofgiven, making it possible to calculate the dimensionlessoperation of the port, the interpretation is that a reduction inamount c t / α ⋅ q ⋅ D of the average cargo transportation

η was asked for by narrowing down the port placement

cost in the hinterland of the port using Equation (2.8).

intervals as much as possible. Therefore, Japan is deemed tothe hinterland is within a range that allows for the constant

have placed many small-scale ports in its limited land area.
In Japan, the reorganization of port functions meansηincreasing W and , leading to an increase in the averagecontainer transportation distance in the hinterland. Figure
2.14 shows the result of a sensitivity analysis of an increase in
the average transportation distance. For example, assuming a
condition of η = 1.5 , a reduction in the number of ports
will double the port placement intervals under the conditionof no change in the depth of the hinterland, resulting in a
doubling of

Figure 2.13 Relationships between Horizontal to Depth Ratioη and Average Transportation Distance δη , or η = 3. If a calculation is made using

Equation (2.11) and these figures for- 19 -

η or using Figure

Koji TAKAHASHI

η , the average transportation

activity in North America, the EU, and Japan relative to that

distance indicates an increase of approximately 44% on

Asian region excluding Japan is increasing significantly. In

average through the entire hinterland. The incremental cost

the East Asian region, the economic activity ratios ofassociated with an increase in transportation distance needs tocountries other than Japan have been relatively increasing, but

be mitigated by reducing cargo handling costs at the port.

only Japan is expected to experience a decrease in its ratio

2.14 and the same values forof the world. Figure 2.9 also shows that the ratio for thethat is significantly different from the overall downward
trends in the ratios for the EU and North America. The
increasing trend in transshipments of international cargocoming from and going to Japan through other countries in
East Asia reflects a decrease in the share of Japan’s economic
activity in the East Asian region. Figure 2.10 shows GDP
values per inhabitable land area in Figure 2.4, indexed to aworld average of “100”. Thus, Japan’s density of economic
activity is still one of the highest in the world but is, relatively,on a declining trend.”
Japan’scurrent

policyoninternational

containers,“Strategic International Container Port Policy,” centersaround a policy on container trunk lines with an index oftransshipment ratio set up to indicate the country’s
productivity

using

the

conceptof‘international

competitiveness’. To be more specific about the content of the

Figure 2.14 Effect of the Change of Horizontal to Depth

policy, regarding reduction of overseas transshipment ratios ofRatio of Hinterland

cargo coming to and going from Japan as the target of its‘international competition’, Japan attempts to solve the issue
The most effective method involves fulfilling theof enhancing ‘international competitiveness’ by improving thereorganization of port functions without changing the spatial

inferior aspects of its ports. Clearly, this policy is extremely

shapes of the hinterlands; that is, reorganizing many existing

important for ‘international competition’ between ports andsmall-scale container ports in the national cargo collection

beneficial to increasing the attractiveness of Japanese ports in

network to make them cooperate with the hub ports to be

the international container market; therefore, steadily andfocused on. According to “International Strategic Container

continuously going ahead with measures based on the policy

Ports,” which Japan is now implementing, taking measures tois necessary. Japan’s Strategic International Container Port

strengthen

thePolicy would be highly effective if Japanese ports had theefficiency of the existing domestic marine network transport,

geographical characteristics of marine hub ports. However, as

and to improve the port-service levels of hub ports is mostshown in this report, Japanese ports have special geographicaldesired. In the future, in-depth discussions are required on

characteristics of the “Japanese port” type; thus, muchensuring integrated management of the domestic container

beneficial effect cannot be expected of this policy.

domestic

coastwisetransportation

for

Then, what should be done?

network.

To keep Japanese ports viable, in response to the relative
decrease in the density of Japanese economic activity,

2.8 Evaluation of Japan’s Strategic International

expanding the range of the hinterland is necessary. In other

Container Port Policy

words, increasing the concentration of containers by reducing
the number of container ports and integrating the port

As mentioned above, “Figure 2.9 indicates changes in thehinterlands must be accomplished.

ratios of GDPs by region of the world, including projectedratios, and shows a downward trend in the scale of economic

As shown in Figure 2.5, Japan’s national inland area is- 20 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

extremely shallow for the length of its coastline. Therefore,

consider the sustainability, which are the earthquake measures

the port hinterlands are not deep. Further, Japan has almost no

to reduce disaster risks. The author believes that prioritizing

undeveloped land area on which to build new bases oftheeconomic activity, indicating that the hinterlands behind theinsufficient to realize this target. What are required are a boldports in the coastal areas cooperate with one another. Under

reorganization of international hub port functions and asuch circumstances, if the hinterlands are integrated by

drastic reformation of the structure of collecting domestic

reorganizing port functions, their depths from the coastline

cargo at major ports.

recognitionof

productivity andsustainability is

Additionally, the author would like to add that, to achieve

remain the same but their expansion follows the direction of

all of these objectives, port management should be discussed

the coastline.

at the national level.

However, to date, any of the port policies throughout theworld were implemented on the premise of enhancing

The author suggests that Japan should further deepen its

economic growth; thus, no preliminary cases exist of a“International Strategic Container Port Policy” and, in fullbalanced reduction policy in which reorganization of port

consideration of the countries geographical features, should

functions aims to reduce ports through integration. Of course,

work out a unique concept of the international hub port as an

because a balanced reduction policy requires painful efforts toisland nation to be implemented as a national strategy.

implement, resistance to such a policy is expected. Therefore,insufficientconsiderationofJapan’sgeographic

characteristics, the Japanese government should develop theconcept of an international hub port for an island nation andproceed with a national strategy of integrating ports through abalanced reduction policy.

2.9 Conclusion on Geographical Characteristics
As a result of our attempt to typify almost all of thecontainer ports in the world, the author recognized that
container hub ports can be divided into a group of continental
hub ports whose mission is to collect cargo primarily from thehinterlands and a group of marine hub ports whose mission is
to handle transshipment cargo as the mode characteristic ofcontainer transportation. From this viewpoint, the author
noted that, although Japan is an island maritime nation, its
container ports satisfy conditions for their continued existenceclose to those of continental hub ports. In addition, significant
gaps exist between the economic growth rates of countries inthe East Asian region and the geographical conditions of theirrespective ports compared with cases in other regions, andcontainer

ports

in

Japan

are—including

local

circumstances—in unique conditions.
Japan’s port policy focuses on working out hub ports thatcan compete effectively with foreign ports to intensively
handle transshipment cargo based on the recognition that theacquisition of more transshipment cargo than other ports is apriority in the productivity using the concept of ‘competition’among international container ports. Japan has a characteristic
wherein there are many large-scale earthquakes and it has to- 21 -

Koji TAKAHASHI

the importance of reinforcing existing port facilities against

3. Analysis on Increased Construction Costs

large-scale natural disasters.

3.1 Overview and Issues
3.2 Gap between the Internalized and Externalized

The major shipping companies of the world are increasing

Costs within the Port Construction Costs

the sizes of their containerships in order to reduce theconstruction

andtransportation

costs

per

TEU

of

As mentioned in Section 3.1, the port construction costs ofcontainerships. Accordingly, anchorage sites for such large

countries increases owing to social and natural factors.

containerships need to prepare deep water mooring facilities,

However, the extent of this increase varies according to social

and the construction costs of the container terminals is boundand natural conditions of each country and site. In this Section,

to increase.

we compared the construction costs of each country and

Further, the 2011 off the Pacific Coast of Tohoku

verified the gap between the internalized and externalized

Earthquake (the so-called “the Great East Japan Earthquake ofcosts within the port construction costs.

2011”) and Hurricane Sandy of 2012 showed port
management bodies of the container terminals around the

3.2.1 Prerequisite for verifying the gap between

world that some large-scale natural disasters might exceed theinternalized and externalized costs

conventional maximum disaster prevention level.

Port construction costs vary largely according to the social

As mentioned earlier, the expansion in containership sizes

and natural conditions of the construction site. We focused on

and preparation for preventive countermeasures against

the gap between the internalized and externalized costs withinlarge-scale natural disasters is causing an increase in thethe port construction costs for Europe, South Korea, andconstruction

Japan, and we compared them under the following

costs

of

container

terminals,

and

port

management bodies all over the world share a common

prerequisites in this report.

concern, namely limiting this increase in the construction
costs.

<Prerequisites>

Therefore, we first compared construction costs acrossWater depth: Quay around 17 m deepmajor global ports, to clarify the gap between internalized andQuay length: Quay around 400 m longexternalized costs within the construction costs and to identify(Converted to construction cost per meter)

the social and natural factors that would increase theSeismic load: Seismic load outside Japan is indicated via a

construction costs. Then, we introduced efforts to reduce thedesign seismic coefficient. Since Japaneseconstruction costs in Japan and verified how the costs forquays are designed considering seismic motion,

improving the existing facilities at the Port of Nagoya, Japan,

seismic load is not indicated (if using thewould rise in response to the upgradation of its disasterconventional design seismic coefficient, thisprevention level for expected large-scale natural disasters.

value corresponds to 0.25 g)

By verifying the Japanese cases, we clarified that it isConstruction cost: Direct construction costs

possible to suppress an increase in the rate of the construction(Port cost estimation standards)

costs to around 10% of its total. Note that we could not(Outside Japan, the construction costs may

estimate the total sum of money required for upgrading theincludedisaster prevention level for future large-scale natural

construction costs of the quays)

project

costs

other

than

the

disasters, because the gaps between the internalized andexternalized costs within the construction costs were large

3.2.2 Comparison between port construction costs insideamong countries.

and outside Japan

Given current progress in the horizontal and vertical

Table 3.1 shows the result of the comparison in quay

specializations of the global economy, any stoppage in theconstruction costs among countries for a high-standard

port functions caused by a large-scale natural disaster in one

container terminal of depth 16 m or more. Generally, thecountry may seriously damage the economic activities ofstructural form varies according to the design and conditions

many countries. Therefore, we hope this report will highlightduring construction, standards such as ground conditions and- 22 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

earthquake resistance standards, and the ordering system. In

has been evidenced since the 1960s in three prime shipping

this report, we estimated that the ports for large containerships

areas: Europe, Asia, and North America. The mooringin all countries include mooring structures, thus lowering thefacilities of the ports in these regions have also been enlarged.

construction costs to the extent possible. In particular, we

Enlarging ports requires not just deepening the water depth

compared the construction costs in terms of secure mooringat the front of the quay, where ships come alongside, to matchfunctions for large container ships. Since the port construction

the draft line of the large ships but also enlarging the channel,

costs for outside of Japan might include the construction costs

anchorage site, and quay site areas and deepening the channel

for other port facilities except quays (for example, freightat the anchorage site.

handling area), there was a possibility that the actual gap

Enlarging ports in areas without a large ground area

between the internalized and externalized costs may be larger

requires offshore deployment of the construction site and thethan that indicated in the comparison. However, whenconstruction of port structures in deep-sea areas.

comparing costs for quays of 16 m depth or more, we foundEnlarging port structures increases the construction costs

that the construction costs of the Ports of Rotterdam andconsiderably. For example, for a caisson type quay (a port

Antwerp, which are not typically subject to earthquakes, werestructure) in deeper water, the landside ground pressure

overwhelmingly lower than those of Japanese ports. Further,increases proportionally with depth, and the resultant force ofwhen comparing quays of 18 m depth, we found that thethe ground pressure increases proportionally to the square ofconstruction costs of the Port of Busan, an area subject tothe depth. Generally, construction costs rapidly growearthquakes albeit at lower seismic loads than those

exponentially with the increase in water depth.

experienced at the Tokyo and Osaka Ports was lower.
Thus, it is clear that the port construction costs vary widely
across countries. In other words, we cannot compare
construction costs simply based on the large gap between

Table 3.1 Comparison of container quay construction costs
Port
Project cost
Maximum water depth (m)($ million/m)
Structure form
Rotterdam 16.7
0.060
Reinforced concrete sheet pile typewith relieving platform
Antwerp17
0.052
Gravity type
(Reinforced concrete L-shaped retaining wall)
Busan
18
0.24
Gravity type
(Vertical wave dissipating caisson)
Tokyo
18
0.43
Piled quay type
Yokohama 18
0.32
Cellular-bulkhead type
Osaka
16
0.28
Piled quay type
Kobe
16
0.25
Piled quay type* The project costs outside Japan may include project costs

external and internal prices.

3.3 Factors Increasing Port Construction Costs
Among the factors increasing port construction costs
around the world, we selected offshore deployment to support
larger ships as a social factor and countermeasures against
earthquakes and soft ground as a natural factor.
3.3.1 Offshore Deployment to Support Larger Ships
Worldwide, value-added expensive products are carried bycontainerships. By utilizing economies of scale, shipping
companies are rapidly increasing the sizes of theircontainerships (Figure 3.1), which go in service in the global
liner routes, in order to reduce the transportation cost per TEUof the marine container. Until recently, the companies

other than the construction costs of the quays.

operated large container ships of total lengths of up to 460 m,
drawing 16 m, and of over 20,000 TEU capacity. They just let** Port project costs outside Japan are calculated aslarger container ships go into service with loadable capacities

construction costs according to Koizumi et al. (2011).

of over 20,000 TEU. Although some believe that very large*** Japanese port project costs are based on the hearing datacontainer ships cancel out economies of scale and that theof the Ministry of Land, Infrastructure, Transport andrestriction at the Strait of Malacca will not allow passage ofTourism of Japan.

larger ships, globally, shipping companies continue topromote the construction of ever-larger container ships; this- 23 -

Koji TAKAHASHI

14,0003.3.2 Countermeasures against earthquakes

16,00013,830Quantity shipped

Figure 3.2 shows the world earthquake distribution map

12,000issued by the United States Geological Survey (USGS),

11,000indicating the distribution of earthquakes of magnitude 6 or

10,000
ＴＥＵ

8,000

7,060
6,400
4,300 4,700
4,950
4,258
4,600

6,000

4,000
2,000

752

1,096

0 738
1960
1970

2,500
1980

higher at depths of 100 km or less. Earthquakes originating at

8,500

depths of 100 km or deeper have their hypocenters in specificregions, such as Japan and the west coast of North America(but not in Europe). Although the Japanese archipelago
constitutes only 0.1% of the land area on earth, 10% ofYear of Completion
2000

1990

magnitude 6 or higher earthquakes have occurred in Japan.

2010

Some researchers estimate that this rate increased to 21% in1994 and later years.

Figure 3.1 Transition in the largest containership size

Source: The author organized this figure based on

Figure 3.3 shows the estimated financial loss for

Akakura (2011).

gravity-type quays at each earthquake motion level indicatedby Ichii (2002). This figure helps us understand that as theseismic load increases, the estimated loss increases rapidly. A
facility with a structure receiving ground pressure consistently

Eurasiafrom one direction, such as a quay or seawall, is designed so

North
Americathat it remains stable because of the horizontal force resisting
the seismic load. To resist a larger seismic load, the cross

AfricaAustralia

South
America

section must be enlarged horizontally to match the increased
resisting force. To improve safety against seismic loads, quays
constructed in earthquake zones like Japan and the west coastof North America entail higher construction costs than theircounterparts in East Asian counties, such as South Korea,
China, and Vietnam, and European countries.

Figure 3.2 Distribution map of earthquakes
Note: Magnitude 6 or higher at depths of 100 km or less from2004.07.14 00:00:00 UTC to 2014.07.21 23:23:59 UTC

3.3.3 Countermeasures against soft ground
Flat lands along coastal areas called alluvial plains were

Source: United States Geological Survey (USGS)

formed on the drowned valleys, which were eroded when thesea level fell during the Ice Age, by the accumulation of soft
soil from the rivers. Therefore, the ground in alluvial plainscomprises soft soil deposit.
Constructing a port facility on such thick and soft groundentails additional cost for ground improvement and settlementof long piles into the foundation layer, which increases theconstruction costs tremendously. Compared to the groundcondition outside Japan where the foundation layer isshallower, the ground in alluvial plains is too soft andnecessitates the introduction of new technologies, special
work barges, and skilled workers in every design and

Figure 3.3 An example of estimated loss for each input

construction phase. Therefore, it is not possible to reduce theexcitation level,
Note: Unit ‘Gal’ means gravitational acceleration, Gal = cm/s2

construction costs of a port sited on soft ground.
Typical examples of structures constructed on thick andSource: Ichii (2002)

soft ground are the Sakishima Tunnel of the Port of Osaka and- 24 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Kansai International Airport in Japan. Located on the sea

Table 3.2 Revision history of the Technical Standards

bottom of Osaka Bay, resting on alluvial and diluvial deposits

Note: See Goda(2006) on “Goda’s wave pressure formula”

several hundred meters thick, they were designed andTechnical developments to improve accuracy and safety
Technological developments for cost reduction
1950: Setting the earth pressure calculation formula andfrictional coefficient of soil
Setting the design seismic coefficient
Setting the safety factors for sliding and falling
Clarification of Hiroi’s formula and Sainflou’s
formula as wave pressure formulae
1959: Introduction of the wave prediction method(SMB, etc.)
Safety consideration of slope and slip circle analysis
1967: Specification design methods for various facilities
Accuracy improvements in the design seismic
coefficient considering the local seismic activity
Indication of standard ship size
1973: Including safety requirements in the Port and HarborAct
1979: Adoption of Goda’s wave pressure formula as thestandard wave pressure formula
Inclusion of design methods for various facilities
Introduction of rules pertaining to anchoring site
calmness
1989: Setting the estimation method for liquefaction
Introduction of bearing capacity analysis with the
Bishop method
Introduction of the soil improvement construction
methodLowering the end bearing capacity coefficient for pilefoundations
Note: The technological development can be charted
through the history of changes in the external load
setting method and the analytical and design methods
used for the rational planning and design of safe
facilities.
These developments also include steps taken
toward reducing construction costs. However, cost
increases were inevitable in some cases where it wasnecessary to secure a certain level of safety.
1999: Introduction of Level 1 and Level 2 earthquake
motions
Introduction of the reliability design method withthe expected sliding volume
Improvement in flexibility introduced by
notifications in the standards
2006: Definition of performance and transition to thereliability design method
Performance-based design methodology was
introduced.
Introduction of Life Cycle Management (LCM) by
preparation of maintenance and management
standards

constructedassuming thatalarge-scale consolidation

settlement would occur. The construction costs for theseprojects increased drastically compared to the costs for cases
without consolidation settlement.
3.3.4 Increase in administrative and maintenance expenses
The Ministry of Land, Infrastructure, Transport andTourism (Japan) estimated future public works expenditures,
upgradingcosts,

andadministrativeandmaintenanceexpenses for existing facilities in Japan. Since the facilities
were mainly constructed in the 1990s, they are in need ofupgradation. The Ministry of Land, Infrastructure, Transport
and Tourism estimates that these costs and the associatedadministrative and maintenance expenses will exceed the total
investible funds.
Since Asian countries have relatively newer port facilities
compared to those in Japan, we can estimate that their
upgradation costs and administrative and maintenanceexpenses will be less.

3.4 Efforts to Reduce Port Construction Costs
How do countries reduce port construction costs? They aremaking efforts to suppress increases in port construction costs.
In this report, we introduced the case of Japan, wherein efforts
for reducing port construction costs are divided into two
periods: from 1950 to 1999, when the design and analysis
methods were improved through technological development,
and post-1999, when reductions in the construction cost andadministrative and maintenance expenses were practicallyrealized.
3.4.1 Approach to technological development in Japan
Table 3.2 shows the history of technical standards applied
for port construction works.
Constructing ports in Japan according to the specification
requirements has necessitated moving from the conventional
experience-oriented

engineering

approachtotheknowledge-based approach. The first design standard in the
postwar period, “Design Specification Guideline for Port andHarbor Construction,” was issued in 1950.

- 25 -

Koji TAKAHASHIIn 1973, the Japanese government incorporated the

3.4.2 Reducing construction costs using performance“Technical Standards for Port and Harbor Facilities in Japan”

definitions in the Technical Standards(hereafter, “Technical Standards”) in the Port and Harbor Act,The conventional revisions of the Technical Standards

thus extending them legal sanction. These technical standards

show the history of safety-related improvements. Although

include the structural functions and safety procedures to be

the government revised the Technical Standards in 1999 infollowed for all port-related construction works. In doing so,

response to its policy of reducing public works expenditures,

the Japanese government employed the Technical Standards

it did not review the fundamental system employed therein,

not just to ensure safety at under-construction port facilities

and hence, it could not actually reduce the construction costs.

but also to serve as the standards that port management bodies

On the other hand, in view of the international trend to define

would use to approve constructions within the port zone.

performance standards, the government revealed plans to

At the same time, the Japanese government urged the port

define performance in the Technical Standards through amanagement bodies and private business operators to improvethree-year deregulation program. As a part of its Public Works

their technological skills by improving the technical guidance

Cost Structural Reform Program (March 2003), it decided toand information required for port construction. Thesechange the Technical Standards for port facilities frommeasures contributed to improving the functions of and thespecification-oriented

safety required at the port facilities of port management

standards.

standards

toperformance-oriented

In 2006, the government revised the Port and Harbor Act tobodies and private business operators.

change the Technical Standards for port facilities, from the

These Technical Standards included the findings ofconventional theoretical studies, indoor experiences, and field

conventional

specification-oriented

standards

toobservations, which contributed to secure the functions andperformance-oriented standards, and at the same time, handsafety of port structures. It defines criteria regarding theover the responsibility of conformance judgments to thedeformation and strength of the facilities as well as theTechnical Standards to the government or a third party. It ismaterials to be used. The original technological developments

possible that the government defined the technical standards

mainly helped to refine the methods used to calculate theas being related to the required safety issues andexternal forces the port facilities have to withstand andcommissioned the popular belief that specifications andimprove the methods for port design, thus aiming at reliable

designs must be performance-based instead of relying on

and safe construction.

safety certifications for port facilities by checking their

In 1999, the Technical Standards reached a major turning

adaptability to the standardized national Technical Standards.

point. In responding to public opinions about the construction

Accordingly, new design methods and special structures based

costs being higher in Japan compared to costs in otheron private inventive approaches could be adopted. Notably, it

countries, many researchers tried devising ways to reduce thewas possible for private corporations to design the facility’s

cost while maintaining safety. The Japanese government

strength and durability to fit its intended importance andincluded these results into the Technical Standards by revising

lifecycle. It was expected that these measures would help

them in 1999.

reduce not just the construction costs but also the upgradation
costs and administrative and maintenance expenses.

However, besides the Technical Standards in 1999, theconventional Technical Standards were specification-oriented

Figure 3.4 shows an example of a breakwater with reduced

standards, which defined the standardized materials andconstruction

design methods for port construction works. This type of

performance-oriented Technical Standards. This breakwater

standard was convenient and reliable for the government andwas designed using the expected sliding volume method,

port management bodies, who were responsible for checking

allowing approximately 10% reduction in the construction

conformity with functions and safety. However, since thesecosts.

standards adopted methods that secured safety using
overdesigned structural reinforcement, they tended to ignore
cost issues.

- 26 -

costs,

designed

accordingtotheResearch Perspectives for Improving the Productivity and the Sustainability of Port Management

plans and the minimization of lifecycle cost (and thus, total of

Approximately 10% reduction in the construction costs

construction costs), upgradation costs, and administrative and

Design condition: Caisson Type Breakwater

maintenance expenses. The government also released the

Significant wave height: 11.1 m Water depth: 18 m

“Port Facility Maintenance and Management Technical

Specification-oriented
designPerformance-based
designSafety factor of sliding: 1.2

Within 30 cm of the
Horizontal displacement

and the Maintenance/Repair Plan.

Wave force

3.5 Elicitation of New Risk

Wave force

Manual,” which introduced preventive maintenance andmanagement procedures such as the Checkup/Diagnosis Plan

In spite of the aforementioned efforts to reduce port
construction costs in Japan, the Great East Japan Earthquakeof 2011 highlighted new risks that would increase these costs.

Figure 3.4 Design example of a breakwater with expected

The author now describe these risks.

sliding volume

L1 events and L2 events are defined as Table 3.3.
3.4.3 Reduction in Administrative and Maintenance
Table 3.3 Definition of L1 events and L2 events

Expenses by Introducing Lifecycle Management

Source: Government of Japan (2011)
L1 ground motion:
Appropriately as a stochastic time history withconsiderations of source, path and site effects, based on the
results of earthquake observation
L1 tsunami:
Occurring more frequently than the largest-possible tsunamis
and causing major damage despite their relatively lower
tsunami heights
L2 ground motion:
Appropriately as a time history with considerations ofsource, path and site effects based on the results ofearthquake observation and the source parameters of the
scenario earthquake.
L2 tsunami:
Envisaged on the basis of developing comprehensive
disaster management measures, which focus on theevacuation of local residents as the main pillar

Matsubuchi･Yokota (1999) released their “Basic Study on
Lifecycle Cost Generation of a Mooring Facility andEstablishmentofa

MaintenanceManagement

Decision-making Support System”.
The results described how ideal mooring facilities could bedesigned alongside their lifecycle costs. Several other studies
about cost reduction through maintenance management are
ongoing.
The Japanese government defined performance-oriented
Technical Standards by revising the Port and Harbor Act in2006, thus allowing the introduction of new design methods
based on novel ideas. One particular revision was quite
significant. The Technical Standards also stipulated the
preparation of a maintenance management plan for all port
facilities to allow long-term cost reduction by maintenance3.5.1 New Risks Revealed by the Great East Japan

management across the lifecycle.

Earthquake

With regard to maintenance management, although theJapanese government stated in the Port and Harbor Act that

The Great East Japan Earthquake of 2011 underscored the“port facilities should be constructed, upgraded, or maintained

importance of preparing for unexpected events. In the past,so that they meet the Technical Standards,” the conventional

the possible occurrence of events exceeding the design

Technical Standards focused on securing a certain level ofconditions was considered highly improbable. In addition,

safety within the facilities, and definitions about the lifecycle

arguments about preparing for Level 2 events were

cost,

were

unacceptable to port management bodies as no budgets wereinsufficient. It is undeniable that, until then, the management

allocated for taking measures against such events. Therefore,bodies had overlooked the significance of maintenance andarguments in favor of preparing for Level 2 events had been

management. The new Technical Standards, however,inactive for a long time.

clarified the importance of maintenance and management,

A post-earthquake

includingmaintenancemanagement

costs,

analysis

revealedthefollowingproblems: lack of preliminary discussions about damage

stipulating the preparation of maintenance and management- 27 -

Koji TAKAHASHI

reduction using a combination of hard and soft measures forb. Breakwater sinking caused by liquefaction after an

preventing and mitigating Level 2 disasters, and insufficientearthquake
In addition to the quays and seawalls, breakwaters founded

information dissemination to the public although someon sandy soil are likely to sink because the soil will undergo

concerns in this regard had been voiced previously.
Therefore, in the future, it would be prudent to analyze allliquefaction during an earthquake. One example of thisevents corresponding to Level 2 disasters and foreplan

phenomenon is the sinking of the breakwaters of the Port ofcountermeasures against them on national and regional scales,

Kobe, which sunk by 2 m owing to the Hanshin Awaji Greatin order to clarify the estimated risks.

Earthquake (formally ‘the Southern Hyogo Earthquake’) in

Possible Level 2 disasters include earthquakes and1995. In order to ensure that they continue to function as

tsunamis. Other presumable events, such as unexpected storm

required in the event of a tsunami, a certain level ofsurges and tidal waves caused by strong typhoons generated

breakwater raising and reinforcement is necessary.

because of global warming, should be targets for suchdiscussions.

c. Partially functional breakwater after a tsunami

However, given the extreme improbability of certain events,

Damage reduction and (at least) partial functionality havesuch as the giant meteorite strike that killed off the dinosaurs,

been hotly debated topics after the earthquake. Clearly,

it is inappropriate to include such events in the discussion

measures and policies allowing the construction of robust

about Level 2 disasters in port operations.

breakwaters (Figure 3.5) are the need of the hour.

Further, many locations are yet to establish facilities to help
withstand Level 1 events, in terms of hard measures.
Therefore, besides soft measures, port facilities must establish
Inside the Port

Outside the Portand maintain reliable hard measures to withstand Level 1

Mound counter

Tsunamidisasters. Moreover, they must also prepare for Level 2
disasters by including soft measures such as establishingBlock

refuge instruction methods and constructing refuge facilities
for employees and inhabitants, especially in cases where hardmeasures such as construction and reinforcement of existing
port facilities are unavailable.

Figure 3.5 Reinforcing the breakwater

In light of this discussion, the estimated emerging risks forport facilities are as follows.

Oil tanks
Seawalla. Increase in the probability of earthquakes
Toward the end of 2012, the Headquarters for Earthquake

Steel Sheet
Pile Quay

Landfill soil

Research Promotion of the Ministry of Education, Culture,
Sports, Science and Technology (Japan) created the

Liquefaction
layer“Probabilistic Seismic Hazard Map”. It shows that thepossibility of earthquakes with seismic intensities of lower 6
or more as per the Japan Meteorological Agency’s (JMA’s)

Bearing Stratum

seismic scale, increased significantly within 30 years after

Figure 3.6 Horizontal soil displacement caused byliquefaction and lateral flow of landfilled areas

2012 mainly around the Kanto area. The possibilities oflarge-scale earthquakes in all three major harbors, which are
the focal points of the Japanese economy, are very high, andthus, port management bodies must undertake immediate and3.5.2 Lateral Flow of Landfilled Areas Caused byurgent countermeasures.

Liquefaction
The 2004 Chuetsu Earthquake caused land deformation
severe enough to create lateral spreading across a wide

- 28 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

landfilled area owing to the liquefaction. However, the dangerfunction against each tsunami and the storm surges that wouldof this phenomenon was not taken into consideration in theattack the structure after the sinking of the storm surge

design measures stated in the Technical Standards. Figure 3.6

protection breakwaters.

shows a model of such a phenomenon. Hamada (2012) had

The Central Disaster Prevention Council of the Japanesepointed out the danger posed by such an event. In particular,

government predicted that if a megaquake (Mw 9.1) occurred

should such an event occur, he indicated the risks posed byin the Nankai Trough off the Pacific coast, as shown by

the large oil tanks located in the coastal areas of the three

Figure 3.7, the quake and its ensuing tsunami would cause

major harbors. Since it is difficult to secure safety withserious economic damage, and accordingly, the Ministry of

breakwater design alone, it is important to consider the safety

Land, Infrastructure, Transport and Tourism was urged toof the overall landfilled areas and take appropriate

considercountermeasures.

measures.

takingthefollowing

appropriate

protective

3.6 Verifying Increase in the Construction Costs:
The Storm Surge Breakwater of the Port of Nagoya
Although efforts to decrease port construction costs are

Table 3.4 Assumed Megaquakes and Megaquakes of thealready underway in Japan, it is expected that the costs will

past
Assumed Megaquakes
AssumedMagnitude
Nankai Trough Earthquake
9.1(Mw)
Tokai/Tonankai/Nankai consolidated Earthquake 8.7 (Mj)
Earthquake that directly hits the Tokyo area
7~8 (Mj)

increase in the future owing to social and natural factors, suchas the emergence of new risks as shown by Table 3.4. In thisSection, the author provide estimates of the increase in theconstruction costs using the case of the breakwater of the Portof Nagoya as an example.

the largest exporter for several global manufacturing

Megaquakes of the past
Mw (year)1946 Nankai Earthquake
8.4(1946)
Great East Japan Earthquake
9.0 (2011)
Hanshin Awaji Great Earthquake
6.8 (1995)
Note: ‘Mw’ is the moment magnitude scale, which isindustries, such as automobiles and the aerospace industry.

synonymous with the Richter scale and ‘Mj’ is the

The author provide the estimated increase in cost owing to themagnitude scale used by the Japan Meteorologicalconstruction of storm surge breakwaters to reduce the threat

Agency (JMA).

Located in the Chubu district (midland of Japan), the Portof Nagoya is the largest and busiest trading port in Japan. It isfrom storm surges. To do so, the author referred to the damage
caused by Typhoon Vera (Isewan Typhoon) at the Port ofNagoya.
The main objective of building these storm surge protection
300km

breakwaters was to raise the breakwater crown to protect theport from a tsunami that would be generated after a large
earthquake; the breakwaters would presumably sink owing to
the liquefaction caused by the earthquake. Further, since they

Osaka

were already very (50 years) old, measures to upgrade them in

NagoyaFukuoka

preparation for large earthquakes were also necessary.

Tokyo

Therefore, the Ministry of Land, Infrastructure, Transport andNankai Trough Line

Tourism based their estimates considering that a tsunami
likely to occur during the design life of the structure (theAssumed Seismic Area

so-called “L1 tsunami”) and the maximum predicted tsunamithat may attack the structure (the so-called “L2 tsunami”)
would eventually occur. Accordingly, the Bureau estimatedFigure 3.7 One of New risks: Nankai Trough Earthquake

the amount by which the storm surge protection breakwaters

Note: Assumption Mw 9.1

would sink after the earthquake and checked the protection- 29 -

Koji TAKAHASHI

would increase by about 10 % over the conventional costs.

a. Checking the breakwater crown by analyzing theseismic response to L1 and L2 earthquakes
The calculation clearly showed that the storm surge
protection breakwaters of the Port of Nagoya would sink by

Required crown height

3.4 m at most after an L2 earthquake, and almost all cross

Nagoya Peil: N.P.+5.40

Sinking causedby the earthquake motion+ 4.70m

sections would fail to meet the required breakwater crownHigh tide deviation

Sinking(N.P. + 5.4 m). To take measures against L1 earthquakes andto secure calm after L2 earthquakes, the Ministry of Land,
Infrastructure, Transport and Tourism plans to raise thebreakwaters to the required level as shown in Figure 3.8. It

Figure 3.8 Concept of preventing Breakwater sinking

also plans to replace the packing sands inside the caisson with

Source: Ministry of Land, Infrastructure, Transport andTourism (MLIT) (2011)mortar for reinforcement, which are of questionable strength
owing to aging.
b. Stability of the storm surge protection breakwaters

The improved part

Raising crown heightagainst L1 and L2 tsunamis
The results of this verification indicated that all breakwater

Foot protection block(new settlement)

cross sections would be stable against both L1 tsunami and

Fixing filling stone
by adding cement

L2 tsunamis. The author also confirmed that they were
sufficiently robust.

Rubble moundReplacement sandAs mentioned earlier, the Ministry of Land, Infrastructure,

Existing
armor stone

Transport and Tourism discussed the robustness of the storm
surge protection breakwaters of the Port of Nagoya to protect

Figure 3.9 Cross section of the upgraded storm surge
protection breakwater of the Port of Nagoya

the port against L1 and L2 tsunamis, such that they can

Source: Ministry of Land, Infrastructure, Transport andoperate as intended even if they sink owing to liquefaction
after

earthquakes.

Accordingly,

Existing
armor stone

Tourism (MLIT) (2011)concrete reinforcement

measures have been in place since 2012. At the same time,measures are also being taken to reinforce the aging

3.7 Conclusion on Increased Construction Costs

breakwaters, which were built nearly 50 years ago.
Figure 3.9 shows the cross section of the upgraded storm

Considering the current progress in the horizontal andsurge protection breakwater of the Port of Nagoya, whereinvertical specializations of the global economy, when a port ofthe crown has been raised (among other measures).

one country becomes functionally paralyzed, many countries

The total amount of investment (construction costs) forsuffer economic damage. However, countries charge either

these measures amounted to 6 billion yen, including the costprivate companies or local governments with the management

for raising the breakwaters, fixing the caisson fillings, andof ports, and these port management bodies cannot meet thereinforcing the foot protection blocks according to theconstruction costs for reinforcing port infrastructure, mainly

breakwater cross sections. Thus, assuming that the same

owing to poor fund-raising capacity. In order to manage themeasures apply to a new storm surge protection breakwater,

container terminal soundly, it is essential that stakeholders

the increase in the construction costs derived from reinforcing

clarify for investors the trends and future outlook of

the breakwater to withstand L1 and L2 earthquakes

construction costs, which are important indicators of businesscorresponds to 10% of the total project cost of a new

management. To eliminate such an eventuality, in this report,

construction, that is, 60 billion yen. In other words, it is clear

the author verified the increase in the rate of the constructionthat to secure measures against the emerging risks posed bycosts in the Japanese context. Note that the author could not

L1 and L2 tsunamis and earthquakes, the construction costs

compare the absolute increase in the cost of port construction- 30 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

across countries, because of the large gaps between the

4. Analysis on Financial Condition

external and internal prices within the construction costs. Our

4.1 Overview and Issues

results showed that port construction costs increased byaround 10% even though there were gaps between the

The ports of the world are operated by port management

external and internal prices within the construction costs forbodies. The systems for establishing port facilities are roughly

each country. The operators of the container terminals thatclassified into two types depending on their sources ofincrease only 10% of conventional facilities investment canrevenue. In the first type of system (used mainly for channels,

reduce the risk of the large-scale natural disaster. This 10% isbreakwaters, berths, etc.), the national/local government andthe cost that they can take in in the management of their

the port management body share the cost of construction. In

container terminals. To ascertain the total increase in

the second type of system (used for cargo handling facilities,

construction costs, the author would need to verify thereclaimed lands, etc.), the port management body alone raises

amount of increase in cases other than the port facilities

funds through a port-related bond-financed project and issues

mentioned in this document; however, our result provides anbonds. One characteristic of such bond-financed projects isapproximated trend applicable to all ports in Japan.

that the costs of operating the facility and redeeming the

Operators of the container terminals need to reinforce

bonds are funded through usage fees for the ground and profit

existing facilities for natural disaster. In addition, they need tofrom the sale of reclaimed land. Port management bodies now

construct refuge facilities for employees and inhabitants andrequire a smooth redemption policy for bonds issued in theestablish refuge instruction methods for the time when apast. However, port management bodies have found it

large-scale natural disaster strikes.

difficult to choose between having to raise usage fees andTo sum up, this report underscores the importance ofland prices high enough to enable smooth redemption in

reinforcing existing port facilities, to prepare them tobond-financed projects on the one hand and having to reducewithstand large-scale natural disasters.

usage fees and land prices to improve the productivity in port
logistics on the other. Unless a solution to this problem isfound quickly, the finances of port management bodies may
become even more constrained, given the rising trend in port
construction costs due to the risks of disasters such as
earthquakes and due to growing interest rates. This is because
prior investments are required for the construction of port
facilities that takes a long time (between 5 and 10 years) andusage fees and profits from the sale of land must be
suppressed to low levels because of political pressure. This
will lead to larger bond issues and therefore a greater
necessity for a smooth redemption policy of port facilities in
the case of ocean space utilization. The author first describes
the structure of port management in the world, and analyze
the financial situation of port management bodies. Next, theauthor points out that as the capital, maintenance, andmanagement costs of port facilities grow in response tolarge-scale

naturaldisasters,

which

exceedexisting

assumptions, and other factors, port management bodies arebeing forced to take measures to address this. Lastly, theauthor argues that public incentive assistance to shipping
companies and logistics companies can effectively address theconflicting demands of improving the productivity and thesustainability which means strengthening disaster restoration- 31 -

Koji TAKAHASHI

capabilities, and enabling the smooth redemption of bonds inb. Tool Port
A port management body builds and owns not onlybond-financed projects.

infrastructure but also superstructure, and leases these to

Yajima･Nakamura･Inamura (1979) and Yajima･Nakamura(1979) proposed the financial simulation model. Saito(2002),

private enterprise.

Nagase (2004) and Akai et al. (2009) pointed out the financial

A Tool Port is classified into three forms.

issues of port management bodies. This report not only

Outsourcing is the form where the port management body

analyzed the financial issues but also proposed importantthat is the public main constituent consigns some duties tosolutions for both port management bodies and port

outside enterprises.

management corporations.

4.2 Management Forms of the ports in the world

Service Operation
PrivateAt first, in this report, the author analyzes the trend of theport management forms in the world.

PrivatePort

4.2.1 Classification of the port management forms
Landlord

The management forms of the ports generally used in theworld today has been classified into four traditional forms.

Asset

The author analyzed the present conditions of the ports in the

PublicPort
Tool Port

PrivatePrivateAssetworld in terms of asset ownership and service operation as
Publicownership

shown in Figure 4.1.

Service

While this traditional classification is basic, it is too vague
to be applicable to a real port, so the author cannot use it toanalyze management forms. Rather, the author subdivided

Publicforms of the private/public participation for port management

Service Operationand defined the traditional classification more definitely as
Figure 4.1 Trends in Management Formshown in Table 4.1.
As shown in this table, each country chooses the most

Source: The author created this figure based on MOT (2000)

suitable management form that private enterprise participate

and OCDI (2006)

in according to public policy, historic background, process ofthe developmentof ports,afinancialstatus,labor

circumstances, the legal frame of the country, and also theTable 4.1 Classification of Port Management

motive or purpose to further advance privatization.

Source: The author created this table based on MOT (2000)

The author analyzed the contents of the management form
and newly defined it as follows.
Publica. Public PortA

port

managementbodybuilds

and

owns

all

infrastructures (land, wharf, yard, channel, etc.) andsuperstructures (cargo handling machines such as gantry
cranes, etc.) and, in addition, performs its own cargo handling
operations. A Public Port does not have the participation ofprivate enterprise. Many examples of this type of port are
Privati-zationseen in the developing countries.

- 32 -and OCDI (2006)
PublicPublic Management and Operation
Port
Tool
Outsourcing
Port
Management Contract
Lease and Rent Contract
Land
Concession-lord
Joint Operation or Joint Venture
Port
BOT (Build, Own and Transfer) or
BTO,
BOOT
(Build, Own ,Operate and Transfer）,
WBOT（Wraparound BOT）
BOO (Build, Operate and Own)
PrivateDivesture by License
Service
Divesture by SalePort
Private Supply and Operation

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

body during the term of a contract.

A Management Contract is the form where the port
management body consigns duties and the management of

Besides BOT, there are similar forms such as BOOT, BTO

port assets to a private enterprise for a certain period; it also

and WBOT. In addition, there is contract matter common touses the ability and know-how of the private enterprise.

these. The proprietary rights of assets move from private
enterprise to the port management body based on a contract.

A Lease is the form where the port management bodyPrivate enterprise cannot hold assets for eternal assets.

leases assets to private enterprise for a short term andBOO (Build, Operate and Own) is a form where proprietaryaccomplishes the management of assets and offer of services

rights move to private enterprise after the term of a contract.

using assets.

On the stage of development and management during the termof a contract, the port management body holds the proprietaryc. Landlord Port

rights of assets.

A port management body builds infrastructure and leases
infrastructure to private enterprise. Private enterprise builds
and owns superstructure as well as performs cargo handling

d. Private Service Port
Private enterprise builds and owns all port infrastructures

operations on its own. There are many examples of this typeand superstructures and, in addition, performs cargo handlingof port in the world.
A Landlord Port is classified into four kinds. While the port

operation on its own. A Private Service Port is classified into

management body of the public main constituent holds thefour entities. Their characteristics are that private enterpriseproprietary rights of the real estate, a Landlord Port is a form

completely holds proprietary rights or usufruct.

entrusting

in

large

measurebothcompetence

andresponsibility to private enterprise. A Landlord Port differs

4.2.2 Trend analysis of management form of the world’s

greatly from a Tool Port.

ports
The author classified world ports according to four port

A Concession is a form that transfers the responsibility for
port

administration

andmaintenance

from

the

management definitions and analyzed historic movement as

portmanagement body to private enterprise on a long-term basis,shown in Table 4.2.
Privatization is moving ahead through ports in U.K., which

15-20 years.
While the port management body of the public mainis classified in Private Port. On the other hand, ports of U.S.A

constituent owns infrastructure, private enterprise has theare advancing from Private Port to Landlord Port. U.S.A iscompetence to build, own and run superstructure freely.

increasing public participation in port management(direction

Private enterprise can profit by administration and pays aof ←).
Because of this analysis, the world port was proved to aim

concession fee to the port management body.

at the Landlord Port form.

A Joint Operation (JO) or Joint Venture (JV) is a form
where a private enterprise together with the port management

In other words, the port management body does not part

body provides capital and assumes port duties jointly for awith proprietary rights of real estate such as land, institution

certain period. Profit is distributed by the constitution ratio of

etc., but the port management body leases it and entrust port

the investment by the administration.

administration to the private enterprise to utilize private
management know-how for the service operation of the port.

BOT is a form where the port management body grants
permission concerning port development and administration

It became in this way clear that the port management bodyduties to private enterprise. Private enterprise then carries out

aimed at the Landlord port form.

port development and administration.

4.3 Capital Cost and Recovery Ratio of Capital Cost

The proprietary rights of all assets are transferred fromof the Landlord Port

private enterprise to the port management body at the end of
the term of a contract. A characteristic of BOT is that the

It is cost of capital (Capital Cost) and maintenancecontract terms come later and that the port management bodyadministrative expense (Maintenance and operation cost) toowns the proprietary rights.

become the index of the judgment that private enterprise

Private enterprise pays a royalty to the port management

enters the port administration. The expense required for the- 33 -

Koji TAKAHASHI

ort Cost
Maintenance andOperation Cost

construction and administration of the port is roughlyclassified into cost of capital and maintenance administrative

Capital Cost

expense as shown in Figure 4.2.

Ratio of Capital Cost
100%

The cost of capital is depreciation and the interest (credit
Figure 4.2 Port Cost

interest expense) generally. Because the cost of capital is tooccur with the construction of land reclamation and the port
facilities, the author can arrange a breakdown to constitute

Table 4.3 Cost of Capital
Cost of capital
Depreciation
Material procurement costs(construction costs)
Labor administrative expenses
Design costs
Business loss costs (site purchasecosts, compensation)
Environmental measures costs
Etc.
Interest
Credit payment interest, borrowed
money fund out of the city

cost of capital like Table 4.3.
Furthermore, the cost of capital is high and will tend to rise
more with geographical conditions in the future. It isnecessary to manage the cost of capital and to come up withresources to allot for the soaring cost of capital to continue in
new investment. The quantity of the cost of capital fluctuates
due to a variety of factors. For example, in the case of Japan,
it is exposed to the severe natural conditions of earthquakes
and typhoons.

4.4 New Type of Concessions

Table 4.2 Classification of Main World Ports
Source: The author created this table based on OCDI(2006)
Public Tool
Landlord Port
Private
Port
Port
Port
Conce
JO/J BOBO-ssion

V

T
etc.

O

Among Landlord Port forms, the Concession form issuperior. The author suggests a New Concession model toclear a financial problem.
At first, the author comments on the structure of

Yokohama
Kaohsiung
Busan

Concession.

Hamburg
Antwerp
Rotterdam

long- term basis. The port management body allots a

As for the case of Concession, a port management bodydevelops land for port use and leases it to a port operator on a

Dubai
Le
Havre
Barcelona

Concession Fee from the port operator for the repayment ofcreation

SeattleLA/LB
NY/NJ
Hong Kong
Shanghai
DalianThe

port

operatorpays

maintenanceadministrative expenses to run the port.
The port management body bears the capital cost in full,develops land for a port site, and repays the creation expense
by transferred concession fee from a port operator. A
FelixstoweSouthamp
ton
Metro
Vancouver

Buenos AiresPort Klan

costs.

Singapore

deficiency occurs when the operator is unable to repay theConcession Fee in a port where the capital cost rises.
What occurs is that the case of the ratio of capital costs isless than 100 %, as shown in Figure 4.3, Figure 4.4 andFigure 4.5?
The author was attentive to the receipt of benefits andexpense burden by port logistics.

Bang
-kok

The range of port logistics is wide, and the economic
advantage belongs to a company and the consumers of the

Mumbai
Note: Privatization advances historically in world ports from

district beyond the governorate of the port management body.
For example, the containerized cargo of the Tokyo Port is

Public Port to Tool Port or Landlord Port (direction ofcarried all over Japan across a governorate of Tokyo and→).

becomes the advantage of companies and of consumers all- 34 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

reclamation bond account is for land reclamation projects inacross Japan.

coastal areas, under which land is reclaimed for industrial,

Therefore, the unfairness of the expense burden occurs
Tokyo

urban purposes, etc. The port management body issues

inhabitants bearing an expense of the Tokyo Port. It is“Facilities Bond (FB)” and “Reclamation Bond (RB)”,

necessary to take in a system, which casts a national tax

respectively, to raise funds for these projects from domestic

depending on advantage into the cost of capital of the port toand international sources. The redemption of these bonds cancancel cost-benefit unfairness.

be funded from facility usage fees and the profits from thebetweeninhabitantsreceivingadvantage

andsale of land.

The author named this model the ‘New Concession’.
In addition, the author is going to announce in different

Meanwhile, port management is entrusted to the autonomy

papers the theoretical grounds and the method of calculatingof the port management body, and the fees from sources suchthe injection of the national tax depending on advantage.

as the usage of the berths and cargo ports are used to fundoperational costs.

Port Cost
Capital Cost

Table

100%

Account

BudgetofInfrastructures

andSuperstructures
Account
Infrastructures and Superstructures
GeneralBreakwater, Quay Wall, Channel
Facility Bond
Cargo handling facilities (Warehouses,
(FB)
Wharf
sites,
Cargo
handling
equipment), Storage facilities
Reclamation
Land for urban development andBondindustry(RB)

Figure 4.3 Port Management body Should Pay Capital Cost

Port Cost
Maintenance andOperation Cost

4.4

Concession Fee
100%

Figure 4.4 Port Operator Should Pay Maintenance andOperation Cost, and Concession Fee

4.6 Financial Conditions of Port Management bodies
In the analysis of the financial condition of port
Port Operator
Recovery Ratioof MaintenanceandOperation
Cost
100%

Port Management body
Recovery Ratio of Capital
Cost: Concession Fee
paid by Operator

management bodies, RB must be evaluated separately. This is
Deficitbecause RB is weakly related to port management when its
purpose is land reclamation for housing and school facilities,
although it is strongly related to port management if it

100%

benefits port logistics companies. In addition, the source of

Figure 4.5 Recovery Ratio

revenue for RB is different. Unlike port management, which
depends on daily revenues, the profits from the sale of land
are used to fund bond redemptions in RB. Therefore, the

4.5 Port Facilities and the Structure of Portauthor limited the subjects of analysis of the financial

Management in Japan

conditions of port management bodies to FBs that can be

Table 4.4 shows the structure of Account budget ofclassified as port management. The subjects of this analysis

Infrastructures and Superstructures in Japan. There are mainly

were all ports in Japan. Regarding RB, the author analyzed

three types of accounts. The general account is for port

the individual financial conditions of Hakata Port as a typicalimprovement works for which the national government andexample of ports expected to have corporate locations andport management body share costs.

other criteria related to port management; and the results of

The facility bond account is for port facility development

this analysis are provided in Section 4.7.

projects, which include projects such as construction of cargo

Figure 4.6 shows the revenues for port management andhandling facilities (warehouses, cargo handling equipment)

port construction, the administrative expenses related toand cargo ports that are necessary for port activities. The

management and construction expenses, and the difference- 35 -

Koji TAKAHASHI

Revenue
Expenditure

between both for all ports in Japan, based on port
management body finance data provided by the Ministry of

US$2.9 bn
US$6.1 bn

Figure 4.8 Financial Conditions of All Ports in Japan

Land, Infrastructure, and Transport. This figure shows that

Note: construction-related

expenditure is approximately 1.5 times revenue. This revenue

Source: The author modified and analyzed data from MLIT

shortfall is funded through transfers from the general account,Exchange rate: US$1=JPY (¥100)

profits from the sale of assets, etc.
Figure 4.7 shows the results of comparison between therevenue from port usage fees and management-related

4.6.1 Issues with FB and RB

administrative expenses, with a focus on port management.

The purpose of the Act on Advancement of Construction of

These results show that large ports were profitable, with

Ports, the foundation law for FB and RB, is to limit port

revenue exceeding expenditure by 20-30%. They also show

improvement projects that directly input the nationalthat important ports were registering small losses, withexpenditure to facilities such as berths and breakwaters.

revenue only slightly lower than expenditure.

Instead, it requires the port management body to procure

Figure 4.8 compares revenue from disbursement andfunding through bond flotation for facilities such as transit

public bonds, with expenses related to construction and public

sheds, cargo handling machinery, and land. The port

bond redemption for port construction, as shown in Table 4.4.

management body can then redeem the bonds with revenues

It shows that expenditure was approximately twice theearned through various sources such as usage fees for therevenue, and that half the expenditure went toward redeeming

completed facilities and profits from the sale of land. If the

public bonds.

cost of port construction is small, it is easy to redeem bonds

As discussed above, port management bodies are able tofrom usage fees and the profits from the sale of land.

earn profits from port management, but incur losses during

However, this revenue has to be increased if the amount to beport construction. Since the revenue deficit from port

redeemed grows in concurrence with an increase in the cost of

construction is much higher than the surplus from port

port improvements, as described later. If usage fees and the

management, port management bodies record losses overall,

price of land exceed the market value, this may lead toforcing them to cover the deficit by drawing upon the general

stagnation in the usage of the facility and in land sales,

account and other revenues.

leading to a bond redemption failure. Further, politicalreasons

Revenue
Expenditure

andcompetitive

pressure

often

force

port

management bodies to lower their usage fees and the sale

US$4.3 bn
US$7.0 bn

price of land below cost price, in order to attract international

Figure 4.6 Financial Conditions of All Ports in Japantraffic and business. Given the possibility of an interest-rate

Note: port management and construction-related

hike, the author believes that the national government andSource: The author modified and analyzed average data forport management bodies should implement a policy for thesmooth redemption of bonds as soon as possible, in order tofive years (2007 -2011) from MLIT

avoid the systematic collapse of bond flotation for designatedExchange rate: US$1=JPY100 (¥100)

port-facility construction projects.
US$1.4bn
US
Expenditure $0.9
bn
Figure 4.7 Financial Conditions of All Ports in Japan

4.6.2 Tendency of Construction Costs

Revenue

The author has pointed out in Takahashi et al. (2014d) thatthe costs of FB and RB are likely to increase further becauseof social factors such as expansion to accommodate theincrease in the size of ships, as well as natural factors such as

Note: port management

earthquakes and softening ground. An outline of the author’s

Source: The author modified and analyzed data from MLIT

claim follows.

Exchange rate: US$1=JPY (¥100)- 36 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

In addition to a tendency for construction costs fora. Offshore development to address increase in ship size
Ship companies are rapidly increasing the size of their

Japanese port facilities to increase due to social and naturalcontainer ships and bulk carriers in order to create

reasons, the author has pointed out that construction costs ineconomies of scale and reduce the cost of marine transport.

Japan are generally higher than those in other East Asian

It is necessary to prepare ports to accommodate these large

nations.

ships.
However, size increases in ports essentially result in

An increase in port construction costs leads to an increase

offshore development, since Japan has insufficient land. The

in the amounts of FB and RB issuance and eventually pushes

cost of constructing port structures in the sea generally

up usage fees and land-sale profits. Countries facing

grows exponentially with the depth of the water.

challenges similar to Japan must think of procurement ofconstruction funds and smooth redemption with theassumption that port construction costs will keep increasing.

b. Protection against earthquakes
Although Japan’s islands constitute only 0.1% of the total
land area on earth, 10% of all the earthquakes of magnitudes

4.7 Port Management body’s Finances Constrained

6 or higher occur on these islands. This proportion has been

by Redemption of RB

estimated to be as high as 21% from 1994 onward. Therefore,

There have been several cases where port management

construction costs in Japan are inevitably growing fasterbodies have experienced RB redemption pressures. Therefore,

than in East Asian nations, such as South Korea, China, andthe author will study RB redemption pressures in the example

Vietnam, or in Europe and Australia to protect againstof Hakata Port and Kitakyushu Port, whose port management

seismic activity in this earthquake-prone zone.

bodies are Fukuoka City and Kitakyushu City.

Further, the importance of preparing for unexpected

In addition, tax revenue is estimated by each port

phenomena is being seen in a new light since the Great East

management body. In case of Hakata Port, as preconditions toJapan Earthquake of 2011. According to the calculations ofestimate tax revenue from 2008 to 2039, the port management

the author, using the storm-surge breakwater in Japan’s

body of Hakata Port, which is Fukuoka City, assumed that the

Nagoya Port as a case study, the reinforcement of theprice of land in the port region would not change at $560/㎡

breakwater as a measure against L1 and L2 earthquakes

and the price of land in the residential region also does notwould require 10% of the total project cost. In other words,

change at $630/㎡. The port management body of Hakata Port

construction costs for this type of breakwater would be 10%also assumed that the population composition of Hakata Porthigher than conventional costs, if measures against new

Island City would experience a change the same as that of theearthquake risks were to be implemented.

whole of Fukuoka City. Therefore, as for the population
composition of Hakata Port Island City, low birthrates andaging advance for 2039.

c. Measures against soft ground
Much of the economic activity in Japan occurs in its flat

Furthermore, about the sale of Hakata Port Island City, thelands or the thick, soft grounds of Japan’s coastal regions.

port management body of Hakata Port assumed that private

Attempting to construct port facilities over these thick, softenterprises and residents would continue purchasing land ingrounds leads to a dramatic rise in construction costs, as thethe same ratio and that the land in the port region would besoil has to be improved and long piles have to be driven into

sold out by 2027 and that the land in the residential region

the basement stratum. Since the ground is softer in Japan

would be sold out by 2033.

than in other countries and has a shallower basement stratum,

The port management body of Kitakyushu Port, which isthe construction costs for port facilities tend to grow when

Kitakyushu City, estimated the past tax revenue using land

new technologies, special project ships, experienced workers,

prices and population from 1964 to 2009.

etc. are required in all stages of design and construction.
4.7.1 Case study of RB of Hakata Port
Hakata Port is a Major International Port located in westernd. Offshore development in FB and RB due to rise inJapan. There have been several cases where port management

construction costs- 37 -

Koji TAKAHASHI

bodies have experienced RB redemption pressures. Therefore,

Table 4.5 shows the financial balance for RB in both thethe author will study RB redemption pressures in the example

port region of Hakata Port Island City, which is related to portof Hakata Port, whose port management body is Fukuoka

management, and in the residential region, which is notCity.

related to port management. Both balances were negative over
US$100 million each, bringing the total deficit to US$160

As shown in Figure 4.9, Hakata Port is a Major

million for both regions.

International Port located in northern Kyushu. Figure 4.10
shows the location of Hakata Port Island City that is theThis balance is calculated for 45 years from the start of thesubject of RB verification.

project (1994) to its completion (2039). Since 20 years havepassed since the project was launched in 1994, the balancehas been calculated based on the records for the 20 years,
assuming a drop in land prices to promote land sales, as wellas the introduction of various systems such as tax benefits forthe next 25 years.
While RB redemptions are calculated based on various
assumptions such as sales and settings for fixed-term landleasehold based on the future plan for land sales in lots, thebalance is expected to be negative at -US$2 million even in
2039 when the RB will be completed. This indicates how
difficult it is to reimburse RB only through land sales. Whileland sales could occur according to plan, there areuncertainties such as the risk of economic-climate changes.
It is also necessary to reduce port usage fees and land
prices as a policy to promote the port for international passage

Figure 4.9 Location of Hakata Portand to attract businesses, so that the port can remain

Source: The author organized this figure based on Fukuoka

productive. In this case, the funds available for RB
redemption would shrink, making it even more important toCity (2011b) “Island City Future Forum” materials

ensure additional sources of funds for redemption. What canbe done? The author believes that the incentive assistancedescribed in the next Chapter can play an important role insmooth and early redemptions.

Table 4.5 Financial Balance for Hakata Port Island City (RB)
Source: The author organized this table based on Fukuoka
City (2011a, 2011b, 2012)
RegionPort region
Residential
regionTotal
Figure 4.10 Location of “Island City” in Hakata Port
Source: The author organized this figure based on Fukuoka
City (2011b) “Island City Future Forum” materials- 38 -

Revenue
Expenditure
Balance
Revenue
Expenditure
Balance
Balance

US$ Million
1516
1628
-112
1243
1291
-48
-160

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

4.7.2 Compensation of Financial Sources for Redemption

to subsidize port users and land purchasers, drawing upon the

by Local Tax Revenue

general account. Incentive assistance from the general accountIn this Chapter, the author studies the financial sources ofwill not only lower practical usage fee and land sales price,funds for the redemption of FB and RB. It is difficult to use

but will also lead to an increase in port users and land

the profits generated from the facilities and lands establishedpurchasers that will consequently increase local tax revenue.

through FB and RB (specifically, local taxes) as a source ofThe extent of incentive subsidy can be determined byfunds for bond redemption. Therefore, the author proposes

estimating future local-tax revenue.

that the profits be offered to private companies as incentive

The example of Fukuoka City is used to study this.

assistance. The reason for this is that some of the local taxes

Fukuoka City passed an industrial-location promotion

should be used as the financial source for FB and RB

ordinance in 2012 and offers three-year subsidies forredemption as profits for the port management bodybusinesses located in the city, as described in Table 4.7. Whenconsidering that the port functions are delivered with thea logistics-related business purchases land in Island City andfacilities and land as one unit while both FB and RB are

constructs a transit shed measuring 1,000 square meters orbonds for procuring the construction costs. Table 4.6 shows

more in area, 30% of the land-purchasing expenses and 10%

the results of a trial calculation of local tax revenue in theof the acquisition expenses for buildings are reimbursed fromexample of Hakata Port Island City. It shows the future

the general account of Fukuoka City as a subsidy. The upper

estimate of business office tax (asset rate), fixed assets tax,

limit for this subsidy is 3 billion yen (US$30million), and it

city planning tax, and individual municipal tax as local tax

amounts to a 30% reduction in land price.
While incentive subsidies aim to reduce the facility usage

revenue. The tax revenue, approximately US$9 million as offee and land price, using local tax revenue as a source for

2010, is expected to exceed US$70 million in 2030.
However, from the viewpoint of financial sources offunds, they also allow the early redemption of FB and RB. In

redemption, it seems possible to reimburse RB at an early

addition, such a policy can trigger a positive spiral, as thestage by using at least 1/3 of the tax revenue as incentive

construction of new businesses will lead to an increase in

assistance, although it is necessary to determine what rate of

local tax revenue.

the overall tax revenue should be used to redeem RB bycalculating the profits.
Table 4.7 Details of Incentives to Businesses for Relocation(logistics-related and urban businesses)
Source: Fukuoka City HP
New establishment, relocation, or facility provision in
important regions (total floor space larger than 1,000 square
meters)Table 4.6 Estimated Tax Revenue of Hakata Port Island City
Source: Data from Fukuoka City HP processed by the author
Anticipated tax revenue
US$ million
2010
9
2015
31
2020
52
2025
65
2030
73
Exchange rate: US$1=JPY (¥100)[Subject] Land, buildings, and mechanical facilities[Standard] 30% of land price, 10% of building/mechanicalmachinery acquisition[Limit amount] ¥3 billion (US$30million)
New establishment or relocation in regions other thanimportant regions (logistics industry area, seaside region,etc.); (total floor space larger than 2,000 square meters)

4.7.3 Attracting Businesses through Incentive Assistance[Subject] Buildings and mechanical facilities[Standard] 2.5% of the above price of acquisition[Limit amount] ¥200 million (US$2million)

To use local tax revenue as financial sources for FB and RB
redemption in the form of incentive assistance, it is necessarythat the profits from port facilities and land be estimated toobtain the understanding of the public about transfer of the
tax revenue.
Therefore, the author proposes the construction of a system- 39 -

Koji TAKAHASHI

4.7.4 Case Study of RB of Kitakyushu Port
Kitakyushu Port is also a Major International Port locatedin western Japan.
As shown in Figure 4.11, Kitakyushu Port is a Major
International Port located in northern Kyushu. As shown in
Figure 4.12, the distance between Kitakyushu Port and
Hakata Port is 60km. Both ports have almost the same
economic hinterland in the Northern Part of Kyushu.
Kitakyushu Port is managed by Kitakyushu City as a port
management body which is a local government as well as
Hakata Port is managed by Fukuoka City. Reclaimed land in
Kitakyushu Port is the subject of RB verification.
Table 4.8 shows the financial balance for RB in
Kitakyushu Port, which is related to port management. The
financial balance is a negative US$130 million, bringing also
the total deficit to US$130 million.

Figure 4.12 Distance between Location of Kitakyushu Portand Hakata Port

However, this table shows the results of a trial calculation

Note: The distance between both ports is 60km.

of local tax revenue in the example of Kitakyushu Port. It
shows the future estimate of business office tax (asset rate),

Both ports are located in the same Fukuoka

fixed assets tax, city planning tax, and individual municipal

Prefecture

tax as local tax revenue. The tax revenue is estimated at
approximately US$932 million from 1964 to 2009.
From the viewpoint of financial sources of redemption, it

Table 4.8 Financial Balance of Kitakyushu Port

seems possible to reimburse RB at an early stage by using the

Source: The author created this table based on the hearing

tax revenue. It is necessary to determine what rate of thefrom Kitakyushu City.
Assets
US$459 million
Liabilities
US$589 million
Balance-US$130 million
Tax revenue
US$932 million(Estimated from 1964 to 2009)
Exchange rate: US$1=JPY (¥100)

overall tax revenue should be used to redeem RB bycalculating the profits in a like way as in the case of Hakata
Port.

4.7.5 Comparison between Hakata Port and Kitakyushu
Port
Hakata Port and Kitakyushu Port are ports located innorthern Kyushu. The distance of both ports is approximately
60 km. However, the redemption method of RB of both Port
Management bodies seems to make a great difference.
The port management body of Hakata Port (Fukuoka City)is carrying out a plan to redeem RB of the Hakata Port onlyby the sale of land. However, because Fukuoka City carries
out incentive assistance by the general account at the sametime, the author considered this incentive assistance to be thesame redemption resources from the general accountFukuoka City was afraid that the debt of RB would suppress

Figure 4.11 Location of Kitakyushu Port and Hakata Port

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

the general account, so the city chose the method to retain theearthquakes and growing interest rates. It is against thisspecial accounts of RB and clarify the redemption situation of

background that the author has addressed the matter ofRB.

financial sources for the redemption of bond-financed projects(FBs and RBs) by Port Management bodies.

In contrast, Kitakyushu City abolished the special accountof RB and integrated RB with the general account.

In this report, the author has provided an overview of theKitakyushu City chose the method to simplify its complicatedfinancial conditions of Port Management bodies in Japan, andaccounts and clarify the financial status to private enterprises

pointed out that the construction of ports has been a major

and residents comprehensively.

cause of deficits, while port management has been either
profitable or balanced.

Each policy of Fukuoka City and Kitakyushu City reflects

Further, the author has analyzed the trend in port

the difference mentioned above, but the two share theconstruction costs in Japan, to estimate future increases orcommon following points:

decreases in FB and RB. This analysis has revealed that
construction costs are expected to increase in the future,a. Adoption of the method to redeem RB by the resources ofdepending on the increase in the depth of port structures andthe general accountthe reinforcement of the aseismic strength required after theb. The economic theoretical grounds that tax revenue fromGreat East Japan Earthquake. The author has surmised thatprivate enterprises and residents in the land should allot for

the rise in construction costs would lead directly to a rise in

the construction cost of the land

FB and RB issuance.
The author has also argued that that early redemption isdesirable for RB, given uncertainties such as changes in the

The economic value of the land is comprised of saleeconomic climate, although no problems will occur if land

income and tax revenue of the land.

sales take place as planned.

Most port management bodies pushed forward theconstruction of land by RB from 1960 to 2000 because

Based on the above analysis, the author proposes thatdemand was excellent and because construction costs offacility usage fees and land prices be reduced throughreclaimed seaside land were cheaper than inland construction

incentive subsidies as a measure to reduce the deficits of port

costs.

management bodies. This will enable the early redemption of

The port management body was able to redeem RB only bybonds and an increase in local tax revenue, since a greater

the sale income of land. As a result, most Port Management

number of businesses can be attracted, as shown in the casebodies limited redemption resources of RB to only the salestudy of Hakata Port and Kitakyushu Port.
The author hopes this report will help port management

income of land and classified the tax revenue of land into thebodies reduce their deficits.

general account.
One of the causes of the lack of success of the special
account of RB was the failure to evaluate reversion of theeconomic value of the land fairly.

4.8 Conclusion on Financial Condition
In the past, Port Management bodies have found it difficult
to choose between having to raise usage fees and land prices
high enough to enable smooth redemption in bond-financed
projects (FBs/RBs) on the one hand and having to reduceusage fees and land prices to improve the productivity of port
logistics on the other. Unless a solution to this problem isfound quickly, the finances of Port Management bodies may
become even more constrained, given the rising trend in port
construction costs due to the risks of disasters such as- 41 -

Koji TAKAHASHI

5. Analysis on Legal Problems
5.1 Overview and Issues
Across the world, port management is increasingly
adopting a scheme of separating infrastructure and operations;this is also the case in Japan.
In the midst of this global trend, Japan experienced theGreat Hanshin and Awaji Earthquake of 1995 and the Great
East Japan Earthquake of 2011, both of which devastatedmajor ports, forcing Japan to face challenges related to its port
management system. In addition, with major earthquakes

Figure 5.1 Locations of Ports in Japan (Figure 1.1)

expected to strike again in the future, it is urgent for Japan tosolve the current problems. Japan’s challenges have much in

Table 5.1 Classifications and Numbers of Ports (Table 1.2)
Classification
International
Extremely Significant Role
5
Strategic Ports
for International Trade
Major
Significant Role for
18
International Ports
International Trade
Significant Role for Mainly
Major Ports
102
Domestic Trade
Local Ports
Role for local area’s trade
808
Article 56 Ports
Designated Water Ares
61
Total
994

common with those faced by port management abroad. This
report reveals legal problems with the current port
management system in Japan, which is designed to separate
infrastructure and operations. It also contributes to the risk
management by foreign ports adopting the scheme.

5.2 An Overview of the Japanese Port Management
Figure 5.1 shows the locations of major ports fulfilling
important functions in Japan.
Table 5.1 shows the classification of ports and harbors.

Sixty years after the Port and Harbor Law was enacted,

There are five “International Strategic Ports,” which serve as

however,bases for an international maritime transport network andgovernments became widely recognized, which led to theefficiently link the international network with the domestic

introduction of the port management corporation system. This

maritime transport network. Eighteen “Major International

system used private companies to manage ports, thereby

Ports,” serve as bases for the international “Major Ports,” 102

separating port infrastructure from port management. Thisin total, which serve as bases for the domestic sea

report will review the history leading to the introduction oftransportation network and other ports critically tied to thethis system.

theinefficiencyofmanagement

by

local

national interest. Table 5.2 shows the types of port
management bodies managing these ports. One characteristic

5.3 Striving for Regional Port Managementof the Japanese port management system is that local

Japanese local governments were established in accordance

governments manage all ports.

with the Local Autonomy Law. Table 5.4 is an excerpt fromThe current port management system is set out in the Port

the law stipulating the roles of local governments and theand Harbor Law, which was enacted under the supervision ofnational government. According to the law, the role of a local“the General Headquarters, the Supreme Commander for the

public body is to “promote the welfare of its residents, forAllied Powers (GHQ/SCAP)”in Occupied Japan in 1950.

which purpose it shall carry out a wide range of tasks in the

Table 5.3 describes the division of roles between the national

autonomous and comprehensive performance of local public

government and port management bodies based on the Law.

administration,” while the role of the national government is

The national government is not directly involved in port

to enforce policies on the national level.

management, confining itself to mandating basic policies forOn the other hand, activities related to the logistics part ofport construction and management or technological standards

port activities are administered regionally, beyond thefor facilities. Port management is entrusted to port

jurisdiction of local governments. Ports are also managed inmanagement bodies (local governments).

accordance with international agreements.

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 5.2 Type of Ports and Port Management bodies (Table 1.3)
Note: (*) shows numbers of “Ports of Refuge”. Total includes number of “Ports of Refuge”.
Port Management Bodies governing several types of ports are classified into the high rank division.
Source: “List of Port Management Bodies” of MLIT (2016)
Port Management Body
Division

Total

Prefecture

Municipality

Port Authority

Administrative
Association

Int’l Strategic Ports
Major Int’l Ports
Major Ports
Local Ports

5
18
45
98

1
11
25
2

4
4
16
96

0
0
1
0

0
3
3
0

Total (*)

166 (29)39 (23)120 (6)

1 (0)

6 (0)

Table 5.3 Major Roles in Port Management
National Government•
Policy formulation for the development and administration of nationwide ports and harbors•
Establishment of necessary laws and regulations•
Providing advice and guidance on port administration and operation to port management bodies•
Authorizing development plans for major ports•
Financial assistance for port management bodies in relation to port construction projects•
Implementation of port construction projects (projects under the direct control of the national government)•
Improvement and maintenance of shipping channels outside the port area•
Establishment of technological standards for planning, design, and construction of ports and harbors•
Surveys and research concerning port technology
Local Government (Port management Body)•
Formulation of port development/management plan•
Construction and maintenance of port facilities•
Permission for and restrictions on facility use in port management districts (marine districts, land districts)•
Leasing and management of port facilities•
Setting and collection fees for use of port facilities•
Establishing conditions for providing port services•
Land reclamation in harbor districts•
Environmental protection in ports and harbors•
Statistics collection for ports and harbors•
Marketing and promotion of ports and harbors

Table 5.4 Role of Local Government according to the Local Autonomy Law
Article 1-2
The task of a local government shall be to promote the welfare of its residents, for which purpose it shall carry out awide range of tasks in the autonomous and comprehensive performance of local public administration.
Article 1-2
In order to accomplish the purpose of the preceding paragraph, the role of the national government shall mainly be toattend to: matters relating to its position as a nation in the international community, matters concerning basic rules onnational activities or local autonomy that should be standardized nationally, or matters concerning policies andprograms to be implemented on a national level or from a national viewpoint. As a rule, administrative matters close
to the people shall as far as possible be referred to local government entities, so that there is an appropriate sharing ofroles with local government. In the working out of rules and the implementation of programs relating to local
administration, the autonomy and independence of the local government must be fully exercised.

- 43 -

Koji TAKAHASHI

Furthermore, because Japan does not have a long tradition of

Given the limited role of local governments, how did

port management by private companies, these corporations

regional port management schemes develop?

face a series of challenges. For example, if a particular port
5.3.1 The First Period: Management by Publicmanagement body (local government) invests large amounts

Corporationsof money in a port management corporation, the local

The national government enacted the Foreign Tradegovernment, as an investor, can press the corporation to act

Terminal Public Corporation Law in 1967, establishing two

for the sole benefit of the local community, rather than the

public corporations, Keihin and Hanshin. The corporations

interests of the corporation. To improve the management

took sole responsibility for regional port administration,

environment faced by port management corporations, thewielding management body over port management bodies

author examined challenges for port management helping(local governments). The corporations also constructed andimproving the productivity. Table 5.5 is the results.

managed the regional container terminals necessary toCreative management, quick decision-making, and regional

manage marine container logistics. As part of administrative

or diversified management covering multiple ports toreform by the national government striving for small

streamline management through economies of scale aregovernment, however, the corporations were dissolved inessential means for port management corporations. In

1982. Port administration was returned to local governments

addition, what is optimal for a single port is not optimal for
Japan as a whole. The country needs a system that aims for5.3.2 The Second Period: The Introduction of Private

the optimization of the whole rather than an optimization ofManagement through the Super-hub Port Systemparts. Therefore, this report points out weaknesses of thecurrent system.

The national government revised the Port and Harbor Law
and introduced the Super-hub Port System in 2005. In threeareas — Keihin, Hanshin, and Isewan — the system enabled a

5.4.1 Creative Management and Quick Decision-Making

single private company to manage contiguous, multiple

Port management bodies are local governments, which as

container terminals as a whole, allowing it to pursue

public institutions are required to judge and act fairly andeconomies of scale in its operations. This revision created theimpartially. Port management bodies are not permitted to set

current system of regional port management by private

management policies that are favorable or unfavorable tocompanies.

particularcompanies.

Thisemphasisonfairnessor

impartiality might hamper creative management and quick
decision-making by port management corporations.

5.3.3 The Third Period: Private Regional Management

In addition, port management corporations are entitled tothrough the Port Management Corporation System
The national government revised the Port and Harbor Law

plan their business and make management plans on their own.

in 2011, establishing the scheme that separates infrastructure

If they receive contributions from particular port management

and operations. This revision has entrusted port management

bodies, however, they may have difficulty in making

to free management by private companies, creating conditions

decisions that are unfavorable to the management bodies,for them to engage in regional management. More than sixty

even if the decisions are appropriate on a regional scale. For

years after the Port and Harbor Law of 1950, the regional

port management corporations to manage creatively and makedecisions quickly, they need to be independent of the

management system has become a reality.

restraints of local governments.

5.4 Remaining Challenges for Port Management

On the other hand, because port management must be
consistent with the national interest, the national government

In the wake of this complicated history, the port

needs the power to supervise those corporations.

management corporation system bears a heavy responsibility
to implement port policies. However, the system faces stillother challenges. Port management corporations are required
to make use of the knowhow accumulated in privatecompanies while looking out for the public interest.

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 5.5 Remaining Challenges
Port Management Body
(Local Governments)

Port Management Corporation

Management

Limited guidance based on port masterplan1) Limited financing by port management body2) Creative management and quick decision-making
3) Regional or diversified management

Supervisory
power of thenational
government

National government lacks the power toencourage port management bodies toconsider the best interests of the whole

There is an obligation to report

Disaster

Limited capability to respond
1) Obligation to report2) Disposal
3) Management of a regional network
4) Quickness

1) Lack of measures to restore management quickly2) Obligation to report

Finance

Principle of limited income

Financial support to maintain and expand

navigation routes

5.4.2 The National Government’s Involvement in Building

completely destroyed ten major international ports, mainly on

Infrastructure

the Pacific side in the Tohoku Region. Although local port

For port management corporations to manage ports

management bodies should have restored port functions assmoothly under the scheme of separating infrastructure andsoon as possible, they appropriated limited human resources,

operations, they need to be provided with ample infrastructure.

equipment, materials, and financial resources for the relief of

If it is decided that a local port management body can bear theaffected residents. As a result, only port personnel worked on

cost of building an infrastructure, the body may delay

restoring the ports. Such policies were natural and inbuilding the infrastructure if it does not benefit the local

accordance with the spirit of the above-mentioned Local

community.

governments are willing to build

Autonomy Law stipulating “tasks in the autonomous andinfrastructure that benefits their communities but not thecomprehensive performance of local public administration.”country, but not to build infrastructure that benefits the

In terms of port management and operations, however, it iscountry but not their communities. The national government

necessary to apply the following three lessons as a hedge

needs to secure the power to get involved in building port

against another major disaster.

Local

infrastructure.
5.5.1 Lessons
Three lessons as a hedge against another major disaster are

5.4.3 The National Government’s Involvement inas follows;

Management and Operations
To support creative management and promote management
beneficial to the country, the national government needs

Lesson 1: An Essential Backup Systemsecure the power to get involved in port management.

Figure 5.2 illustrates that unaffected ports on the Japan Sea

In addition, although there are many stakeholders involvedside operated as backups, taking over the logistical functionsin ports, no one has the power to take the initiative inof affected ports on the Pacific side. Because it takes

coordinating those stakeholders. The power to facilitate theanywhere from a few months to a few years to restore

coordination should be granted to the national government.

damaged ports, it is essential to develop a backup systemthrough cooperation among ports.

5.5 Port Management in Disaster

If different management bodies or port management

The Great East Japan Earthquake in March 2011

corporations manage ports, however, the activation of a

- 45 -

Koji TAKAHASHI

backup system can be delayed. It is desirable to develop a

The fundamental problem is that the Port and Harbor Law

backup system run by one port management body or

does not anticipate that a port management body will neglect

corporation. To establish a backup system as a contingency

its functions in times of disaster. To avoid the possibility thatagainst a major earthquake affecting a wide area, it might also

port management bodies (local governments) will become

make sense for a centralized port management body with anfunctionally paralyzed and fail to fulfill their management

organizational structure covering the whole country tofunctions, alternative measures should be introduced, such as

manage and operate ports and harbors.

regional port management, port management by other port
management bodies, or management by the national
government, and other bodies should manage the restorationof devastated ports.
Lesson 3: Financial Problems caused by the Annual
Accounting System and Complex Ordering Procedures
The national government and local governments use an
accounting system that requires them to include theexpenditure for a purchase to be made next year in the budget
for the current fiscal year. In addition, to order construction or
supplies, they have to follow complex procedures including
gathering price estimates and issuing public notice, whichtake several months. Beyond these procedures, in the case ofrestoring a disaster-stricken area, the national government has
to assess the damage so that the order reflects the extent of thedamage, which further extends delays. Among the ten majorinternational ports affected by the earthquake of 2011,
Hachinohe Port was the first to be restored, but the restoration

Figure 5.2 Backing up Ports on the Pacific Side (right side)
Note: Logistics of Goods from Ports on the Japan Sea (left)

was not completed until August 2013, two years and fiveto Ports on the Pacific Side (right) affected by themonths after the earthquake. Restoration work on the other

Great East Japan Earthquake.

ports is still underway.

Note: The green line shows the logistics lines on the roadOn the other hand, roads directly controlled by the national

where support supplies were carried in 2011.

government, the Shinkansen, and expressways were restored
quickly. It is necessary to introduce a contract method free ofthe annual accounting system and complex ordering
procedures.

Lesson 2: The Loss of the Function of a Port Management
body
As mentioned earlier, immediately after the earthquake,

5.5.2 The National Government’s Involvement in Disaster

port management bodies (local governments) appropriatedResponse

limited human resources, equipment, materials, and financial

Major disasters, where local public bodies as a whole areresources for the relief of affected residents, leaving thebusy providing relief to affected residents, necessitate therestoration of ports to port personnel. Although these policies

involvement of the national government. In countries such aswere based on the Local Autonomy Law, they resulted inAustralia, where a state and county system is used, it isthose bodies neglecting port management functions. A

replacedcomparison of infrastructure clearing operations of roads

governments.”

by

the

“involvement

of

state

and

countyversus ports clearly reveals that roads, directly controlled by

For the national government’s involvement in a disaster tothe national government, were rapidly cleared, whereas ports

be effective, port management bodies and corporations needtook several months to clear.

to be obliged to report the damage to the national government.

- 46 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

The national government in turn needs to control the disposal

5.6.1 The limitation of Port Management/Operations byof debris in restoration, and it needs to be able to decide for

Local Governments Bordering the Sea
The Port and Harbor Law enacted in 1950 allows only

other bodies. The details are as follows.

localities bordering the sea to participate in the establishmentof port management bodies.

a. An Obligation to Report Disaster Damage
One characteristic of Japanese ports is that, in a disaster,

It is questionable whether administrative decisions by local

port management bodies or management corporations do notgovernments can appropriately manage ports when the scale

have an obligation to report the damage to the nationalofgovernment.

internationally.

Thenational

government

cannotcollect

port

logistics

isexpanding,domesticallyandinformation about the damage through legal systems. On theother hand, operators of railways or airports are obliged to

5.6.2 The Port Management System is divorced from thereport accidents to governmental bodies such as the Ministry

Spirit of the Local Autonomy Law

of Land, Infrastructure, Transport and Tourism (Minister ofAccording to the Local Autonomy Law (Table 5.4), a local

MLIT), not only in cases of disaster but also in ordinary times.

public body’s function is to “promote the welfare of its

To facilitate the sharing of information, the obligation toresidents, for which purpose it shall carry out a wide range ofreport in disaster and ordinary times should also apply to porttasks in the autonomous and comprehensive performance ofmanagement bodies and management corporations.

local public administration.” Port management by multiple
local governments brings different benefits depending on thebodies. Is it possible to maintain free port management?

b. Disposal Right
In emergencies, local port management bodies have thelegal right to dispose of debris or flotsam and to enter others’

5.6.3 The Risk of the Breakdown of Port Management andpremises; the national government does not. To facilitate rapid

Operations

restoration in major disasters, these legal rights should be

The Port and Harbor Law does not anticipate that a port

granted to the national government as well as port

authority could cease to function. To avoid the possibility thatmanagement bodies.

port management bodies (local governments) could become
functionally paralyzed, alternative plans should be introduced,
such as regional port management, port management by otherc. The Power to Decide Priorities in Restoration Efforts
It is crucial to decide in terms of a nationwide network

port management bodies, or management by the national

which ports should be first restored. However, neither port

government (or state and county governments).

management bodies (local governments) and management
corporations nor the national government has the power to

5.6.4 Creative Management, Pursuing Economy of Scale

make this decision. As a result, the decision is made throughwhile Safeguarding the Public Interest

consultation, but reaching an agreement can be delayed when

For port management corporations to manage freely andstakeholders have conflicting interests. For the sake of thecreatively, it is important to provide a management

nationwide network, the national government needs to be theenvironment in which they are free of the administrativedecision-maker when prioritizing restoration.

restraints imposed by local governments and can pursue
economies of scale by, for example, managing multiple ports

5.6 Legal Problems

as one system.

The above discussion reveals that the current port

On the other hand, to secure the public interest in port

management system, where port management bodies (local

management, the then Minister of MLIT stated in the Diet:governments) manage the ports, has the following legal“Concerning these port management corporations, I would

problems.

like to safeguard the public interest through restrictions on
holding too muchstock,

supervisory orders to thecorporations, or revocation of designation” (at the Committeeof Land, Infrastructure, Transport and Tourism of the House- 47 -

Koji TAKAHASHI

of Representatives on March 15, 2011). In addition, bothconstruction costs, while the balance of the costs is paid

Houses of the Diet passed a supplementary resolution stating:by the national government (2/3) and local governments“The government shall take necessary measures particularly(1/3).

to safeguard the public interest, considering that port
management corporations become exclusive management

JRTT, financed almost entirely by the national government

bodies for public goods, ports and harbors” (at the Committee

and local governments, builds and owns the Shinkansen,

of Land, Infrastructure, Transport and Tourism of the House

allowing JRs to use it exclusively. This is similar to ports: theof Representatives on March 15, 2011 and the Committee ofnational government or other bodies build port facilities, andLand, Infrastructure, Transport and Tourism of the House ofthen lease them to port management corporations.
Expressways

Councilors on March 31, 2011). It is necessary to safeguard

also

use

the

schemeofseparating

infrastructure and operations: JEHDRA owns road facilities

the public interest while pursuing creative management.

and

5.7 Solutions to Legal Problems

leasesthemtoNipponExpressway Companies(NEXCOs), which manage and operate them. The defining
characteristic is that JEHDRA adjusts the loan fees so that

This Section examines how to solve the above problems.

NEXCOs do not generate profits.

There are helpful precedents in Japan. Table 5.6 and Table

The comparison of these cases reveals the following trends:

5.7 compare port management corporations with othertransportation management companies. They comprise theairports of Narita, New Kansai, and Central Japan, which

a. Kansai International Airport, Central Japan International

integrate infrastructure and operation; the Japan Railway

Airport, Metropolitan Expressway, and the Hanshin

Construction, Transport and Technology Agency (JRTT),

Expressway are infrastructures closely tied to their local

which separates infrastructure and operation; and the Japan

communities. Local governments finance them thanks to

Expressway

Agencythese close relationships. On the other hand, Narita(JEHDRA), which also separates infrastructure and operation.

International Airport and Nippon Expressways (East,

Holding

andDebt

Repayment

Central, and West) are not locally financed.

The Narita International Airport was built and is managedb. Except for the completely privatized JR-East andand operated by a wholly government-sponsored special
corporation; Kansai International Airport, by a special

JR-West,corporation financed by the national government, local

infrastructure.

thenational

government

financesgovernments, and private companies; and Central Japanc. Except for the completely privatized JR-East andInternational Airport, by a designated corporation financed by

JR-West, the national government guarantees debt. (JRthe national government, local governments, and private

Hokkaido and JR Kyushu have funds for stable
management.)

companies.
The Shinkansen separates infrastructure and operation:d. For all these infrastructural elements, the Minister of

JRTT builds, owns, and leases infrastructure to JRs, which

MLIT reserves the power to issue supervisory or

manage and operate it. The defining characteristics of theadvisory orders.

arrangement are as follows:
These forms of involvement by the national governmenta. JRTT respects decisions made by JRs.

and local governments suggest how to support port

b. JRs pay only lease fees, which are set below JRs’ profits,management corporations. Namely, for port management

namely, the difference between their earnings with thecorporations to engage in regional management, it would be

Shinkansen and those without it. They do not have to pay

necessary to increase support from the national government,in the form of financing and debt guarantees, or to review

construction costs.

financing by local governments.

c. Part of the income from the lease fees is allocated to pay- 48 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 5.6 Management and Operations of Public Facilities by Private Companies

Port

AirportShinkansen

Road

Port
Management
Corporation(Inc.)

NaritaInternational
Airport (Inc.)

New KansaiInternational
Airport (Inc.)

Central Japan
International
Airport (Inc.)

JR(East,West)

JR(Hokkaido,Kyushu)NipponExpressway(Inc.)(East,
Central,West)

Expressway(Inc.)
Metropolitan, Hanshin

Corporate
form

Designatedcompany

Specialcompany

Specialcompany

Designatedcompany

Joint-stockcompany

Specialcompany

Specialcompany

Specialcompany

Capital
Structure

Local
governments,
Privatecompanies

National
government

National
government,
Local
governments,
Privatecompanies

National
government,
Local
governments,
Privatecompanies

PublicNational
government

National
government

National
government, Localgovernments

Management
form

Separate
infrastructure
and operation,
Owned bythe national
government
and a port
authority

Integrated
infrastructure
and operation

Integrated
infrastructure
and operation

Integrated
infrastructure
and operation

Separate infrastructure
and operation, Owned
by JRTT

Separate infrastructure
and operation, Owned by
JEHDRA

Table 5.7 Management and Operations of Public Facilities by Private Companies

AirportShinkansen

Road

Port
NaritaObligationof thenational
government
to hold
stocksNo

New Kansai

CentralNo

Yes,
1/2 or moreYes,No
regulations
about the
share

No

No

・Interest-freeloan
・Financing by
the national
government
and local
governments
・Debt
guarantee
・Tax-freereserve

・Interest-freeloan
・Financing by
the national
government
and local
governments
・Debt
guarantee
・Tax-freereserveNo・Funds forstablemanagement

Supervisoryorders etc.

Supervisoryorders etc.

Advisory
orders etc.

Supervisoryorders etc.

Support・Interest-freeloan・Tax break・Interest-freeloan
・Financing by
the national
government
・Debt
guarantee

Supervisionby theMinister of
MLIT

Supervisoryorders etc.

Supervisoryorders etc.

AdministratorNot a port
authority

Airport administrator in the Airport Law- 49-

JR (E,W)

JR (H,K)－

N.E

E.M, E.H

Yes,
1/3 ormore

Yes,
1/3 ormore heldby thegovernment and local
governmen
ts

・Debt guarantee

Supervisoryordersetc.

Supervisoryorders etc.

No road administrator
in the Road Traffic Law

Koji TAKAHASHI

5.8 Conclusion on Legal Problems

a. The creativity of port management corporations is

This report has discussed the Japanese port management

respected. Corporation management is placed outside

system, focusing on regional port management or diversified

the jurisdiction of local governments; or the bodies’

management; the kind of management necessary to make use

involvement is limited or eliminated. The nationalof the knowhow of joint-stock companies and port

government finances the corporations.

management corporations; and the development of theb. Public institutions build infrastructure with financial

Super-hub Port policy since the Port and Harbor Law was

support from the national government, leasing them toport management corporations.

enacted in 1950. It has also shown that port management byprivate companies has been required to safeguard the publicc. To safeguard the public interest, the national government

interest since the Great East Japan Earthquake. This reportobliges port management corporations and publicalso shed light on the fact that the power of the national

institutions to report disaster damage and reserves thegovernment is limited because it entrusts port management topower to get involved in their disaster management.

port management bodies, although port management and
The author hopes that, considering in the Japanese

operations seriously affect the national interest.
On the other hand, in Japan, port management corporations

strategies introduced in this report, those involved in port

as well as the national government and port management

management across the world will pursue the ideal port

bodies have not yet accumulated enough management

management system for their own countries.

knowhow. Therefore, this report compared port managementwith precedents — cases of the management of otherinfrastructural elements adopting the scheme of separating
infrastructure and operation — to see what kinds of problems
should be solved to achieve the goal of improving Japan’s
productivity

andsustainability

throughaggressive

management by fledgling port management corporations
making use of private knowhow.
As a result, this report was able to prove the following inanalyzing regional port management by port management
corporations:a. The power of the Minister of MLIT is weak both inordinary times and in disaster.
b. Management by port management corporations is notindependent enough of port management bodies.
c. For port management corporations to expand theiroperations, it is imperative to examine the possibility of
the national government financing them or giving themdebt guarantees.
Considering these findings, the author proposes shifting to
the following system to solve the legal problems of the port
management system:
Port management strategy follows the precedent of
separating infrastructure and operation, and- 50 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

6. Analysis on Large-Scale Natural Disasters

6.2 Response to Large-Scale Natural Disaster Risks

6.1 Overview and Issues

Of the major ports in Japan (Figure 6.1), the Great East

As mentioned in Chapter 2, Shipping companies consider

Japan Earthquake of 2011 destroyed 10 ports located on the

two types of factors when setting up trunk shipping routes for

Pacific side of Tohoku Region (See Figure 5.2) and paralyzed

internationalisport logistics. The ports on the Sea of Japan side functioned as

geographical factors, such as geographical positions on a

backup for port logistics on the Pacific side. In addition to

global scale, sea area conditions to set up shipping routes,

being responsible for transporting emergency supplies toeconomic sizes of port hinterlands, and international affairs.

stricken areas, the ports on the Sea of Japan side took on the

The other is factors related to means of transportation, such asnecessary logistics to enable private businesses to resume

scales and functions of container ships and container

operations. Oddly, the Great East Japan Earthquake enabled

terminals. Fujita･Krugman･Venables (1999) had shown why

the realization of the importance of healthy ports to back up

ports and other transportation hubs become sites for cities. By

disaster-stricken ports.

containertransportation.

The

first

focusing on the “economic activity density” and “vertical

Meanwhile, the Nankai Trough Earthquake is predicted todepth” of the port hinterland, which are the least studied

occur in the future and cause damage concentrated in theamong geographic characteristics so far, an analysis of the

Pacific-side ports in the Middle Western part of Japan based

geographical characteristics of ports throughout the worldon the expected point of origin, as shown in Figure 6.2. Thisclarified that three types of ports exist in terms of port

report decided to verify the ports that would function asplacement: a. “Continental hub port type,” which has dense

backups for the stricken ports if the Nankai Trougheconomic activity and is large in vertical depth; b. “Marine

Earthquake occurs to fully utilize the lessons learned from the

hub port type,” which has low density economic activity andGreat East Japan Earthquake. This verification considered asis small in vertical depth; and c. “Japanese-type,” which has

the subject cargo the marine container shipments that can bedense economic activity and is small in vertical depth. The

horizontally transported on land over long distances, and theanalysis also clarified that, to prevent further decreases in thesacrifice model improved by Iyama･Watanabe (2010, 2011)

shares of economic activity in other countries, Japanese-type

was adopted as the estimation model. Although bulk cargo

ports are required to implement a balanced minimizationsuch as completed automobiles may be transported on land

policy that does not depend on improved indexes of overseas

over long distances, this method was not included in thetransshipment ratios but on the integration of port facilities.

estimation. The supposition was that transport routes would

In contrast, the Great East Japan Earthquake in Japan of

be changed for these shipments in accordance with the2011 paralyzed the functions of ports on the Pacific side in thecontainer cargo.

Tohoku region in Japan. Including Japan, which suffered fromthe Great East Japan Earthquake, many countries harbor therisks that large-scale natural disasters will cause serious
damage to their lands. Using the sacrifice model, the variationin container logistics caused by earthquakes was analyzed for
the Nankai Trough Earthquake, which is expected to occur inJapan in the future. The following points were clarified: thenecessity of establishing hub ports as backups for ports thatare functionally paralyzed during disasters, that countries
whose economic activity density is now declining should
implement a balanced minimization policy based on port
integration, and that countries facing the risk of large-scale
natural disasters should establish hub ports to back up
sacrificed ports in addition to implementing a balanced
minimization policy.

Figure 6.1 Locations of Ports and Tohoku Region in Japan- 51 -

Koji TAKAHASHI

S3 has high transport expense and short transport time. S2 hasintermediate transport expense and its transport time isbetween that of S1 and S3. On any of these routes, the totalsacrifice S becomes larger in proportion to the time value.
Therefore, the route to be selected varies depending on thetime value. In Figure 6.3, Route 1 is selected if the time value
is smaller than α12, Route 2 is selected if the time value isbetween α12 and α23, and Route 3 is selected if the timevalue is α23 or larger.
Meanwhile, the time value varies depending on whether
cargo or a traveler is being transported, and each forms a

Figure 6.2 Focal Area Affected by the Nankai TroughEarthquake Likely to Occur in the Future

point on a line when viewed individually. Thus, expressing

Source: The author create this figure based on HP of thethe time values as a collection is possible by grasping how

Headquarters Earthquake Research Promotion

they are distributed when considered collections of shipments
or travelers.
In general, practically no studies exist on shipping cargo,
although research on estimating the time value for travelers

6.2.1 Overview of the Sacrifice Model
The sacrifice model is a decision-making model thathas been more extensively conducted. Therefore, this report

digitizes behavior patterns to select the route that wastes thepresumed that the time value for cargo would have aleast time and cost (in other words, has the least sacrifice) for

logarithmic normal distribution pursuant to the estimationtransport or movement when cargo is transported or when amethod for travelers. Moreover, this report also presumed thattraveler moves. A characteristic of this model is that it simply

the probability of the person making the choice to select thedigitizes the two main factors for route selection, which aretransport route is the same as the actual measurement value

time and cost.

for a container cargo flow survey.

The sacrifice model is expressed using the following

Table 6.1 shows time value and the time value distribution
curve is expressed using the following Equation (6.2):

Equation (6.1):
Sr=Cr

+

α・Tr,

(6.1)

where Sr represents total sacrifice, Cr represents cost, α
represents the time value, and Tr represents time.
The total sacrifice Sr for route r is expressed as the cost Cr(6.2)

required for each route, including fares and transport expenses
added to the product of the estimated time Tr required for thecorresponding route and the time value α, which isdetermined by the characteristics of the cargo or the traveler.
Now, how is a route selected using the sacrifice model?
The concept is shown in Figure 6.3, in which the vertical axis
plots the total sacrifice and the horizontal axis plots the timevalue. For example, supposing that three routes may be
selected to transport cargo from the departure location to thedestination, these three routes vary with respect to transport
expenses and required time. Thus, the sacrifices expressed by
Equation (6.1) are calculated as S1, S2, and S3. S1 is a routewith low transport expense but long transport time, whereas

Figure 6.3 Concept of the Sacrifice Model- 52 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

handled volumes for each port that functions as a backup for

Table 6.1 Time value
Asia Lines
ExportImportExportImportAverage
μ

7.37

7.12

7.67

7.58

Standard deviation
σ

1.19

1.90

1.85

2.29

Coefficient of
Determination R2

0.48

0.49

0.53

0.44

Number of Data

254

268

96

110

Time value(Median):α¥ /hour・TEU

ports destroyed by earthquakes would double or more thanTrunk Linesdouble. Because shipments exceeding the capacities would beconcentrated on the backup ports, these ports’ limits forhandling shipments would be practically exceeded. It is also
expected that a concentration of transshipments would occur
at Busan Port, Shanghai Port, Kaohsiung Port, Hong Kong
Port, and Singapore Port, where an increase in transshipment
containers is predicted. Figure 6.4 shows the increase intransshipment cargo volume at overseas ports such as BusanPort. Overall, at overseas ports, the volume of cargo handled

1,590

1,233

2,146

would increase to 3 or more times. In particular, in the rate of

1,963

increase, Shanghai, Singapore, Hong Kong and Busan are
high.
Thus, the author believes that it is necessary for Japan to

Cost is determined based on the results of an investigationconsider the following backup scenarios when they develop aof the Ministry of Land, Infrastructure, Transport andbackup system in case of earthquakes:

Tourism.
Backup scenario 1: Provide full support with backup
6.2.2 Simulation Results

ports

Figure 6.4 shows the simulation results, which are now

As shown at Figure 6.5, in this case, expansion in capacity

reviewed.

will be necessary in terms of facilities, including capacity to

The cargo volume of Keihin (Tokyo, Kawasaki andallow the docking of large ships and handling capacity for

Yokohama), the ports on the Sea of Japan side (Hakata,marine container shipments. It is difficult to handle 40% of

Kitakyushu, Shimonoseki and Tsuruga etc.), the ports on thethe marine container shipments for the entire country of Japan

Setonaikai (Hiroshima and Mizushima etc.) and others isin terms of the scale of facility capacity and the size ofincreasing. Those ports would function as backups for 7.4

investment, and it is not easy to change the ports of call for

million TEU per month, corresponding to 42% of Japan’slarge ships that make tours around the world.

total marine container cargo (17.4 million TEU per month).
The red portion of the graph shows the cargo via Busan

Backup scenario 2: Set up domestic hub ports for backup

Port. The number of transshipment containers would nearly 3

and coordinate by feeder transport

times at Busan Port. What should be mentioned specially is

As shown at Figure 6.6, because shipments werethat the cargo volume of Tsuruga Port is almost occupied byconcentrated at Northern Kyushu, Niigata Port, this backup

the cargo via Busan Port.

scenario tries to position these ports as the hub ports for

Backup ports, which function as a backup for the ports

backup and to establish coordination with other healthy ports

destroyed by the earthquake, would double or more cargothrough feeder transport.

volume. It means that cargo volume to be handled exceeds the

Although it is difficult to change the trunk routes for large

capacity of container terminals in backup ports. Thus, theships, because the service patterns for the large ships all overauthor believes that Japan must consider the following backup

the world would be affected, it is possible to change thescenario when they develop a backup system in the event ofservice patterns for collection at ports where they alreadyearthquakes:

regularly dock or in concurrence with reducing the number ofthe ports of call. On this point, Northern Kyushu, Shimizu,

6.3 Backup scenario for Establishing Backup

Mizushima, Hiroshima, Kanazawa, etc. would play the

Systems

important role of backup hub ports.

What can be commonly said about all cases is that the- 53 -

Koji TAKAHASHI

Figure 6.4 Changes in Container Logistics affected by Nankai Trough Earthquake
Note: Black shows the volume of Busan Port.

- 54 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management.

Figure 6.5 Backup scenario 1

Figure 6.8 Location of Back up ports
Note: In case of Nankai Trough Earthquake occurs.

Backup scenario 3: International coordination withforeign ports such as Busan Port and Shanghai PortAs shown at Figure 6.7, this is the backup scenario forusing transshipment of Japanese cargo at Busan Port,
Shanghai Port, and others through international coordination.
There has already been a case of international port integration
between Copenhagen Port in Denmark and Malmö Port in
Sweden (See Section 7.4). In this backup scenario, thenational government of Japan would adopt a policy topromote the international coordination of ports. However,concluding an international agreement in case of disasters
with Busan Port, which is a rival port to those of Japan, would

Figure 6.6 Backup scenario 2

inevitably force Japan to change its policy on international
coordination.
Because the shipments are concentrated on Keihin,
Northern Kyushu (Hakata, Kitakyushu and Shimonoseki),
Hiroshima, Mizushima, Tsuruga, and others in Figure 6.8,
these ports should be set up as backups for the stricken ports.
Therefore, they will be functionally developed and will
establish coordination with other healthy ports through feedertransport. In particular, the Northern Kyushu region isgeopolitically close to Busan Port, and developing hub portsthat enable the callings of large ships is important
Although changing the trunk routes for large ships isdifficult because doing so would affect the service patterns forsuch ships all over the world, changing the service patterns
for collection at ports at which they already regularly call or

Figure 6.7 Backup scenario 3- 55 -

Koji TAKAHASHI

that are in accordance with the reduction in the number ofbig enough to allow large ships to reach the berthing facilities.

ports of call is possible. On this point, Keihin and Northern

Therefore, in light of the port placement theory, the author

Kyushu would play an important role as backup hub ports.

proposed from the geopolitical viewpoint that the portfunctions of the three largest bays should be enhanced and6.4 Conclusion on Large-Scale Natural Disasters

that domestic hub ports should be developed in Northern
Kyushu.

The attempt to typify almost all of the container ports in theworld clarified that container hub ports can be divided into

In this report, the author classified all container ports

three groups. The first group is of continental hub ports whose

throughout the world according to their geographicalmission is to collect cargo primarily from the hinterlands. The

characteristics. This report also clarified that the response to

second group consists of marine hub ports whose mission isJapan’s decline in relative position in economic activity in theto handle transshipment cargo as the mode characteristic ofworld and large-scale disaster risks should be a Japanese port

container transportation. The third group consists ofpolicy that enables integration of ports through a balanced

Japanese-type ports with high economic activity density andreduction policy and develops ports to hedge risk.

world-uniquegeographicalcharacteristics,

toThe author expects that this report will be helpful for

which

countries in developing their own port policies.

Japan—even though an island maritime nation—belongs.
In addition, this report clarified that significant gaps exist
between the economic growth rates of countries in the East
Asian region and the geographical conditions of theirrespective ports compared with cases in other regions, andthat Japanese container ports require integration.
Japan’s port policy focuses on working out hub ports thatcan compete effectively with foreign ports to intensively
handle transshipment cargo based on the recognition that theacquisition of more transshipment cargo than other ports is apriority in the competition among international container
ports. The author believes that prioritizing the recognition of
the productivity and the sustainability is insufficient forrealizing this target. A bold reorganization of international hub
port functions and a drastic reformation of the structure ofcollecting domestic cargo at major ports are required.
In contrast, to fully utilize the lessons learned from theGreat East Japan Earthquake, the author verified the changes
in the logistics for marine container shipments through asimulation using a sacrifice model by presuming damage fromearthquakes expected to occur in the future. Approximately
40% of all marine container shipments in Japan need to behandled by healthy backup ports, and the volume of marine
container shipments to be handled by the backup ports would
nearly double or more. Moreover, the simulation clearly
showed that Keihin (the ports of Tokyo, Kawasaki and
Yokohama), the ports on the Sea of Japan side and Setonaikai
Sea between Shikoku area and Chugoku area would back up
stricken ports.
However, in reality, the backup ports are incapable ofaccepting a significant amount of cargo volume and are not- 56 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

was demonstrated that the national government’s leadership

7. Analysis on Leadership of National Gov’t

could establish port operations resistant to large-scale natural

7.1 Overview and Issues

disasters.

The national governments of the world grope for how a

In addition, “reform” is defined in this report as a policy

port operation system with high productivity and highthat changes the scope of the government’s leadership. In

sustainability against large-scale natural disasters can bedetail,established. In other words, how should the national

privatization, and orders from the government.

reformcontains

decentralizationofauthority,

government exercise its powerful leadership to implement

Furthermore, the Canadian port system was analyzed inpolicies aimed at overall optimization instead of partial

accordance with the review conducted by Ircha (2001, 2002,

optimization?

2008), Brooks (2007), Debrie (2010), AAPA (2009), Heaver

The author hypothesized that a method to solve this(2009), and Hall et al. (2011), Sharman (2012), and the results

problem was that the national government should develop andof a hearing investigation performed by the author from Ms.

implement a comprehensive policy and participate in the port

Kazuko Komatsu who had been a director of board of bothmanagement/operation. However, few studies have verified

Vancouver Port Authority and Port Metro Vancouver as a

the importance of a government’s leadership in port policies.

representative of the Canadian federal government. The port

This report is the first research outcome obtained from an

management/operation integration in Denmark/Sweden was

analysis of the significance of a government’s leadership bycited from Hirano (2009) who had been the first secretary ofcomparing port operation systems of each country. This is in

Embassy of Japan in Denmark. The analysis of the Japanesecontrast to the many research outcomes on decentralization of

port system was conducted based on the achievement ofauthority or privatization that have been obtained along withTakahashi et al. (2013a, 2013d, 2013g, 2014a) who were

the progress of decentralization of authority or privatization

officials of the Japanese Government.

of port management/operations worldwide.

7.2 Switch of the Port Policy by the Administration

Previously, the change of the Canadian port policy is the

Change of Government: Canadian Casetypical example that the port policy switched by theadministration change of the federal government in countries
participating in the Group Eight (G8). Canadian port policy

7.2.1 Reform of the Canadian Port System

was on track to decentralization of authority/privatization, but

The change of the Canadian port policy is the typicalthey changed this approach as they realized the importance of

example that port policy switched by administration change

the federal government’s leadership. Therefore, in this report,of the federal government in countries participating in thethe transition of Canadian port policy is reviewed first, andGroup Eight (G8).

the background of the shift made by the federal government

administration change of government and the port policy andand the detailed government’s leadership are then analyzed.

analyzed the influence that the administration change of

Subsequently, port management/operation integration ingovernment gave in the port policy. As a result, the federal

Denmark, Sweden, and Japan are reviewed to verify the effectgovernment of Canada has executed a large-scale reform ofof the national government’s involvement for improving thethe port policy three times to date.

productivity.

Author focused on the relations of theTable 7.1 shows the flow of the reform of Canadian port

On the other hand, the Great East Japan Earthquake insystem. Notably, Canadian port reform policy was largely

Japan paralyzed functions of Japanese ports operated by local

changed because of administration changes.

governments in 2011. If an anticipated Nankai TroughThe first reform, executed before 1983, was transferred all

Earthquake occurs, port functions may be paralyzed just as in

ports

2011 under the current port operation system conducted bygovernments, and privatization was conducted by creating

local governments. Today, horizontal/vertical division of work

public corporations. The management and operation system ofhas been expanded in the global economy, and thus, paralysis

the ports was systemized using public corporations; however,of Japanese port functions may result in severe damage on thethere are many limitations in this system.

global economy. Accordingly, through the case of Japan, it- 57 -

undernational

management/operation

to

local

Koji TAKAHASHI

Table 7.1 Historical Transition of Administration Change and Significant Port Reform in Canada
Note:

These characters show the major polices.

Source: The author created this table based on the hearing from the Canadian Government
Ircha (2001, 2002, 2008), Brooks (2007), Debrie (2010), AAPA (2009), Heaver (2009) and Sharman(2012)

Liberal Party became the governing party
1963

Change of administration

1964

Establishment of harbor commission✓The harbor commission was established and given management responsibility.

1979

Change of administration

Conservative Party became the governing party
1979
1980

Change of administration
Change of administration

Liberal Party became the governing party
1980

Change of administration

1983

Canada Ports Corporation Act✓Past debts were cancelled and privatization was adopted.

1984

Change of administration

Conservative Party became the governing party
1984
1993

Change of administration
Change of administration

Liberal Party became the governing party
1993

Change of administration

1995
1998

Declaration of national ocean policy
Establishment of Canada Marine Act✓Defining the port types, the port authority system was applied to major ports.

2006

Change of administration

Conservative Party became the governing party
2006

Change of administration2006

Declaration of the Asia-Pacific Gateway and Corridor Policy✓This declaration made priming economic growth through soft/hard improvements in ports thatserve as the gateway and railways/roads that serve as the corridor in response to the remarkable
expansion of trade between China and the North American continent.
Major amendment of Canada Marine Act✓Incorporating financial improvements of port authorities and provisions of integration, three port
authorities in British Columbia were integrated.

2008

2015

Change of administration

Liberal Party became the governing party, up to the present date
2015

Change of administration- 58 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

The second reform set forth national marine policy in 1995,

private sectors, integration of port management bodies, andestablished the Canada Marine Act in 1998, and developed

integration of concerned people in addition to respective

port management bodies to enable independent management

independent effects.

and operations at major ports. However, because this reform

Policies implemented in the APGCI ranged widely acrossimposed various constraints on the port authority while

port/railway/road modes, and the fact that the prime minister

introducing an independent accounting system, significant

and responsible ministers visited Japan and China for top

facility investment became impossible because of funding

APGCI sales implies that the government responsibly

problems; thus, port call opportunities by maritime companies

exercised leadership by placing an exclusive minister for thewere lost.

implementation system. The powerful leadership of thegovernment after the administration change was largely

The third reform, which established the “Asia-Pacificaffected (Transport Canada (2012a, 2012b)).

Gateway and Corridor Initiative (APGCI)” in 2006 andIn addition, concurrently with the development of an

implemented logistics policies (including railway/road modes
with efforts of public and private sectors under governmental

integrated

leadership), is currently in effect. The federal government

management/operations of the port authority organization

environment

tostreamline

thealtered the policy characteristics of the third reform ofthrough amendments of laws and regulations (e.g., the Canada

promoting decentralized and self-managed port operations,

Marine Act), implementation of large-scale port works bychoosing to integrate three port management bodies in the

public and private sectors became the driving force toGreater Vancouver area and make major improvements toreorganize port management bodies into organizations withport/railway/road infrastructure. Regarding the alteration ofeffective management/operations, because it is conducted on

the federal government’s port policy, there was a serious sense

the premise of improvements of the financing capability ofof crisis in the administration arising from the trade

port management bodies (WESTAC(1999)).

competition between Canada and the United States related toTable 7.2 shows the board and directors of Port Metrothe rapid growth of trade between Asian countries. Especially,

Vancouver (PMV). The federal government decided tothe change of administration in 2006 became a distinctive

strongly integrate three ports (i.e., the Ports of Vancouver,watershed point. The Liberal Party of Canada privatized andFraser River, and North Fraser) on the west coast within the

aimed for a financially independent port operation before

Greater Vancouver area through the federal government

2006. Since 2006, the leadership of the Conservative Party ofrepresentative participating in a board. The port authority has

Canada has changed this path to enabling the federala board, which is the highest organ of management/operation,

government to become powerfully involved with port

and the board provides management/operation instructions tooperations and public works.

managers in the system. The board consists of 7 to 11
directors, who are appointed by the representative bodies. The

7.2.2 Characteristics of the Canadian Federal

federal government does not have a right and a budget on the

Government's Leadership for the Port

port management/operation. However, a representative of theManagement/Operation

federal government is included in the board to reflect theintentions of the federal government.

A significant change was made by the powerful leadership

In summary, the characteristics of Canadian federal

ability of the federal government after the administration

government's leadership are the following:change in 2006.
The APGCI announced by the Canadian government in2006 was well received within the country. In the program’sa. Canadian port policy was on track to decentralization of

first 4 years, the government implemented specific policies inauthority/privatization, but they changed this approach asorder to improve the capacity and efficiency of “Gateways”

they realized the importance of the federal government’s(i.e., ports) and “Corridors” (i.e., railways/roads). Based onleadership.
b. The federal government does not have a right and a

the APGCI, these policies are intended to produce synergistic
effects, such as a combination of port/railway/road modes,

budgetimplementation of public works through efforts of public andrepresentative of the federal government is included in- 59 -

on

the

port

management.

However,aKoji TAKAHASHI

the board to reflect the intentions of the federal

port but also a wider range operated under internationally

government.

agreed rules such as international supply chains..
Thus, it is of interest to determine how these wide-ranging

7.3 Switch of the Port Policy by the Administration

port activities have been realized while the roles of local

Change of Government: Japanese Casegovernments were limited.
In 1967, the national government newly established theForeign Trade Port Public Corporation Act and setup two

7.3.1 Reform of the Japanese Port Management System

national public corporations: Keihin (Tokyo, Yokohama) andTable 7.3 shows the transition of the Japanese port policy
Japanese

Hanshin (Kobe, Osaka). These public corporations solely

government executed significant reform of port policy three

undertook port management of a number of ports andtimes after 1950. The first reform, executed in 1950, left all

conducted construction and operation of container terminals

ports including ports managed/operated by the nationalfrom a wide range viewpoint required for international marine

government to independent management/operation by local

container logistics. However, the national government, whichgovernments. The second reform established two national

was aimed at a small government, judged that construction

foreign trade port public corporations in 1967 and transferredand management by two national public corporations became

the container terminal operation from local governments tounnecessary

two foreign trade port public corporations; however, theadministration reform. All container terminals constructed andincludingportmanagement

systems.

The

and

thus

dissolved

them

in

1982

as

operation was transferred to the local public corporations as

operated by the national public corporations were transferred

the national foreign trade port public corporations wereto local public corporations owned by local governments fordissolved in 1982. In the third reform, the Super-Hub Port

operation. (The second reform was executed as part ofInitiative was announced in 2004 and the International

LDP’s administration reform.)

Strategic Port Policy was declared in 2011, and the container

The Ministry of Transport established the first Port Policy

terminal operation was transferred from local public

hurriedly when the national public corporations were

corporations to private corporations. The third reform

dissolved. The Ministry of Transport worried not to be able tocontinues to the present date.

continue to construct port facilities. The Port Policy indicates

By contrast, from a viewpoint of the administration power

the necessity of constructing port facilities other than thebalance between Liberal Democratic Party (LDP) andbasic ones. However, the Port Policy mainly considered

non-LDP, looking at the transition of port policy caused byconstruction, and port operation was not mentioned.

administration changes from 1993 to 1994 and from 2009 to
2012, non-LDP-related regimes affected significant portc) Reform under the Non-Liberal Democratic Party

policies. First, the relationship between the port policy and the(Non-LDP) Regime from 1993 to 1994
The Fiscal System Council, which was the consultative

administration after 1950 is reviewed.

body of the Non-LDP regime, concluded that port investments
should be inhibited (rank C among ranks A/B/C that implya) Establishment of the Port and Harbor Act (1950)
The current Port management/operation system is regulated

investment control). Consequently, the budget allocated toby the Port and Harbor Act established under the instruction

port construction was less than to public works in other fields.

of the General Headquarters, the Supreme Commander for the

Although ports worldwide were in the course ofAllied Powers (GHQ/SCAP) in 1950. (The first reform wasconstruction and operation of large-scale container terminals

executed under the administration of GHQ/SCAP.)

because of predicted size growth of container ships, theJapanese government announced that they would decline thisinvestment.

b) Challenge to Wide-Area Operation of Ports (PortPolicies under Liberal Democratic Party (LDP)-related
Regimes from 1950 to 1993)
Logistics, which are important port activities, involve not
only the range of administration of local governments of the- 60 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 7.2 Board and Directors (11 members) of Port Metro Vancouver (PMV)
Source: “The Canada Marine Act" of the Canadian Government
Canadian
government

federal1 memberBased on the recommendation of the minister of Transport Canada,appointment by the chairperson of the council

1 member

Province of British Columbia

1 member

Governments of western provinces (Alberta, Saskatchewan, andManitoba)

Person appointed by
local government

1 memberRepresentative of 16 neighboring cities, including Vancouver

Port user

7 members

After consulting with the industry, recommended by the minister oftransportation and appointed by the chairperson of the council

Person appointed byprovince government

Table 7.3 Historical Transition of Administration Change and Significant Port Reform in Japan
Source: The author created this table based on the data of the Ministry of Land, Infrastructure, Transport and Tourismof the Japanese Government (MLIT), and Takahashi (1998, 2007, 2008, 2010).
Port Policy

1950–1982 (LDP)
Development of port facilities

Post-War Reconstruction

a. Port and Harbor Act
b. Foreign Trade Public Port Corporation Act

a. Port Policy for 21st Century
b. Follow-up of Port Policy for21st Century

a. Dissolved Foreign Trade Public Port
Corporationb. Structural Impediments Initiativec. Basic Plan for Public Investment

1982–1993 (LDP)a. Development of facilities
other than basic facilities
b. Creation of comprehensive
port space

National Movement

1993–1994 (Non-LDP)

a. Finance System Council:
Port is rank C (Investment Control)b. The Great Hanshin-Awaji Earthquake

1994–1998 (LDP)a. Selection and concentrationb. Development of hub port

Internationalizationa. Amount increase for the Basic Plan for the
Public Investment
b. Fundamental Principles of General
Logistics

1998–2009 (LDP)a. Selection and concentration,b. Development of hub portc. Concession

Super-hub port policy(Privatization of public
corporations)a. Advance comprehensive approval systemfor public facilities
b. Private Finance Initiative lawc. Act on Special Zones for Structural
Reform2009–2012 (Non-LDP)a. Selection and concentrationb. Development of hub portc. Port operation by verticalseparation

International Strategic Port Policya. The Great East Japan Earthquake(Management Corporation System)

2012–present (LDP)(ditto)(Note) LDP: The Liberal Democratic Party-based Administration
Non-LDP: Non-Liberal Democratic Party-based Administration- 61 -

Koji TAKAHASHId) Introduction of Private Operations with the Super-Hub

the Local Autonomy Act defines that “a local government

Port System (Liberal Democratic Party Regime from 1994

shall be to promote the welfare of its residents, for whichto 2009)

purpose it shall carry out a wide range of tasks in the

The national government became aware that logistics wasautonomous and comprehensive performance of local public

significant economic activities for growing Japan’s economic

administration” and specifies that the role of the national

Power. The first comprehensive logistics policy of thegovernment is to implement measures from a national point of

national government that included a strong cooperation ofview.

ports, roads and other infrastructures was announced in 1997.

Since the operation system by local government was

Realizing the necessity of constructing a large-scale

introduced in 1950, the Japanese port management system has

container terminal to accommodate for larger container ships,

been concentrated to constructing port facilities, but there hasin 2005, the Japanese government introduced the super-hub

been no change in the basic system. Because a local

port system by amending the Port and Harbor Act and bygovernment must maximize the public welfare of residents inenabling a single private business operator to integrally

the area under its jurisdiction, it implements the measures

operate a number of successive container terminals at three

optimal to its respective locality, including those against

ports (Keihin, Hanshin, Isewan). Thus, terminal operators

investment competition between neighboring ports. However,

could pursue the managerial advantage of scale. This led tothose measures may not be optimal in Japan as a whole.

the establishment of the current system of wide-area port

As a result, port management/operation functions weremanagement/operation by the private sector. (The thirdparalyzed when the Great East Japan Earthquake affected thereform was started the awareness of the importance offunctions of local governments in 2011.
Figure 7.1 shows the focal region of the Nankai Troughlogistics under administration of LDP.)

Earthquake, whose occurrence in the pacific sea surroundinge) Wide-area Operation by Private Sector under PortJapan is anticipated. If the Nankai Trough Earthquake occurs,Management

the damage is expected to be more severe than that in the

Corporations(Non-Liberal

Democratic

Great East Japan Earthquake of 2011. Particularly, because

Party-related Regime from 2009 to 2012)
In 2011, the national government amended the Port andthe assumed disaster-stricken region includes a number ofHarbor Act to establish a two-tiered (separating infrastructure

ports, such as the Ports of Nagoya, Osaka, and Kobe (major

and

the

ports for international trade), according to Takahashi et al.

port/management to the private sector, an environment to(2014a), ports serving as transportation routes of 7.4 million

enable wide-area management/operations was developed.

TEU of marine container cargo, that is, 42% of the entire

Sixty years after the first reform in 1950, the wide-areamarine container cargo in Japan (17.51 million TEU; 2011),

operation system was realized

would be paralyzed. The damage is expected to expand far

operation)system,

and

while

leavingbeyond the administrative district of each local government,
7.3.2 Characteristics of Japanese Government's

and thus, the damage level would be beyond that local

Leadershipgovernments could handle and recover.

As seen in Table 7.4 by the allocation of roles between the

In addition, because horizontal/vertical division of work onnational government and local government including portinternational trade has been advanced, this type of paralysis ofauthority under the Port and Harbor Act, the national

Japanese logistics would cause significant damage to thegovernment was not directly involved with the operation of

global economy. It is the mission of the national government

ports, and its role was limited to provision of instruction by

to prevent such damage from spreading to the world.
In summary, the characteristic of Japanese government's

basic policies of port construction/management and technicalstandards for facilities. It abandoned the operation of ports toleadership is that the Japanese Government lays emphasis on

port management bodies, who are the local governments.

decentralization/privatization

of

the

port

management

Local governments in Japan were established under the/operation too much and lowers the leadership of the

Local Autonomy Act. As indicated by the roles of local

government. When a large-scale natural disaster occurs, thisgovernments and the national government shown in Table 7.6,

characteristic becomes remarkable- 62 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 7.4 Allocation of Roles between the National Government and Port Management Bodies under the Port andHarbor Act (Abbreviated Table 5.3)
Source: The author created this table based on the Port and Harbor Act of the Japanese Government.
Port Management Bodies(Local Governments)

National government
a.
b.
c.
d.
e.
f.
g.
h.

Policy formulation for the development andadministration of nationwide ports
Establishment of necessary laws andregulations
Providing advice and guidance on port
administration and operation to port
management bodies
Financial assistance for port management
bodies in relation to port construction projects
Implementation of port construction projects(Limited to projects under the direct control of
the national government)
Improvement and maintenance of shipping
channels outside the port area
Establishment of technological standards
Surveys and research concerning port
technologyi.

Formulation of port
development/management planj. Construction and maintenance of port
facilities
k. Permission for and restrictions on facility use
in port management districts (marine
districts, land districts)
l. Leasing and management of port facilities
m. Setting and collection fees for use of port
facilities
n. Marketing and promotion of ports
o. Establishing conditions for providing port
services

Figure 7.1 Assumed Seismic center of Nankai Trough Earthquake (Mw 9.1)
Source: The author created this figure based on Earthquake Research Committee (2013)- 63 -

Koji TAKAHASHI

7.4 Management/Operation Integration Case of theport while borrowing port assets from CPH City & Port

Ports of Denmark/Sweden

Development and the city of Malmö.

7.4.1 Formation of Transnational Economic/Living Area

7.4.3 Involvement of National Government in CMPÖresund Link, the bridge and underwater tunnel used forPorts in Denmark used to be managed and operated by theboth road and railway, was opened in 2000 (Figure 7.2, 7.3).

national government, but operations of all ports were

It connects Copenhagen and Malmö and reduces the traveltransferred to local governments. Furthermore, aiming attime to approximately 45 minutes by car and 30 minutes bymanagement/operation by private companies, the port act wastrain. There are many people commuting across the borderrevisedfrom Malmö and the neighboring area to Denmark, and an

management/operation by private bodies. This movement

economic/living area termed the Öresund Region reaching theadheres to the line of privatization taken by England in theoutskirts of both cities has been formed.

1980s. However, in 2000, the policy was changed to enable

in

1999

to

systematicallyenableIn the Öresund area, integrated economic growth was

the national government to manage/operate the company, andachieved regardless of the border: for instance, a major

the government is now involved by making investment toindustrial cluster of biological research called Medicon Valley

CMP, the company owning the Port of Copenhagen andwas formed that crosses the border. The Port of Copenhagen

operating the Port of Copenhagen and Port of Malmö.

and Port of Malmö were located across each other over theborder at the Strait of Öresund, but the opening of theÖresund Link led the two countries to agree to integrate themanagement/operation of ports, and integrated port operations
began in 2001.

7.4.2 Structure of Port Operations
Figure 7.4 shows the operational structure of the
Copenhagen Malmö Port. The cities of Copenhagen and
Malmö were originally the managers of the Port of
Copenhagen and Port of Malmö, respectively, and the city
mayors agreed to integrate the management/operation of thoseports in 1998. The Port of Copenhagen was initially owned by
the city of Copenhagen, but the ownership was transferred to

Figure 7.2 Öresund Link beyond the bordera port corporation 100% owned by the Danish government in2000. The port ownership was split among Copenhagen cityand the port development company CPH City & Port
Development: 45% was owned by the Danish government,
and 55% was owned by the city of Copenhagen; furthermore,
the Port of Malmö was owned by the city of Malmö.
Copenhagen Malmö Port (CMP) is integrally operating
both ports. CMP is 50% owned by Copenhagen city and theport development company and 50% owned by the Malmö
port corporation. Separating the owners and operators of both
ports, the owners are participating in port operations via afinancing relationship. Currently, the ownership ratio in theport operation is as follows: the Danish government, 22.5%;

Figure 7.3 Enlarged view of Öresund Link

the city of Copenhagen, 27.5%; the city of Malmö, 27%; andSource: The author created this figure based on Google map.

private corporations, 23%. CMP is managing/operating the- 64 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 7.6 Role of Local Government and National Government according to the Local Autonomy Law(Abbreviated Table 5.4)
Local/National

Role according to the Local Autonomy Law

Local
Governments

The task of a local government shall be to promote the welfare of its residents, for which
purpose it shall carry out a wide range of tasks in the autonomous and comprehensive
performance of local public administration.

National
Government

In order to accomplish the purpose of the preceding paragraph, the role of the National
Government shall mainly be to attend to: matters relating to its position as a nation in theinternational community, matters concerning basic rules on national activities or local
autonomy that should be standardized nationally, or matters concerning policies and programs
to be implemented on a national level or from a national viewpoint.

DanishCity ofgovernment

Copenhagen

45%

55%

Owner of Port of Copenhagen:Copenhagen City and Port
Development Company

Owner of Port ofMalmö:
City of Malmö

50%

Private company

23%

27%

Copenhagen Malmö Port (CMP)
Figure 7.4 Owners of Port of Copenhagen and Port of Malmö, and Ownership of CMP
Note: Number shows the ratio of capital investment.
Source: The author created this figure based on the homepage of CMP and Hirano (2009)

7.5 Comparison of the Participation of the Nationalor the port management/operation body financed by the local

Government

government.

The author introduced the three forms in this report, which

By the comparison of three forms, the difference inthe national government participates in in the port

participation forms of the national government becomes clear.
Themanagement/operation body. The first is a participation form

power

of

the

participation

in

the

port

by the government representative such as the Canadian port

management/operation is decided according to the capitalauthority. The second is a participation form by the capital

investment ratio. Generally, capital investment ratio moreinvestment of the government such as CMP. The third is thethan 50%, which can hold the right of management/operation

form the national government does not participate in the port

completely, is the strongest. The power of the participation by

management/operation and entrusts it to the local government

the government representative is decided according to the- 65 -

Koji TAKAHASHI

cooperation with other members of board. If other members

operation has been left to local governments since 1950 andgo along, the government can show powerful leadership, butthat the national government is involved only with budget

unless other members go along, intention of the government

allocation. As a result, Japanese port policy is capable of

may not be necessarily reflected.

providing partial optimization for residents within eachOn the other hand, each port management/operation bodies

administrativein Japan completely becomes independent each other, whichadministrations; however, this is not optimal for Japan as ais under perfect competition in economics. It is the method

whole. Furthermore, assuming a large-scale natural disaster, itthat is most suitable when it is necessary for this form to raise

became apparent that port management by local governments

capability to the uniform standard that there is in a delayed

might have considerable negative effects on the global

part. However, when economics surpass a constant standard

economy as the functions of local governments are paralyzed.

and the perfect competition produces the problem of theAccordingly, the author concludes that the following threepointsoverinvestment, which is a worldwide economic problem.

are

district

importantthrough

to

raise

local

the

government

productivity

and

The port management/operation affects national interest

disaster-handling capabilities (i.e. the sustainability) in port

directly and the government must prevent the mutual

management and to implement policies aimed at overall

destruction by the overinvestment legally, but the system as of

optimization instead of partial optimization.

one of Japan cannot reflect intention of the governmenta. The national government should develop and implement

legally.
For reinforcement of the international competitivenessa comprehensive logistics policy of ports, railways, andbetween national nations as well as reinforcement against theroads with international competitiveness and strong

large-scale natural disaster, the powerful leadership of theresistance against large-scale natural disasters.
b. The logistics policy can be established through items

government is important. This problem is common throughout

such as implementing public works, promoting port

the world.

integration and so on.

7.6 Conclusion on Leadership of Nationalc. The national government should participate in the port

Government

management/operation by the capital investment to theport management/operation body.

The author identified the following facts in this report.
The case of Canada presented an example of a foreign port
in which the federal government developed policies to

However, there will not be the effect of c. if theestablish the system, realize the integration of three

government does not perform a. and b. at the same time. The

neighboring ports, and engage in realizing integrated,author appeals to port-related people globally through theeffective

case of Japan in that from the aspect of productivity andportmanagement/operations

andenhancedtransportation capability of logistics infrastructure as Portsustainability, port operation requires policies developed byMetro Vancouver. Canadian port policy was on track to

the national government, the establishment of a management

decentralization of authority/privatization, but they changed

system in which the national government is involved, andthis approach as they realized the importance of the federal

powerful leadership of the national government.

government’s leadership. This was conducted in the context
of an economic mission and powerful leadership exercised by
the federal government who chose to spark the domestic
economy by focusing on the tremendous trade growth
between North America and China. In the case of port
management/operation integration at the cross-border CMP,
the Danish government became involved with the ownershipand operation of port assets because it was a port operation
matter concerning two countries.
On the other hand, the Japanese case indicated that port

- 66 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

expected to work on solving the issues in Group C.

8. Analysis on Stakeholders

As a result of the classification of the issues, the following

8.1 Overview and Issues

points became clear;

As mentioned in Chapter 1, the author presented an
overview of the current state of stakeholders concerned witha. The national government, port management bodies andport management of Japan. Stakeholders of Japan are very

port transport business providers cannot be expected tocomplicated as well as more numerous than that of the world

use self-help efforts to improve the current situation.
b. The issues that the cargo owners and port management

as shown at Table 8.1.
Figure 8.1 is a correlation diagram of concerned parties ofcorporations have need to be solved by the third parties.

the port management corporations. The author conductedc. The mutual point of all the issues is that the third parties
need to tackle them in order to resolve them.

surveys with the concerned parties on port management ofcontainer terminals, and asked about the issues they were
facing. According to the answers, the issues can be classified
into three groups based on their characteristics to be solved as

Table 8.1 Stakeholders of Port Management
Note: See Chapter 1, Table 1.1 (Reprint)
U.S.A.
Japan
Port Authority
National Government
Terminal Operator
Port Management Body
Labor UnionPort Authority
Local Government
EU
Administrative Association
Port Authority
Port Management Cooperation
Terminal Operator
Terminal Operator
Labor UnionPort Terminal Corporation
U.K.
Port Transport BusinessTerminal Operator
Prime Provider
Labor Union
Shipping company
Warehousing company
Pure-play company
Sub Provider
Pure-play company
Labor Union

shown at Table 8.2. As the result of analyses, issues that port
management for container terminals face are shown as Table
8.3.
The problems categorized as “Group A: issues that need tobe resolved with their own effort” could not be found in theanswers from cargo owners and the three Japanese shipping
companies, but only in MLIT, port management bodies andport transport business providers. This is because cargoowners and the three Japanese shipping companies are under
the competitive situation in which the issues are shaken out
due to their self-improving function, which can be seen in theprocess of pursuing their interests as private sector businesses.
However, on the other hand, MLIT and the port management
bodies are public sector organizations in which the selfimproving function cannot be seen, and up to now, port

8.2 Changes in a Social Economy

transport business providers have maintained businessMeasures to deal with socio-economic issues such as thepractices in which a competitive principle has hardly everenvironment, a declining birthrate and an aging population, an

existed since the postwar period.
There are a few issues classified into “Group B: issues thatindustrial safety and health environment, disaster prevention,

are inseparably connected to more than one of the concernedand fiscal reforms must be taken by the country as a whole.

parties of the port management in one port.” The only

Port management is no exception—this sector must also takeproblem that can be found in the group is about humanmeasures to tackle these issues in step with the rest of theresources. In order to tackle the issue, changes need to be

country. Table 8.4 details the issues which require measures

made in the policy of human resources between port

in port management to deal with changes in a social economy.

management corporations, port management bodies andIn particular, in order to comply with CO2 emissions
regulations, improving productivity in response to a lack ofprivate companies.
“Group C: issues that need to be resolved by the third

human resources, and enhancing the safety of a working

parties as they cannot be solved with the effort of theenvironment to realize a zero rate of work accidents, the swift

concerned parties of the port management in one port”, can be

introduction of “a. Electric Motorization and automation ofseen in the answers from cargo owners and the port

port cargo handling equipment” is anticipated. However,management corporations. In other words, the third parties areaccording to the author’s research, as shown in Table 8.5, the- 67 -

Koji TAKAHASHI

introduction has pros and cons. In order to overcome the cons,the Local/National Diet, and the business integration between

taking the time for coordination between stakeholders,port management corporations can take place. Whensecuring temporary sites and considering developing acompared with management by public organizations, in thecompensatory system are needed beforehand.

degree of freedom, private companies have a considerable
advantage. This point is the strength of the private companies,

Meanwhile, it is necessary to transplant perfectly

which is not available for port management bodies.

knowledge of experienced port workers with a high degree ofskill into an electric motorized and automated system. As it

Port management corporations are stock companies, and as

will be too late to transplant this knowledge after thesuch, are bound by the Companies Act of Japan to follow theexperienced workers have retired, this will have to be

will of their stockholders. So, what are the restrictions placedcompleted while they are still actively working. As there is aon stock companies?

risk that the electric motorization and automation of theTable 8.7 shows the stockholder structure of a port

loading equipment could lead to an excess of workers, before

management corporation. The top name on the list of

the system is started, it will be necessary to ensure thatstockholders for Kobe-Osaka International Port Corporation

positions ready to accept excess port transport workers as wellis the national government, followed by local governments

as a safety net to pay those workers compensation are(Kobe and Osaka Cities), which are port management bodies,developed. Also, since among port transport businesswith the same proportion of stocks. As no stockholder has aproviders, those specialized in port transport operations

controlling stake of more than 50% of issued stocks required

traditionally respect their prestige and reputation, measuresfor ordinary resolutions or resolutions to elect or dismissthat respect these trade customs will be required.

directors, no one stockholder can act unilaterally at general

In comparing Table 8.4 and Table 8.5 with Table 8.3, it ismeetings; however, if Kobe and Osaka cities were toclear that all the issues are included in Table 8.3. Thus, thiscooperate, they would control 62% of issued stocks, and thus

report will examine the issues detailed in Table 8.3.

would be able to pass ordinary resolutions. On the other hand,port management corporations located in Yokohama andTokyo, i.e. Yokohama Tokyo Port Corporations and Tokyo

8.3 Stockholder structure and the strengths

Port Terminal Corporation, which receive no public

In Section 8.1 and Section 8.2, problems that port

investment from the national government, are controlled bymanagement of container terminals have, and issues that the

Yokohama City and the Tokyo Metropolitan Government,

stakeholders of port management need to tackle in order toeach of which has a stock of close to 100%. The port

deal with socio-economic changes, are shown. Here, what aremanagement corporations are in a position where unless thethe strengths that port management corporations in charge of

big stockholders, namely the national government and the

managing container terminals are expected to have? In otherport management bodies, express their clear views, theirwords, what are the issues that port management bodies have

corporation policies cannot be made.
What is a code of conduct held by local governments?

with restrictions as local governments?
Table 8.6 shows the strengths of port management

Local governments, according to the Local Autonomy Act,

corporations as private companies. Behind the establishment

are seen as entities, which “pursue the fundamental ofof port management corporations as private companies, as thepromoting the welfare of residents, and take a broad role togovernment and port management bodies (The original

conduct governance independently and comprehensively

organization are local governments.) are public organizations,

within the district (the Local Autonomy Act, Section 1.2).” Asthere is the fact that restrictions such as the prohibition ofshown in Table 8.3 and by Takahashi et al. (2013d), this roleunequal treatment, budget measures based on a fiscal year,of local governments, which conduct local governance, is aand the approval from the Local/National Diet to implement

hurdle to the port management, which conforms to market

budgets and new policies are placed prevents the realization

principles. In the same way, the involvement of these localof highly productive port management. On the other hand, ingovernments,

the case of private companies, guarantees of contract

governance, is a hurdle to port management which conforms

confidentiality, new investment unrestricted by a fiscal year or

to market principles.

- 68 -

aslarge

stockholders

conducting

localInvestors
Lease
Cooperate
Supervise✔National Assets(Land)✔Reduction of
Taxes✔Loans without
Interest✔Land Use

Land
Lease

Fees

Port Management
Corporations

Contract

Services

Port Transport
Business Providers
Fees

Services

Terminal
Operators✔Local Public Assets(Land, Facilities)✔Port Use Plan
✔Management Policy✔Usage FeesPort Management bodies（Local Governments)

Investment

Lease
SupportSupervise

Fees

National Government

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Shippers
Shipping Companies
Land Transport Companies
Figure 8.1 Correlation Diagrams of Concerned Parties of Port Management (Figure 1.2)
Source: The author created this figure based on Acts of Japan.

Table 8.2 Classification of Issues Based on the Characteristics of Stakeholders
Group
A

B

Characteristics
Issues that need to be resolved

It is possible to solve issues with ones' own effort, but incentives

through one's own effort

that motivate the stakeholders to solve issues are needed.

Issues that are closely

In order to resolve the issues, the stakeholders need to share theconnected to more than one

awareness of the issues, and make an effort to solve themstakeholder in one port

together. To achieve that, the stakeholders need to clarify duties
and responsibilities, and have incentives that they all can benefit
from, by solving the issues.

C

Issues that need to be resolved

In order to work on the issues, the stakeholders need to have third

by third parties as they cannot

parties take the initiative, and let them resolve the issues. As thebe solved with the effort ofthird parties need to be fair, their candidates are the national

stakeholders in one port

government or economic organizations. However, to make thiswork, the same as with Group B, the concerned parties need tohave incentives to solve the issues.

- 69 -

Koji TAKAHASHI

Table 8.3 Issues that Port Management for Container Terminals Face
Source: Based on surveys that the author conducted
Stakeholders and Issues
1. Cargo Owners

Classification

The market share of Japan’s transportation has been relatively increasing in the Asian
service-route network, while it has been relatively decreasing in the North American direct line,
which is said to be ‘a trunk service-route network’. Even though the market share of Japan’stransportation in the North American direct route has relatively decreased, the direct route
remains of high importance to Japanese companies; hence, cargo owners need to maintain the
direct route in order to continue to stay in business in Japan going forward. However, the national
government of Japan has discussed the importance of shipping routes concerning port
management focusing only on the market share of Japan’s transportation. It is necessary to
discuss the importance of the service-route separately as the market share of Japan’stransportation has been large and the North American direct service-route is also important toJapan even though that of Japan’s transportation has been small.

C

2. MLIT that holds Jurisdiction over Port Management
a. The Ports and Harbours Bureau of MLIT, with jurisdiction over port management, has theability to analyze the economic trends of cargo owners and shipping companies; however,since it has lost a network of contacts with shipping companies, the ability to collect credible
information has fallen behind.
b. Port transport business providers can be classified into three groups, the pure-play company
group specializing in port transport, the shipping company group, and the warehousing group,
based on their business types. The Ports and Harbours Bureau of MLIT holding jurisdiction
over port transport business maintains a close personal network of contacts with the pure-playcompany group specializing in transport, and does not have a close network of contacts withthe shipping company and warehousing groups among port transport businesses. MLIT’s
information on port transport business tends to run low on the information of the shipping
company group and the warehousing company group.
c. The Ports and Harbours Bureau of MLIT with jurisdiction over port transport business has anumber of highly-skilled civil engineers; however, they do not have enough know-how toanalyze port management from the perspective of business economics.
d. There is a lack of communication between the Ports and Harbours Bureau having jurisdiction
over port management and port transport businesses, with the Maritime Bureau holding
jurisdiction over maritime transport businesses, the Road Transport Bureau holding
jurisdiction over road transport businesses, and the Road Bureau holding jurisdiction overroad infrastructures due to a vertical administrative organization based on sectionalism in
MLIT; that is, “there are no ministries, only bureaus.
e. The ability of the Maritime Bureau of MLIT having jurisdiction over maritime transportbusinesses has weakened to control Japanese affiliated shipping companies via administrative
guidance. This is represented by the fact that the global alliance of shipping companies in theworld, which accelerate the global business strategy, has been made at the initiative ofJapanese affiliated shipping companies.
3. Port Management Bodies i.e. Local Governments
a. Even though they have been in a financial crisis, most of the port management bodies, since
they are public institutions, have not created financial statements that show their financial
situations and management indexes. Because they do not provide precise information on theirfinancial crisis to the citizens, they never receive pressure from the citizens to implementfiscal reconstruction, and consequently, they never think of working on fiscal reforms.
b. Regular personnel reshuffles spur an outflow of know-how and human resources on port
management and port facility maintenance. Furthermore, small and middle-sized port
management bodies do not have almost any know-how or human resources for maintenanceand port management, due to a surge in an outflow of know-how and human resources.
c. Since local governments perform the work of port management bodies, the scope of the port
management bodies is limited to within the administrative districts of the concerned local
governments. In other words, the port management bodies have to take policies providing apriority on local area; they place priority on the benefit of the administrative regions, andcannot take an action based on the viewpoint overlooking the whole Japan, which are called- 70 -AA

Research Perspectives for Improving the Productivity and the Sustainability of Port Management‘local egos’. As a consequence, the following facts can be commonly seen; excessive
investment in port facilities out of the sense of rivalry to neighboring ports, possession of
surplus facilities rarely used, and shipping routes invited forcibly by using incentive subsidies
without paying attention to the market principles.
d. With the deterioration of the financial crisis, a large amount investment has been made for the
gubernatorial/mayoral election to contribute to a victory.
e. With the decline of coastal industries such as steel and chemical businesses, and thedevelopment of inland industries such as value-added product manufacturing, container cargo
which are more suitable to unit transport, have been taking over the bulk cargo market which
is made for mass transport. As a result of the change in the industrial structure of Japan, an
economic effect driven by ports affecting their administrative districts of local governments
has decreased, leading to a reduction in the organizations of local governments at ports. As theport management bodies have been continuing their port business with their downsized
institutions, they have not been able to design new port policies, and are also having trouble
with their businesses.
4. Three Japanese Shipping Companies Operating Containerships on Overseas Routes
a. At container terminals of shipping companies with lowered operating rates, the reorganizationof port transport business providers at the shipping companies has been advanced.
b. Due to a decrease in the volume of containers handled at ports of call in Japan, the leadershipof deciding ports of call in Japan among shipping companies constituting the alliance ofcontainer transport, has been lost. In order to regain this leadership, it is necessary to increase
the volume of containers handled at one port, a port of call by integrating ports of call andreorganizing container terminals in Japan.

C

5. Port Transport business providers in charge of Loading and Unloading at Container Terminals
a. Facilities and personnel need to be optimized due to reorganization of container terminals.
b. Due to severe working conditions such as high accident rates at loading and unloading, andwork in the intense heat during summers and intense cold during the winters, a shortage ofyoung personnel and aging personnel has worsened. Securing human resources is urgently
needed by improving the working conditions.
c. Introducing IT has not been promoted as many companies have little capital.

A

6. Port Management Corporations Established to Operate Container Terminals
a. Many of the workers are temporarily assigned from port management bodies and privatecompanies. The temporarily transferred employees will return to their original employers anaverage of two years, with an appointment letter of a personnel reshuffle. Such a personnel
reshuffle in the short term, has made these workers have a narrow-minded view and lose their
willingness to tackle new challenges.
b. Since the relation between the goals of port management that the national government and theport management bodies set, and the business strategy of the port management corporations
are unclear, the business strategy remains unspecified. For example, the national government
sets three pillars as the goals of port management, namely ‘cargo collection’ gathering cargo at
hub ports, ‘cargo creation’ in the volume of handling cargo by promoting the industry, and‘strengthening of the international competitiveness of ports’ by improving the productivity ofthe ports. The national government is required to show economic indicators to evaluate thedegree of achievement of their goals, as well as the concrete goals regarding the three pillars.
c. Even though the business strategy and port masterplan are not linked together, someregulations, which are not related to business strategy, exist. Port management corporations
need their business strategy.
d. The sources of information are limited to shipping companies and cargo owners who are
related to their designated ports, since the ports to be targeted for port management arelimited.

- 71 -BCKoji TAKAHASHI

Table 8.4 Issues which Require Measures in Port Management to Deal with Changes in a Social Economy
Source: Survey by the author
Issuesa. Introducing electric motorization and automation to loading and unloading facilities.
b. Establishing a cooperative relationship in the industry for practical management.
c. Securing and training human resources engaged in port management.
d. Accelerating the transparency of the financial situations of the port management bodies; the introduction of
corporate accounting.
e. Improving the continuity of business in the case of large-scale disasters. ; Formulating Business Continuity
Plans(BCP) and establishing an implementation system

Table 8.5 Pros and Cons in Introducing Electric motorization and Automation to Loading and Unloading Facilities
Source: Survey by the author
1. Prosa. Requesting a reduction in CO2 emissions.
b. Taking alternative measures for decreasing excellent port workers and lack of such workers.
c. Reducing operation costs at terminals by improving efficiencies.
2. Consa. Due to the large amount of capital investment needed at the first stage, and the limited extent of terminals tohave their systems based on the ability to recover invested capital, it is difficult to introduce the systems to all
terminals in terms of funding.
b. If efficiencies are low, terminal management will be costly.
c. Regarding the introduction of existing terminals, prior coordination with the existing users of the terminals,
securing temporary terminal sites for construction, and off-work compensation benefits for the port transportbusiness providers might be required.

Table 8.6 Strengths of Private companies as Port Management Corporations
Source: Survey by the author
Factors of Strengtha. Accumulating human resources and skills (know-how) of port management.
b. The ability to service facilities promptly and perform maintenance meticulously (port facilities and loading andunloading facilities, among others), complying with wishes of tenants.
c. Powerful negotiation skills with cargo owners, shipping companies, port transport business providers, and roadtransport business providers.
d. Improving productivity and bringing more balance to facilities and personnel.

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 8.7 Stockholders of the Port Management Corporations (as of March 31, 2015)
Source: Business reports released by the port management corporations
1. Kobe-Osaka International Port Corporation
Stockholders
Number of Stocks
National Government (Minister of Finance)
10,000
Kobe City
9,000
Osaka City
9,000
Sumitomo Mitsui Banking Corporation
800
Mizuho Bank, Ltd
200
Bank of Tokyo-Mitsubishi UFJ, Ltd.
200
Total
29,200
2. Yokohama Port Corporation
Stockholders
Yokohama City
Yokohama Port Transport Association
Sumitomo Mitsui Banking Corporation
The Yokohama Chamber of Commerce and Industry
Total

Number of Stocks
540,400
191
95
19
29,200

Ratio
34%
31%
31%
3%
Less than 1%Less than 1%
100%

Ratio
99.9%
Less than 1%Less than 1%Less than 1%100%

3. Tokyo Port Terminal Corporation
Stockholders

Total Stocks

Tokyo Metropolitan Government
Tokyo Rinkai Holdings, Inc.
Total

269,654240,100
509,754

CommonStocks240,100
240,100
480,200

Ratio
50%
50%
100%

SpecialClass Stock
56,55456,554Note 1: Stockholders of special class stocks do not have voting rights at general meetings. In addition, stockholdersof special class stocks do not have voting rights at general meetings for stockholders with special classstocks, except in the case of changing the articles of incorporation.
Note 2: Tokyo Rinkai Holdings, Ins. is a stock company that the Tokyo Metropolitan Government owns 85% andmore of the outstanding stock
Note3: Yokohama Port Corporation corporatized Kawasaki Port and changed its corporate name to“Yokohama-Kawasaki International Port Corporation” in 2016.
Stakeholders stocks (ratio) are as follows;
National Government

10,000 (50%)

Yokohama City

9,000 (45%)

Kawasaki City

900 (4.5%)

Sumitomo Mitsui Banking Corporation 100 (0.5%)
Total

20,000 (100%)

Source: Business reports released by Yokohama-Kawasaki International Port Corporation(as of 2016).
This corporation is expected to integrate Tokyo Port Terminal Corporation in the near future.

- 73 -

Koji TAKAHASHIIn order for port management corporations which conform

undertake port management to maximize their profits

to market principles to display their strengths, local

according to market trends and invest in foreign port

governments must put aside their local egos.

management in consideration of the economic rise ofAsia.

8.4 New National Targets and Solution Policies
The author has stated in this report that in order to solve

In other words, according to the above points, the nationalvarious issues, intervention from third party organizations isgovernment will need to revise the policy of International

necessary. Furthermore, in order to solve the issues of port

Container Strategy Port in order to affect the policy.

management corporations and bring out the strengths of

8.5 Forming Public Opinion by Third Party

private companies, which conform to market principles, aclear goal of the national government as a stockholder, as well

In Section 8.1, the author has stated that in order to solve

as the elimination of the local egos of local governments are

the issues in port management, solutions made by third party

necessary.

organizations are necessary. In this Section, the author will

Now, what kinds of goals should be set by the government,

discuss the role of third party organizations and what kinds ofand how can port management corporations utilize theirorganizations are suitable third parties.

strengths in port managements?
Table 8.8 shows all the possible solutions for the

The role of third party organizations is to make the national

challenges of port management. However, these are under thegovernment, port management bodies and port transportpremise of adjustments of various restrictions and vested

business providers, who cannot be expected to help

interests. The details will be described later.

themselves achieve improvements, recognize the need for

What is shared by these solutions is they all exclude

self-help efforts and create an environment where they caninterference in management by port management bodies andsolve their own problems. As a result of this, it is necessary

the national government, aim at management that maximizes

for third party organizations to be impartial and expert, and to

profits as private companies, and suggest overseas expansion

have no special relationships with those involved in port

from Japan, where the domestic market has remained

management. They will be required to form public opinion tocontracted, to realize economies of scale.

argue for the necessity of the rapid implementation of thesolutions, as well as to lend authority capable of dealing with

Next, the consistency with the policy of International

stakeholders equally.

Container Strategy Ports, Japan’s latest port policy, will beThus, in real terms, the third party organizations will fulfill

discussed. Comparing the solutions in the Table 8.8 with thethe following roles:

policy of International Container Strategy Ports, the following
points become apparent, showing that the policy does not suita. Survey and proposal for port management policies andthe present condition.

individual items for implementation.
a. The national government will need to shelve theb. Coordination and mediation between stakeholders (asobjective of the policy of International Container

shown Table 8.2 for the issues created by theStrategy Port, which is a reduction in the rate of a

implementation of port management policies.

foreign transshipment, and ask port management
However, as port management corporations are, in the end,

corporations to aim for management to maximize theirprivate companies, their managerial autonomy is ensured, andprofits as private companies.

third party organizations do not participate in portb. In order to pursue economies of scale as private

management.

companies, port management corporations will need to- 74 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 8.8 Possible Solution Menu for the Issues on Port Management
1. Realizing management that can promptly respond to the global market trend
1.1 Logistic systems by the port management corporations which comply with wishes of cargo owners
a. Formulating and practicing scenarios to increase shipping routes and cargo by each shipping
company.
b. Achieving the goal of luring a large number of shipping companies by revising contracts from an
exclusive lease to lease based on the amount of usage.
c. Meeting the objective of increasing the amount of cargo handled at ports through negotiations (luring
shipping routes and cargo, and focusing on port sales) with cargo owners and shipping companies forJapan as whole, by gradually promoting cooperation, investment and integration with port
management corporations across the country.
d. Abolishing port sales which involve petitions from groups visiting cargo owners and shipping
companies with written requests as well as for photos taken as souvenirs.
e. Business cooperation with foreign container terminals.
1.2 Reducing the Power of the Port Management Bodies that Represent Local Benefits
a. Reviewing the large investment from the port management bodies and reducing it to the scale that
does not affect port management.
1.3 The Relaxation of Regulations
a. Upgrading the ability by the improvement of existing loading and unloading facilities.
b. Creating business space for the port related industry by providing real estate.
c. Improving the cooperation and unification of the port transport business.
d. Cooperating with domestic and international shipping companies (the relaxation of cabotage
regulations including the introduction of a tag-end cabotage system).

2. Pursuing Economies of Scale by the Port Management Corporations
2.1 Collective management of loading and unloading facilities across Japana. Reducing costs by procuring loading and unloading facilities en bloc at several ports.
b. Receiving maintenance business for port facilities from port management bodies throughout Japan, byaccumulating human resources and know-how regarding maintenance of port facilities.
c. Introducing electric motorization and automation to loading and unloading facilities.
2.2 Integration of the Computer Systema. Establishing the information network between the port management corporations.
2.3 Expanding Business to Growing Overseas Markets
a. Capital participation in port management of overseas container terminals.
b. Establishment of an information network by integrating computer systems.

(Continued to the next page)- 75 -

Koji TAKAHASHI(Continued from the previous page)
3. Improvement of Container Terminals in Japan
3.1 Reorganization of container terminals in Japana. Selecting terminals in the country where the port management corporations could achieve economies
of scale and participating in management.
3.2 Reorganizing the Port Transport business providers in Japana. Reorganizing the port transport business providers due to reorganization of container terminals.
3.3 Sorting out the Complicated Relationship of Owning and Leasing Facilities
a. Removing multi-layered terminal management systems that create the situation of no one claiming
responsibility, and unifying the systems for the management of the port management corporations.
New terminals will be “Common Terminals,” which are publicly built and privately operated, and will
be provided with the labor right of loading and unloading for the port transport business providers.
b. Centralizing the proprietary right of lands and quays in the national government and the port
management bodies.
c. Unifying operators as a group at each port into consolidated companies of the port transport businessproviders.
3.4 Accelerating the Transparency of the Financial Situations of Port Management Bodies
a. Introducing corporate accounting (double-entry bookkeeping) to finance the port management bodies
and releasing the financial statements.
3.5 Diversion and Sale of Surplus Port Facilities
a. Diverting surplus port facilities to logistic sites.
b. Upgrading the ability by improvement of the existing loading and unloading facilities.

4. Reinforcing the Port Management Corporations
4.1 Cooperation and integration of the port management corporations throughout Japan
a. Integration between the large-scale port management corporations.
b. Management cooperation with local port management corporations.
c. Establishment of computer networks between the port management corporations.
4.2 Hiring and Training Regular Employees
a. Transferring from other organizations and hiring from the outside to become specialists.
b. Training regular employees as specialists of port management.
4.3 Training the Ability to Deal with Problems at the Time of Disasters
a. Formulating a Business Continuity Plan (BCP).
b. Establishing backup systems for port management, with cooperation and integration between thenation-wide management corporations.

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

9.2.2 Scenario 2

9. Three possible scenarios

Scenario 2 is comprised of items, which, within existing

9.1 Overview and Issues

restrictions and vested interests, the National government andport management corporations need to improve going forward,

Chapter 8 has detailed the solution policies and has
described the utilization of third party organizations to solve

and port management corporations’ performance improves.

issues. In order to realize these policies, various restrictive

In particular, in this scenario, in order for port management

requirements and vested interests need to be considered incorporations to utilize the public-built private-management

creating the scenarios.

system fully, the following points are pivotal:

9.2 Possible scenarios

a. Cooperating and unifying port transport businesses due

Among the solution policies, some are easy to implement,

to reorganization of container terminals

and others need a great deal of coordination with numerousb. Promoting rationalization of systems by organizing

stakeholders. Thus, the author proposes three possible

complex ownerships and owner-tenant relationships for

scenarios ranging from a ‘minimum requirement’ scenario tofacilities.

achieve an initial goal of port management corporations, to a
‘middle scenario,’ and the future scenario requiring a great

The former has been carried out in some ports but the threelargest bays i.e. the bay of Tokyo, Osaka and Ise in Japan. For

deal of coordination (Table 9.1).

example, the introduction of electric motorization andautomation at the Port of Hakata, which is located in thewestern part of Japan, has led to the cooperation and

Table 9.1 Three Possible scenarios
1. Scenario 1
Implementing the Solutions listed in Table 8.

unification of port transport business providers. It is thoughtthat movements toward cooperation and unification at theNote that the solutions below, which require loads ofadjustments, are excluded.

largest three ports will be stimulated by the introduction of

1.3d

operators who are forced out of business, or will have to cut

electric motorization and automation. However, in respect of

Cooperating with domestic and international
shipping (the relaxation of cabotage regulations
including the introduction of a tag-end cabotage
system)3.2
Accelerating the cooperation and unification of
port transport business
3.3
Promoting the rationalization of systems byorganizing complex owner-tenant relationships
for facilities
2. Scenario 2
Implementing the Solutions listed in Table 8.

down business due to electric motorization and automation, asafety net is necessary for port workers and their companies
to distribute profits through dividends, along with theinvestment to merged companies.
In the latter, the process of changing from national
government’s public corporations to port management
corporations over time has resulted in the complex
relationships and owner-talent relationships between theNote that the solutions below, which require loads ofadjustments, are excluded.
3. Scenario 3
Implementing all the Solutions listed in Table 8.

rights and liabilities to rent facilities. Reorganizing the rights
belonging to rent facilities is needed, by putting the debt
management of facilities and privately owned facilities backinto the hands of port management bodies for the public
interest.

9.2.1 Scenario 1
Scenario 1 is comprised of items which can be carried out

9.2.3 Scenario 3

through the port management corporations’ own efforts

Scenario 3 is comprised of all items which should be

without infringing any vested interests under existing

carried out, and with the added relaxation of cabotage

restrictions.

regulations, and the introduction of tag-end cabotage to be
used at main ports from Scenario 2.
Against the background of including the relaxation of- 77 -

Koji TAKAHASHI

management.

cabotage regulations, a serious shortage of Japanese laborers
is predicted in domestic shipping lines, the same as otherindustries, and “Asian Low Cost Carriers” in shipping lines

Step 3 shows an integration of port management

are expected to come into Japan with the explosive expansion

corporations in order to bring out the strengths of the portof Asia’s economy.

management corporations.

Furthermore, the coast of the Japan Sea has practically no

9.4 Remaining Issues for Researchdomestic shipping lines served by domestic shipping
companies. South Korean shipping companies fulfill a role ofThe

objectiveofestablishingportmanagement

domestic shipping lines using the Port of Busan as a hub andcorporations for container terminals is to revise of theare connected to foreign major ports across the world throughinflexible port management system of the local governments,

this hub. The relaxation of cabotage regulations may

and to develop a structure that can rapidly adapt to global

potentially cause the management of existing domestic

economic changes, and the intentions of shippers andshipping companies to deteriorate; however, this is consideredshipping companies.

to mainly lead to a strengthening of shipping capacity inThis report has provided a qualitative analysis of port

domestic shipping lines including the coast of the Japan Sea.

management systems, and shown the challenges and their

In addition, even if the relaxation of cabotage regulations

solution policies, and scenarios and processes for solutions.

does not lead to a comprehensive cabotage system, an

The remaining research tasks are to determine when toincrease in shipping capacity can be expected by introducing

implement the solution policies based on the results of the

tag-end cabotage to be used in main ports.

qualitative analysis in this report, with the addition of a

If the domestic shipping function of the Japan Sea Coastquantitative analysis. The quantitative analysis will require

can be recovered, the Port of Kitakyushu and the Port ofclarification of the items in Table 9.3.

Hakata, which are located close to the Port of Busan in SouthThe Japan’s three biggest shipping companies (K Line,

Korea, will become topographically more convenient,

MOL and NYK) announced their container businessbringing about the expectation that this will allow not justrestructuring plan on October 31, 2016 appeared in The Japanthese two ports, but the entire country of Japan to benefit

Times (2016). Based on the recent changes of the world

greatly.

economy, the author plans to publish the research results ofthese items in another report.

9.3 Process for the Realization of Scenarios
The three scenarios shown in Section 9.2 are a menu of thesolution policies. The menu does not include a concept oftime. Table 9.2 shows the process including a concept of timefor Scenario 1 to 3.
At first, Step 1 shows launching the supporting businesses
for port management such as authority of the third parties thatstand on neutral and specialized positions to form public
opinion and conduct coordination and mediation, theintroduction of electric motorization and automation toloading

andunloadingsystems,

establishing

a

port

management support corporation or newly adding the port
operation

supporting

businesstotheexisting

portmanagement corporations, and unification and cooperation of
the port transport business
Step 2 shows the national government invests in main local
ports and changes the management policies of port

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 9.2 Process to Implement the Scenarios
Step 1: Launching the Supporting Businesses for Port Management
a. Authority of the third parties that stand on neutral and specialized positions to form public opinion and conduct
coordination and mediation.
The third parties discuss the way of port management, advocate (forming public opinion) plans for systems
and assistance measures to support the operation of the port management corporations, and develop structure(authority) to make coordination and mediation for concerned parties.
b. The Introduction of electric motorization and automation to loading and unloading systems
The national government is to promote electric motorization and automation for loading and unloading
systems with an emphasis on the measures for CO2 emission regulations, lack of human resources and theimprovement of labor safety.
As part of these measures, the national government is to provide the supporting system of technologicaldevelopment for electric motorization and automation, as well as to create subsidies, preferential tax measures,and loan systems without interest for cargo facility makers to introduce electric motorization and automation forloading and unloading facilities. New terminals can be motorized and automated at the time of use; however,
the existing terminals need to be improved while being used, leading to the need of temporary sites forrefurbishment. The introduction will be sequentially implemented from terminals that can secure a temporarysite.
In order to maintain the high quality of the loading and unloading work, the introduction needs to beadvanced while experienced workers are not yet retired.
c. Establishing a port management support companies or newly adding the port operation supporting business tothe existing port management corporations
Port operation supporting businesses will be responsible for ordering new cargo handling facilities andelectrically motorized and automated cargo handling facilities all together, leasing these facilities to borrowersof container terminals, and managing necessary personnel and equipment for the maintenance of the cargohandling facilities.
There are some methods to launch port operation supporting businesses such as establishing a newcorporation or adopting a new business into the existing port management corporations.
d. Unification and Cooperation of the Port Transport Business
The National government will advance the unification and cooperation of the port transport business,
together with the introduction of electric motorization and automation as well as reorganization of container
terminals. With the examination of the situation of labor supply and demand at the port transport business, if
there is an excess of workers, the National government will take a central role in creating work for the port
transport business, and building a safety net to protect the wages of employees. Establishing consolidated
companies with investment in port transport business providers is one solution to preserve their prestige andreputation.
Regarding shipping company-style port operators, the National government will take a central role toaccelerate their unification with the goal of shipping company unification.
(Continued to the next page)- 79 -

Koji TAKAHASHI(Continued from the previous page)
Step 2: The National Government to Invest in Main Local Ports
As local governments (see Note) lead the management of main local ports, port management corporations atthese ports are operated based on the pursuit of local benefits. In order to realize port management which seeks
to benefit the nation as a whole, the National government, instead of the local governments, needs to invest in
port management corporations and change the management policies of port management.

Note: Possible Main local ports to be reviewed: Tomakomai Port, Ishikari Bay New Port, Sendai Shiogama
Port, Ibaraki Port, Niigata Port, Tsuruga Port, Maizuru Port, Hiroshima Port, Mizushima Port,
Kanmon Port, and the Port of Hakata

Step 3: Integration of Port Management Corporations
In order to bring out the strengths of the port management corporations, as the final step, the National
government needs to accelerate the integration of invested management and develop structures where a single
port management corporation manages the entire port management operations across Japan, with the expansionof port management overseas being achieved.

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Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Table 9.3 Items for Quantitative Analysis to Establish the

10. Conclusion

Time Period Required for the Implementation of
Solution Policies

The National government and stakeholders involved in port
management have great expectations for port management

1. Understanding of the Current Situation and Future
Predictions

corporations. At first, the author considered that the issues of
stakeholders involved in port management need to bea. The current situation and future predictions for shipping
companies and domestic shipping companies.

addressed in order to assist the drawing up of a management
policy for the future of port management corporations whenb. The number, ownership, age, and operating status ofloading equipment

launching port management corporations. However, evenafter the port management corporation was established, the.
c. Management bodies and the status of container terminals
across Japan.

author realized that it had not progressed toward any solutionsof the issues, resulting in a decision to survey the issue of port

d. The current situation and future predictions for supply
and demand of port operators, including port transportbusiness providers and domestic sailors.

management corporations.
What was revealed in the addressing of the issues with port
management corporations was lack of individuals willing toe. Predictions of supply and demand for workers at port
transport businesses, related to the electric motorization
and automation of loading equipment.

take responsibility. As port management corporations are
private companies, corporation directors have management

2. Discussion of Methods for the Introduction of Electric
Motorization and Automation

responsibility. Although the National government and port

a. Processes and methods for the improvement of existingterminals with the electric motorization and automationof loading equipment.

express their opinions on companies’ policies, the fact that the

management bodies have the strong rights as stockholders tostockholders themselves do not have a clear policy makes thisproblem more profound.
On the other hand, there has been no previous researchb. Effect of cooperation and unification of port transportbusinesses.

dealing with port transport businesses, providing a gap in the
research. Because of this, the author has clarified those who

3. Feasibility Study on the Putting the Port Operation
Supporting Businesses

hold responsibility, and indicated which scenario and process
to take going forward.

a. Examination of the amount of bulk orders for loading
equipment, lease charges, and administrative andmaintenance costs at Japan’s three largest ports and main
local ports.

The conclusion of this report is summarized as follows:b. Surveys Related to Implementing Business Operations
by the Separating Possession of Equipment andManagement.

Theobjectiveofestablishingportmanagement

corporations for container terminals is to improve a rigid port
management system by the local governments, and develop a

4. Examination of Involvement in the Management of Main
Local Ports

port management system, which can rapidly adapt to global
economic changes, and the intentions of shippers anda. Examination of investment in the management of main
local ports.

shipping companies. The author has analyzed the current
system of port management bodies theoretically in ab. Surveys related to implementing business operations by
integrating the management of port management
corporations.

previously published research paper, and has pointed out that
there exist diverse problems in the system.

5. Examination of the Relaxation of Cabotage Restrictions(including the introduction of tag-end cabotage)a. The need to integrate facilities for container terminals by
reducing surplus facilities, in accordance with Japan’sa. Predictions for the future and effectiveness for a domestic
shipping route network.

geographic characteristics from the perspective ofphysical geography, in order to improve the productivity

b. Predictions of the effectiveness for management of port
management corporations.

of container terminals in Japan (Chapter 2)- 81 -

Koji TAKAHASHI

b. The issues for shippers and port management
b. The fiscal conditions of local governments as port

corporations require solutions made by other thanmanagement bodies had been deteriorating due to anthemselves.

increase in the capital costs and administrative andmaintenance expenses of the ports to be reduced andc. These issues all share the attribute of requiring solutions
from third party organizations.

integrated (Chapter 3)
c. A rise in the capital costs and administrative and

Next, with respect to these issues, solution policies utilizing

maintenance expenses should be compensated by

the strengths to be expected from port management

injecting local taxes (Chapter 4)

corporations, which are private companies, are indicated.
These solution policies, in comparison with the policy of theInternational Container Strategy Port, have been shown thed. The current port management system operated by local

need for the following management strategies:

governments has the objective of Japan’s legal systemand the situation of a global port operation is constrained

a. The national government will need to shelve theby the Local Autonomy Act of Japan (Chapter 5)

objective of the Policy of International Containere.

terminals

Strategy Ports, which is a reduction in the rate of athroughout Japan is necessary, in order to build theforeign transshipment, and ask port management

sustainability in port management, which is resistance tocorporations to aim for management to maximize theirlarge-scale natural disasters expected to occur in the

profits as private companies.

An

integrated

operationof container

future (Chapter 6)
b. In order to pursue economies of scale as private
f. What is inevitable to implement solutions for the issues iscompanies, port management corporations will need to

not leaving it to the initiative of local governments but

undertake port management to maximize their profits

the powerful leadership of the national government

according to market trends and invest in foreign port

(Chapter 7)

management in consideration of the economic rise of
Asia.

However, as stakeholders involved in port management
face various issues, the management of port management

Further, based on these management strategies, to solve thecorporations has not proceeded smoothly. Thus, the author has

problems of port management, the author has suggested thedecided to find out what issues are hurdles to the process byneed for the involvement of neutral and expert third party

rigorously examining the actual conditions of organizationsorganizations to form public opinion, and provide authority.

and trade practices, among other factors.

The author has also proposed three scenarios, namely the

As mentioned in Chapter 8, by carrying out a rigorous

scenario carried out with the minimum coordination withsurvey of stakeholders involved in port management, andstakeholders, the middle scenario, and the future scenario

analyzing issues requiring measures for port management torequiring a great deal of coordination with stakeholders, andachieve their initial objectives andthe processes for implementing these scenarios.

adapt to changes insocial economy, the following trends detailed below byThis report, in combination with the author’s existing

stakeholders have been found:research based on seven fields of geographic, engineering,a. The improvement of the National government, port

finance, administrative law, business administration, risk

management bodies and port transport business

management and politics, is considered to have theproviders cannot be expected simply through their own

achievement of the first systematic research on port

efforts.

management system as well as a groundbreaking one in the
research history of port management.

- 82 -

Research Perspectives for Improving the Productivity and the Sustainability of Port Management

Acknowledgements

Lastly, the author is hopeful for positive developments inthe future, leading to concrete solutions for the issues. In

The author would hereby like to express my sincere

addition, the author will be also delighted if this reportgratitude to Mr. Shinichi Urabe in Chapter 2, Dr. Yasuo

contributes to opening the door to a bright future for Japan.

Kasugai in Chapter 3, Fukuoka City / Kitakyushu City /Hakata Port Terminal Co. Ltd. in Chapter 4, Prof. Dr. Keiko
Sakurai (Gakushuin University) in Chapter 5, Mr. Shigeru
Iyama in Chapter 6, Ms. Kazuko Komatsu (Japan-Canada
Chamber of Commerce) in Chapter 7, Mr. Oshu Go (Port of
Seattle) in Chapter 8, Prof. Emeritus Dr. Katsuhiko Kuroda(Kobe University), Dr. Takayuki Kaneda, Mr. Yoshiaki Okuda
and Mr. Masahiro Mizuno in Chapter 9.
In addition, the author would like to express my gratitude to
the Ministry of Land, Infrastructure, Transport and Tourism(MLIT) and those who cooperated with the author’s research.

Afterword
The author showed the copies of this report to those who
participated in International Conferences of the world. This
report has been standing high in public estimation.

- 83 -

Koji TAKAHASHIMIT Press, pp.227-236.

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港湾空港技術研究所報告第 55 巻第 4 号

２０１６．１２

編集兼発行人

国立研究開発法人海上・港湾・航空技術研究所

発

港 湾 空 港 技 術 研 究 所

行

所

横 須 賀 市 長 瀬 ３ 丁 目 １ 番 １ 号
TEL. 046(844)5040 URL. http://www.pari.go.jp/

印

刷

所

株 式 会 社 シ ー ケ ン

C （2016）by MPAT
Copyright ○All rights reserved. No part of this book must be reproduced by any means without the written
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CONTENTS
1. Research Perspectives for Improving the Productivity and the Sustainability of Port Management···························································································· Koji TAKAHASHI ··············

1