State may buy into Tokyo, Osaka port operators to counter Busan

Kyodo

The transport ministry is looking to acquire equity stakes in the companies that run the main container ports in Tokyo and Osaka amid strong competition from the port of Busan in South Korea, sources said.

Businesses have been urging the government to get involved in running the operators of Keihin Ports, which covers Tokyo, Yokohama and Kawasaki in Tokyo Bay, and Hanshin Ports, which covers Osaka and Kobe, after seeing large shipments of Japanese cargo bound for Europe and North America routed via Busan.

At Busan, a state government-owned authority provides various subsidies totaling an estimated ¥4 billion or more to freight forwarders each year. The aid and low personnel costs are helping shipping firms set lower fares, drawing Japanese customers to South Korean vessels.

Both the Keihin and Hanshin superport hubs are run by local governments, with minimal involvement by the central government, the sources said.

In 2011, Keihin handled 7.76 million 20-foot containers and Hanshin 4.96 million, compared with 16.18 million at Busan. Data between 1994 and 2012 show that port calls by containerships bound for Europe and North America rose at Busan but fell at Keihin and Hanshin.

“There is no guarantee that South Korean ships will remain a low-cost option forever, and it’ll work against Japanese exporters over the long term if they rely on Busan port,” a Land, Infrastructure, Transport and Tourism Ministry official said.

The ministry is thinking of revising the Ports and Harbors Law next year to increase state involvement in the two key ports, the sources said.

Provisions may be added to allow the central government to take stakes in the operators of Keihin and Hanshin, the sources said. The Keihin stake might be acquired in fiscal 2014, when the management companies of the Tokyo, Yokohama and Kawasaki ports are merged, the sources said. The Hanshin stake might be acquired in 2015, when Osaka and Kobe ports are merged.