Speeches: Masahiko Nakano, Acting President, Japan Trucking Association (JTA), Japan

"Development of modern, multi-modal supply chains in Japan - In Japan, a trend may be observed among consignors including major home appliance manufacturers and makers of foodstuffs toward greater restructuring of company distribution systems using multi-modal transport."

(click on photo to enlarge)

by Masahiko Nakano
Acting President, Japan Trucking Association (JTA), Japan

Development of modern, multi-modal supply chains in Japan

Introduction

There are over 600 million automobiles on the world's roads today, including trucks and other industrial vehicles. Japan with its heavy dependence on trucks is no exception: with 91% of freight by ton and 54% by ton/kilometer transported by truck, trucking is essential to the country's economic development and to enhancing the living standards of its people, as a core element of Japan's domestic distribution system. It is no exaggeration to say that the truck transport operating day and night in Japan is now an integral part of the country's social and economic infrastructure.

This growing number of vehicles on our roads does however have a downside, in the form of numerous issues requiring urgent resolution, including atmospheric pollution and global warming caused by vehicle emissions, the problems of how to save energy and resources, and noise pollution.

In July 2001, four years after the Japanese government formulated its "Comprehensive Program of Physical Distribution Policies" with the aim of "offering the most convenient and attractive services in the Asia-Pacific region," the Principles have been reviewed and approved by the Cabinet in the form of a new framework for distribution. 2005 is the target for achieving each of the goals in the framework, the aim being to build an internationally competitive distribution market and environmentally friendly distribution system. In specific terms this means improving access to airports, ports and expressways and promoting multi-modal transport in the area of long-haul general cargo transport, with all the relevant government ministries and agencies united in a comprehensive drive to implement distribution policies that will make distribution more efficient, an issue of national importance.

How multi-modal transport works:

Amid these developments, new consignor company approaches to distribution are transforming customer demands with regard to the trucking business. In particular, companies are actively starting to employ supply chain management (SCM), moving beyond company boundaries to assemble a coherent delivery system linking manufacturer, wholesaler and retailer, and expecting trucking firms to play their part in the supply chain.

In recent years, as one aspect of supply chain management, and in an attempt to rebuild the distribution system into one more responsive to environmental issues, a trend has emerged toward rail and shipping, which have minimal impact on the environment, for the long-haul arterial sector of freight journeys. This trend is particularly conspicuous among major manufacturing companies.

Moreover in Japan as of September this year all large trucks with a total vehicle weight of 8 tons or more or a maximum load of 5 tons or more must be fitted with speed limiters restricting them to a top speed of 90km/hour. This is another factor prompting freight operators to switch to rail or sea for certain long-haul journeys, so that they can continue to provide consistent service.

There have been calls for some time for a modal shift from trucks to more environmentally friendly rail and maritime transport in response to environmental problems, however with the distribution environment now changing by the day, the development of multi-modal transport is becoming reality.

2. Modal shift trends among consignors

A trend may be observed among consignors including major home appliance manufacturers and makers of foodstuffs toward greater restructuring of company distribution systems using multi-modal transport. All are aiming to reduce impact on the environment and cut costs, as part of supply chain management programs. The intention of these companies is also to make particular use of rail freight with its limited transport capabilities, as a form of investment for the future.

The following are some examples of multi-modal supply chain management.

(1) Major home appliance manufacturing group (Hitachi Group)

Major home appliance manufacturing group A (the Hitachi Group) is engaged in a new initiative involving a modal shift to rail for medium-length journeys of around 100 kilometers, for which rail was previously deemed unsuitable.

In February this year the group started full-scale transport of home appliances produced overseas and unloaded at the Port of Tokyo to its Tochigi site by rail in 40-foot sea containers. This does not mean shifting the entire volume of freight to rail, but leaving around half for direct drayage by trailer. Once the trailer has completed delivery to the company's Tochigi site, it proceeds to the freight terminal, and carries the container transported by train to the site, in a cost-effective formula using one vehicle for two loads.

For this new initiative, group distribution subsidiary (Hitachi Transport System), which runs transport operations for the group, discussed the plan with JR Freight and secured space for transport of a monthly maximum of 240 40-foot containers (12 per day) between the Tokyo Freight Terminal and Utsunomiya Freight Terminal. During company A's busiest month of March, 483 containers are landed at the Port of Tokyo. Approximately half therefore will be shifted by rail.

Previously the distribution subsidiary (Hitachi Transport System) had been transporting by rail approximately 500 containers (5-ton containers) per month of goods with a high weight to volume ratio such as beverages and water. With this latest scheme the company now shifts a further 960 5-ton containers' worth of freight by rail, and is utilizing this increased capacity in a major expansion drive.

(2) Major electrical manufacturing group B (Matsushita Electric Industrial Group)

With the aim of reducing CO₂ emissions arising from distribution of its electrical appliances 30% by the year 2010, as of October 2002 major electrical manufacturing group B (the Matsushita Electric Industrial Group) began to employ rail transport as an integral part of its transport operations. Company B freights a total of around 320,000 tons of electrical appliances annually, and with this latest move hopes to achieve a 20% reduction in CO₂ emissions by switching 69,000 tons of this to rail by 2005. In 2010 the company will raise this volume to 100,000 tons, taking the proportion of appliances transported by rail to around 30%, and reducing CO₂ emissions by 30%.

The main focus of this effort will be the company's distribution subsidiary (Matsushita Logistics), in partnership with leading general freight carrier (Nippon Express). Currently the rail routes used consist of a few main trunk routes including Utsunomiya - Fukuoka, Shiga - Urayasu and Settsu - Urayasu, carrying items such as television sets and refrigerators. The company is employing 30-foot and 31-foot containers (Ecoliners, see later section) to improve loading efficiency, and by adding the company logo to some containers is also advertising its stance on the environment.

(3) Precision equipment manufacturer C (Canon)

Precision equipment manufacturer C (Canon) is also a keen proponent of the shift to rail and shipping, as part of its environmental management policy. In terms of moving to rail, in August last year the company switched to rail containers to transport products from its Kanto distribution center to its sales company warehouse in Osaka. Forming a partnership with a major general freight carrier (Nippon Express), company C is using 31-foot containers (Ecoliners) developed by this same freight carrier.

31-foot containers have excellent loading efficiency and can be loaded from the side, for greater work efficiency as well. The company plans to shift to rail the equivalent of around 900 11-ton trucks' worth of freight, i.e. 40% of its annual transport volume over this sector, and is now steadily increasing its use of rail freight. By shifting 900 11-ton trucks' worth of freight to rail, the company maintains it can cut CO2 emissions by 250 tons annually.

Company C plans to continue this shift in medium- and long-haul arterial transport to rail and sea, eventually shipping 20% of its domestic freight using environmentally friendly modes of transport.

31-foot container (Ecoliner)

Source: Nippon Express Website

(4) Food manufacturer D (House Foods)

Food manufacturer D (House Foods) has also embarked on an active modal shift to rail. Recently the company commenced trial rail operations using 15-foot containers for mineral water, one of its main products accounting for around 40% of total shipments, and will monitor the outcome with a view to accelerating its move to rail.

Mineral water is transported from the plant at Nara to the Osaka freight terminal and dispatched to the company's Kanto distribution center in Tochigi daily, and to the Fukuoka distribution center in Kyushu every alternate day.

Company policy from this point onward will be to actively increase this modal shift, using the same JR containers and sea containers as previously, and taking into account the cost aspects and effectiveness in reducing impact on the environment. The company also plans to extend use of rail transport from bottled water to include processed foods such as curry, and increase the number of routes, testing them for cost and lead times. Company D aims to switch around 15% of its total freight volume to rail and coastal shipping by 2005, in a fast-paced initiative to build an environmentally friendly system for transport of its products.

(5) Major paper company E (Oji Paper)

Major paper company E (Oji Paper) was dispatching 30 10-ton trucks of paper products daily from its Yonago plant to customers in Kita-Kyushu and Nagoya, however has now switched to rail containers.

As a result, the company is reducing CO₂ emissions by around 45 tons daily, and 16,514 tons annually.

Overview of modal shift by large paper company E

3. Modal shift trends among freight companies

Major general freight carrier F (Nippon Express)

In response to the fitting of speed limiters, and to provide a transport system that reduces the environmental impact of consignor companies, major general freight carrier F (Nippon Express) plans to expand its own coastal shipping capacity from this October. Starting in October the company will add new coastal vessels to its fleet on the Tokyo - Hakata run, boosting its current freight capacity by 40% by January 2004. Company F also plans to increase freight capacity on the Tokyo - Hokkaido run by 5% commencing October.

Company F has also conducted verification trials on swap bodies in conjunction with a rail freight company. Swap bodies allow the bed of the truck to be swapped directly onto a freight wagon, and the company is currently working toward their practical application.

Major freight carrier G (Sagawa Express)

As part of its modal shift program, major freight carrier G (Sagawa Express) is proceeding with a scheme to employ the "Super Rail Cargo" freight trains developed by a Japanese rail freight company as the country's

first electric freight trains, as main trunk container trains exclusively for transport of courier parcels etc. between Tokyo and Osaka.

Super Rail Cargo trains have sixteen cars (28 containers), and the company plans to run one service daily each way between Tokyo and Osaka. This is equivalent to 56 10-ton trucks, and is expected to reduce CO₂ emissions by 14,000 tons annually.

Super Rail Cargo

Source: Sagawa Express Website

Rail freight company F (JR Freight)

In response to a shift from road transport to environmentally friendly rail transport, rail freight company F (JR Freight) is upgrading its container transport operations.

In addition, with demand for international sea container freight expected to rise, to meet customer requirements the company plans to install facilities such as cargo-handling machines for international sea containers at its terminals near major ports, and continue to increase the number of terminals with international sea container handling capabilities.

High-speed freight ferry service

Transport by coastal shipping often takes longer than by truck, and with growing demand for high-speed transport in recent years, this slower service had been an obstacle to encouraging use of coastal shipping.

In September 1999 a high-speed freight ferry service connecting Tokyo and Tomakomai was launched to rectify this situation.

The service emerged as part of policy moves at national level to make a modal shift in distribution reality, and as the ideal vessel for applying the concept of modal shift - by catering to modern customer requirements with regular services and transport of unmanned trucks and trailers - the ferry is expected to play a major role in the shift to multi-modal transport.

The ferry has a cruising speed of 30 knots, a considerable improvement on the previous 20 knots, cutting travel time from 30 to 20 hours. The combination of speed and a well thought-out schedule maximizing the convenience of the service has produced a competitive transport system rivaling trucking on the Tokyo - Hokkaido run. This in turn has lead to more use of the service, mainly for items such as courier parcels and agricultural and marine products.

4. Conclusion

Trucks are employed in a variety of situations: to supply materials at various stages of the supply chain, deliver to stores, and closer to home for such tasks as courier deliveries and moving house. Trucking is now indispensable to daily living in Japan.

On the other hand, if the trucking industry is to maintain this symbiosis with the community, it will need to tackle a number of major environmental issues which as human beings we cannot afford to ignore, from environmental problems affecting the entire planet such as global warming, to atmospheric pollution in our major cities. Trucking plays a vital role in sustaining economic activity and our modern lifestyles. However it is also a source of emissions such as CO₂, a factor in global warming, and of substances such as NO_X and PM that cause air pollution, and urgent measures are required to combat these effects.

The trucking sector needs to respond steadily to demands from the public to be more environmentally aware and ensure that safety is maintained. Trucking firms are therefore working on a variety of initiatives including multi-modal transport to protect the global environment and prevent accidents, at the same time continuing to set their sights on ever-greater efficiency as part of the nation's economy.

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