Market Trends of japan freight and logistics Industry
With growing demand for home deliveries & labour shortages, the MILT is focusing on construction of automatic cargo transport roads and logistics tunnels
- The transportation and storage sector has captured a significant percentage of GDP over the past few years. The country still leads in Southeast Asian infrastructure investment with total construction investment reaching JPY 68.8 trillion (USD 521.63 billion) as of 2022. Moreover, Ministry of Land, Infrastructure, Transport and Tourism (MILT) published an interim draft in October 2023, with a focus on developing a dedicated road for automatic cargo transportation. Owing to rising home delivery demands and labour shortages, the country is further aiming to build a system where self-driving carts run through underground tunnels dedicated to logistics.
- The transportation and storage sector in Japan saw a significant increase, rising from 0.57% YoY growth in 2021 to 4.94% YoY in 2022. This was primarily due to technological innovations in transportation and logistics and investments in automation, artificial intelligence, and robotics, which enhanced the efficiency of logistics operations, reducing costs and improving service quality. Japan relies heavily on a robust logistics industry, driven by its sizable manufacturing sector and the resulting need for efficient goods storage and distribution—consequently, shipping firms like Yamato Holdings rank among the world's top logistics companies. In 2021, Japan handled approximately 4.71 billion tons of domestic freight and an additional 900 million tons of cargo through foreign trade.
- In 2021, the trade in digital commodities, including integrated circuits and related semiconductor items, experienced a notable 21.3% increase compared to the previous year, reaching a substantial value of USD 4.34 trillion. The trade of electrical and electronic goods like computers and peripheral equipment also drove the growth.
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Japan's government extended the gasoline subsidy program till 2023 year-end in response to concerns that gasoline prices will rise if the subsidy program is terminated
- Gasoline and crude oil prices are expected to remain high and influence retail prices due to increasing inflation and economic uncertainty globally. A weak Yen and a gradual reduction in government subsidies have led to record-high prices of regular gasoline across Japan. The average gasoline price at the nation's gasoline stands was JPY 185.6 (USD 1.27) per liter in 2022. Since June 2023, the government has gradually reduced the subsidy rate, which stands at 30%, to terminate the program at the end of September, as the crude oil market has regained calm. Japan extended the year-end gasoline subsidy program in response to concerns that gasoline prices will rise if the subsidy program is terminated.
- As of December 2021, the monthly average domestic retail price of diesel fuel in Japan stood at around USD 1.06 per liter, a decrease from USD 0.95 in December 2020. The average diesel price during the Q1 of 2022 was USD 1.07, with a minimum of USD 1.04 in May 2022 and a maximum of USD 1.09 in June 2022. In comparison, the average price of diesel in the world for this period was USD 1.93 per liter.
- The surge in crude oil prices over the past few months raised concerns regarding increasing inflation and stirred uncertainty in the global economy. Japan requested producer nations to increase their output and launched a temporary subsidy program in January 2022. It has since raised twice the amount to hit a cap of JPY 50 (USD 0.37) per liter. Japan's average retail gasoline price reached its highest level in seven years in 2022, reflecting a global surge in crude oil prices. The average price for regular gasoline was USD 1.4 per liter in Q2 2022, reaching its highest level since October 2014 and indicating an increase of 25 cents (USD 0.25) from October 2021.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Japan's population decline accelerated due to the rise in old age population, expected to shrink by 20 million by 2050
- Manufacturing is the fastest-growing sector in Japan, with leading production of electronics, automobiles, etc.
- The Japanese e-commerce market is estimated to grow by 6.89% YoY in 2023 after experiencing a decline in 2022
- Japan aims to expand machine tools exports to USD 11.98 trillion by 2030 under the Machine Tool Industry Vision 2030
- Rising fuel prices, average truck driver wages, and truck driver shortage impact the overall trucking operational costs
- Japan falls to the 13th rank in LPI owing to a decline in the logistics sector in 2022 amid labor shortages and rising costs
- Land and maritime transportation modes contributed the highest revenue share as of 2022, supported by government investments
- Japan is enhancing maritime connectivity in the Indian Ocean to boost bilateral trade and network connectivity
- Growth in freight pricing was witnessed due to rising inflation and the network disruptions caused by the Russia-Ukraine War
- Japan aims for USD 606.4 billion FDI by 2030, encouraging global partnership and infrastructure needs
- Japan strives to increase chip sales to USD 113.72 billion by 2030 to strengthen semiconductor manufacturing
- Japan recorded the lowest inflation rate among developed nations in 2022, largely due to fear of depressing consumer spending by increasing prices
- The government allocated USD 39.3 billion in FY 2023 to support supply chain resiliency for manufacturing companies
- Japan recorded a 39% YoY increase in oil, coal, and natural gas imports in 2022, driven by domestic resource scarcity
- Commercial vehicle sales are recovering from the impact of the global shortage of semiconductors witnessed in 2022
- With truck sales amounting to around 185,510, Daihatsu and Toyota were the leading truck manufacturers in 2022
- Declining shipbuilding and iron ore imports are expected to impact maritime fleet capacity structure during 2023-2030
- To achieve carbon neutrality by 2050 and reduce its carbon footprint, Japan has started trials for autonomous vessels
- In Japan, air freight volume has increased significantly, specifically for domestic trade, supported by local road freight connectivity
