1 Table of Contents 1. Current State of Freight Transport 2. Major Issues of Freight Transport 3. Comprehensive Freight Transport Policy 4. Examples of Recent Measures Freight Transport Policy and Measures in Japan Yoshi Imanishi Public Planning & Policy Studies, Inc

2 1. Current State of Freight Transport in Japan

3 (1) Freight Transport Volume Started to Level-off The freight transport demand in ton lifted increased rapidly during the high economic growth period up to Since then, it has remained stable. The freight transport demand in ton-km, traffic volume of freight vehicle and GDP have been growing proportionally. Source: Freight Volume in ton-km: “Handbook for Traffic Economy Statistics for 2003” Traffic Volume in vehicle-km: “Traffic Statistics for 2003” GDP: Website of the Economic and Social Research Institute, Cabinet Office  GDP at constant price, Freight volume and Traffic volume  Freight volume transported (tons) 7 times larger declining

4 (2) Decrease in Freight Transport Volume: Economic Stagnation and Expansion of Service Industry Due to the expansion of the service industry and the slow growth of the economy, freight volume per GDP has been decreasing since The mainstream of the economy has been shifting from manufacturing to the service industry. Ratio of employees by industry type Freight volume per GDP (ton, ton- km) Source: Freight volume in ton-km: “Handbook for Traffic Economy Statistics for 2003” GDP: Website of the Economic and Social Research Institute, Cabinet Office Source: “Report of the Labor Force Survey”

5 (3) Rapid Motorization in Japan up to the 1990’s Until around 1970, rail and marine transport played the leading roles in domestic freight transport. After this period, an increase in freight transport by truck supported the high economic growth that lasted until There has been no major change in the modal-split in freight transport recently. Transport modal share (ton lifted) Transport modal share (ton-km transported) Source: Handbook for Traffic Economy Statistics for 2003

6 (4) Enhancement of HGVs’ Load Efficiency Due to the growth in the size of freight vehicles and in the share of for-hire freight vehicles, the laden weight per vehicle has been increasing. So, freight transport is improving in efficiency by larger loads on each truck. Source: “Handbook for Traffic Economy Statistics for 2003” and “Annual Statistical Report on Automobile Transport” Average Laden Weight per Vehicle average loading capacity

7 (5) Advanced and Sophisticated Logistics Along with the industrial advances, the size of each parcel has become smaller and lead time has become shorter. In other words, small quantity and JIT (Just-In-Time) logistics is prevailing. There is more demand for quickness and punctuality. This trend will be a factor in increasing the freight vehicle traffic volume. Data of Discussion Group for Logistics Policies (797 responses to a questionnaire for manufacturers and wholesalers in 1999 by Nippon Express Co., Ltd.) Parcel size changes Increase in freight transport with designated delivery dates

8 2. Major Issues of Freight Transport in Japan 2. Major Issues of Freight Transport in Japan

9 (1) Traffic Congestion and High Proportion of Freight Vehicle Traffic Japan has two remarkable traffic characteristics: 1) Low travel speed on the general roads (as low as 20km/h in major cities) 2) High proportion of freight vehicle traffic (especially in major cities) Comparison of traveling speeds Source: Japan: “Road Traffic Census for 1999” U.K.: Adopted from government data Japan: General National Highways, UK: A Roads Proportion of freight vehicle traffic Source: Japan: “General Traffic Volume Survey of Road Traffic Census for 1994” U.K.: Adopted from government data France: Adopted from government data * : Proportion of Whole country are measured on ton-km basis. ** : Proportions of Tokyo, London and Paris are measured on vehicle number basis. They are calculated as the average proportion of freight vehicle traffic on the roads that are passing through each screen.

10 (2) Environmental Problems The environment such as air pollution gradually improved recently. However, only 60% of measurement stations have fulfilled the environmental standard in major metropolitan areas. We still need to make efforts to improve the environment in our country. Achievement Rate of Environment Standards (SPM) Designated areas* Source: “Air Pollution in Japan” Nationwide Designated areas: Tokyo Metropolitan area, Aichi-Mie area and Osaka-Hyogo arae Achievement Rate = No. of stations satisfying E.S. / Total No. of stations

11 (3) Increasing Traffic Accidents Until around 1970, the number of traffic accidents was increasing sharply as road development could not keep up with the growing traffic demand. After that, efforts to implement road safety measures brought a decline in accidents. Recently, while the fatalities from traffic accidents have been decreasing, the number of accidents has been increasing. Source: “Traffic Statistics for 2003”

12 (4) Low Usage Rate of Toll Expressways The expressways made a meaningful contribution to freight transport efficiency. However, in recent years the usage rate of expressways has been decreasing even as the length of expressways is extending. Due to advances in cost management resulting from the stagnant economy, transport businesses are making efforts not to use expressways, in order to avoid spending money on the tolls. Source: Ministry of Land, Infrastructure, and Transport Usage Rate of Expressway = vehicle-km on Expressway / vehicle -km on all roads

13 3. Comprehensive Freight Transport Policy 3. Comprehensive Freight Transport Policy

14 In Japan, we have a “Comprehensive Program of Logistics Policies” that sets forth the basic principles of Japan’s logistics policies. It have been promoted to establish a logistics system where both economic growth and environmental improvement are possible. Outline and Targets of “New Comprehensive Program of Freight Transport Measures” The Outline of the New Comprehensive Program of Logistics Policies In April 1997, the “Comprehensive Program of Logistics Policies” was approved in a Cabinet meeting. This program was specifically geared toward the realization of internationally competitive logistics services in various aspects including cost effectiveness by The “new Comprehensive Program of Logistics Policies” was made, before entering the targeted year of the previous program, to set the new goals based on the changes in situation since 1997 along with specific measures to achieve such goals. Goals of the New Comprehensive Program of Logistics Policies Target Year: Creating a logistics market that is internationally competitive in various aspects, including cost effectiveness 2. Constructing a market system that reduces environmental burdens and contributing to a recycle-oriented society

15 “New Comprehensive Program of Freight Transport Measures” sets numeric targets and monitors progress toward those targets. Some targets are expected to achieve, however, some targets might not to achieve. Numeric Targets of the Measures and Current Progresses Specific goalsCurrent status (2001) Target (Target year) Standardization of unit loadProportion of palletizable freights that are actually palletized 75%90% (Around 2005) Standard Palletization50%50 – 60% (Around 2005) Development of major domestic shipping terminals for intermodal transportation Proportion of population living in areas where a round trip to/from the intermodal terminal within half a dayis possible. 80%90% (Around 2010) Implementation of multimodal transportation measures Proportion of major airports and ports accessible within 10 minutes from motorway interchanges Airports: 60% Ports: 40% 90% (Around 2010) Simplification of procedures for imports and exports Time required for an imported freight to be departing from a container yard after its arrival in a port All freight: 3 days Containers: 2.5 days 2 days (Around 2005) Promotion of efficiency in city logistics Average speed of vehicles in the three major cities 20km/h25km/h (Around 2010) Load efficiency of HGVs45%50% (Around 2010) Modal ShiftAchievement rate of modal shift40%More than 50% (Around 2010)

16 4. Examples of Recent Measures 4. Examples of Recent Measures

17 (1) Development of Arterial Road Networks The expressway networks covering the whole country and the ring road networks designed to improve traffic congestion and the environment in major cities are under development. Although the construction started in the 1960s, it is still only about halfway completed. Source: Ministry of Land, Infrastructure, and Transport Nationwide Expressway Networks and Regional Ring Road Networks Expressway networks Ring road networks (Tokyo Area) Length of Opened Expressways (As of April 2004) 8,540km Length of Planned Expressways14,000km Percentage of Opened Expressways 61% Length of Opened Expressways (As of April 2003) 121km Length of Planned Expressways518km Percentage of Opened Expressways 23%

18 Reduction in Distribution Costs resulting from Road Development The length of expressways and the total traffic capacity of arterial roads have been extending. Due to the road development, traffic congestion has been mitigated and expressway usage has increased, thus reducing freight transport costs to transport one ton for one kilometer (yen/ton-km). Length of expressways and the traffic capacity of arterial roads. Freight transport costs per ton-km (by trucks) Source: Road Traffic Census for 1999 Annual Report of Road Statistics Source: Estimated logistics costs based on the cost-benefit analysis manual with data of Road Traffic Census for 1999 Decreasing the traffic capacity of arterial roads

19 Development of Access Roads to Airports and Ports Many of the airports and ports are not connected directly with expressways in Japan. To improve freight transport efficiency and the environment, the measures for direct accesses from expressways to airports and ports are being implemented. Access rate of expressways to major airports and ports (International comparison) Source: Ministry of Land, Infrastructure, and Transport Example: Development of access roads to airports and ports in Nagoya 91% 84% 61% 61% The target percentage is 80% – 90%.

20 Kobe Logistics Center (2) Development of Distribution Center The development of distribution centers is on the way in the areas around expressway entrances and exits. Those distribution centers have function both as a truck terminal and as a place for business activities. Kobe Distribution Center Example :Kobe Distribution Center The Kobe Distribution Center has been in service since 1984, and the Fusehata Interchange of the Kobe-Awaji-Naruto Expressway opened in April 1998 inside the center. The center plays an important role as a distribution complex, located near the metropolitan area, with access to well-developed transportation facilities, such as an expressway network. Private sector investment targeting interregional logistics was brought in, and economic activity in this area was boosted by this distribution center. Kobe Distribution Center To Akashi Kaikyo Bridge To Miki City Fusehata entrance/exit

21 The maximum gross vehicle weight for vehicles that can travel on any road is 20 tons. Selected parts of the overall road network have been improved for larger vehicles to use. The maximum gross weight allowed to travel is 25 tons on designated general roads and 36 tons on national expressways. Case 1 - Designated Roads for HGVs The length of the road and the proportion of vehicles allowed to travel (As of the end of FY 2003) Source: Ministry of Land, Infrastructure, and Transport Designated Road Network in Tokyo Area (As of the end of FY 2003) Maximum gross vehicle weight allowed to travel Road typeLength Proportion 36tNational expressways7,3431% 25tDesignated roads44,3904% 20tOther roads National roads 19,9762% Local roads 1,100,43094% Total length1,172,139100% Designated road: Current status of road networks: oversize/ overweight vehicles can travel (3)Traffic Controls for HGVs

22 The GVW limit of vehicles that can travel on general roads without any restriction is 20 tons, which is lower than European standard. To drive a vehicle heavier than 20 tons GVW, it is mandatory to apply for permission. In order for permission to be granted smoothly, a computer system is in operation. This system searches the routes available for such vehicles and provides the drivers with the route information. Case 2 - Permission System for over-sized/over-weight Motor Vehicles -Online application The applicants can complete the necessary documents and submit them online at office or at home via internet. Anyone who drives an over-sized/over-weight vehicle is required to apply with the relevant road administrator for traveling permission (Article of the Highway Act). The driver shall carry the permission while driving. There are various ways of applying for the traveling permission, including online application. Source: Ministry of Land, Infrastructure, and Transport

23 To control the traffic of vehicles with specifications exceeding the legislative limits, an automated device has been installed on a trial basis. This device measures the axle load, height, width, and length of passing vehicles, without stopping them. Case 3 - Automated Monitoring System for Over-sized/Over-weight Vehicles A device called an “Automated Measuring System for Over-sized/Overweight Vehicles” was implemented in November 1997 on the Route 43 of National Highway, Hyogo Prefecture. This device operates 24 hours a day to measure the specifications (axle load, weight, length, width, and height) and the number plates of passing vehicles with specifications exceeding the legislative limits. It also gives a warning through the information display to the drivers of vehicles with axle loads considerably exceeding the limit. Displaying warnings for violators from September 1998 did bring about a certain degree of desirable effects on traffic control of large vehicles (The following graph shows the result in Oishi of the Nada district on the Route 43.). Source: Website of Road Bureau, Ministry of Land, Infrastructure, and Transport Vehicle height detector Registration number reader Vehicle length/width detector Data transmitter Information display Vehicle weight detector

24 (4) Environmental Management In order to improve air quality, vehicles that fail to fulfill the NOx and PM emission standards are prohibited from traveling in the three major metropolitan areas. To encourage the replacement of such vehicles with the vehicle that meet the emission standards, these local governments provide partial financial support for purchasing new vehicles. Reduction of HGVs’ Burden on Environment (Measure # 1) National level: The Automobile NOx & PM Control LawLocal level: The Diesel Vehicle Regulations Vehicles failing to fulfill the NOx and PM emission standards are prohibited to be registered within the major city areas (Tokyo, Aichi, and Osaka) that have severe air pollution. Since October 2003, diesel vehicles failing to fulfill the PM emission standards have been prohibited from traveling within Tokyo and the three neighboring prefectures. 2. The local government designates a device for lowering PM emissions to the level determined. Stickers of evidence are provided to the vehicles with such devices. 1. Financial support for the purchase of vehicles powered by natural gas, LG, gasoline, or diesel fuel is provided. Areas subjected to the Automobile NOx / PM Control Law Aichi and Mie areas Osaka and Hyogo areas Tokyo metropolitan area Ordinance of Tokyo and the three neighboring prefectures Targeted areas All areas of Tokyo and the three neighboring prefectures (except islands of Tokyo) Targeted Vehicles Trucks and buses powered by diesel (Special purpose vehicles converted such trucks and buses are also included.) PeriodFor 7 years from the first registration PenaltyFine up to 500,000 Japanese Yen

25 Environmental road pricing has been implemented in Tokyo and Osaka costal areas. The toll rate for the route passing through the coastal area is lower than the toll rate for the route passing through the inland. Environmental road pricing intends to divert the HGVs from inner cities, to coastal areas with fewer residents, therefore reducing the environmental burden on inner city areas. Reduction of HGVs’ Burden on Environment (Measure # 2) - Environmental Road Pricing “Environmental road pricing” is aimed at diverting traffic concentrated in residential areas of inner cities to coastal areas by applying price differentiation between neighboring toll roads. Diversion Price B Price A Price A > Price B Coastal areas Residential areas The Metropolitan Expressway Regular toll price 1200 yen Reduced toll price 950 yen Yokohama Tokyo