Logistics & Freight

The Coronavirus has created a very volatile situation for the logistics sector. Borders between countries have been closed, manufacturing plants have closed and an overall decrease in movement has taken its toll. Trade figures are unfortunately all pointing in the same direction, and there is currently little to indicating that this will change in the near future. At the same time, we are seeing more demand for Business to Consumer (C2B) delivery as consumer patterns are changing to deal with the new realities. All this puts the logistic and freight industry under immense strain.

Under these circumstances it is important that the Japanese Government does its utmost to facilitate the smooth flow or goods, goods that are vital for the functioning of our society, whether we are talking about the access to medical products or parts to the automobile industry. What is needed are clear guidelines and better alignment with other countries. There is also a need to continue to keep harbours and airports open while taking all the necessary precautions.

European logistics and freight companies offer consumers the benefits of access to their worldwide logistics operations. This has been even more evident in the last couple of years as e-commerce and home deliveries have increased exponentially. Moving forward there are no signs that this trend is receding, and companies in the logistics and freight sector are struggling. This is true both from a regulatory perspective but also due to the labour shortage and the fragmented digitalisation. Moreover, companies struggle with Japan’s high cost base, inadequate infrastructure, heavily congested ports, and rigid customs clearance procedures. They also have to deal with outdated restrictions on foreign-owned companies engaging in the domestic freight forwarding business, and unfair competition caused by differences in the rules and regulations applied to carriers providing the same service, resulting in inefficiencies and higher prices for users. The EBC appreciates the Government’s efforts as of late and believes that it is on the right track. However, if the Government truly wants Japan to become a viable logistics hub for regional trade, it must now take account of all stakeholder perspectives and ensure the right regulation and infrastructure are in place.

With the entry into force of the EPA, the logistics sector became even more important as it facilitates and will continue to facilitate the ever-increasing trade between the EU and Japan. However, for this trade to reach its full potential it is important that customs authorities and other parties that are involved do not introduce measures that are not in accordance with the agreement, and instead support business to further expand EU-Japan business. There is, furthermore, a need to make certain that the agreement is applied in a consistent manner, independent in which EU Member State or Japanese Customs region products are imported.

Companies expected the introduction of the Authorised Economic Operator (AEO) concept in Japan to lead to simplification of many of the transport and customs processes they need to undertake. Unfortunately, the new system has missed this target: instead of streamlining these processes, it has burdened companies with an increase in administrative tasks and compliance requirements in order to achieve AEO status. The EBC believes that more simplifications should be introduced, similar to those proposed when the AEO concept was first presented.

Finally, while MLIT has introduced positive reforms aimed at improving Japan’s overall business infrastructure there is still some to do to remedy the challenges to shipping services. The development of Japanese container terminals is being initiated by local authorities rather than by central Government, such that anticipated economies of scale and efficiencies will remain difficult to achieve. Data show Japan’s decline in port activity: Kobe Port, for instance, dropped in the Asian rankings from fourth place in 1980 to 59th place in 2015. Tokyo and Yokohama ports combined only ranked in 33th place globally in 2017 based on containers moved. Structural improvements are desperately needed if Japan wants to remain a vibrant shipping country.

Key issues and recommendations

Chairman

c/o Mr. Bjorn Kongstad
Chief Policy Director
European Business Council in Japan

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Upcoming committee meeting schedule

Please contact the EBC ( ebc@ebc-jp.com ) to confirm the meeting location prior to attending

2022
DATETIMELOCATION
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