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Hideaki Tsuchiya’s small trucking firm in Tokyo’s Meguro Ward faced a major headache earlier this year: Five of his 20 trucks did not meet new exhaust regulations that take effect in the metropolis Wednesday.

The 54-year-old owner of Juyugaoka Unso decided to replace two of the trucks with new models. He then decided to install devices to cut emissions of soot and other particulate matter on two freezer trucks, while opting to scrap a 4-ton truck that he bought 12 years ago.

The 4-ton truck can clear new regulations implemented by the Tokyo Metropolitan Government if it is equipped with a soot filter — but will have to be retired in just one year under separate rules being introduced by the national government.

“Spending several hundred thousand yen on a filter (to keep the truck running) for such a short period of time is a waste of money,” Tsuchiya said.

Buying a new truck is a heavy burden on his small firm, which has 18 workers and generates about 200 million yen in annual sales. He estimated that the cost of complying with the new rules would reach 20 million yen over six years.

On Wednesday, the metropolitan government and the prefectural governments of Chiba, Kanagawa and Saitama will enforce ordinances banning diesel-powered trucks and buses unless they meet tightened limits on particulate matter emissions.

Simultaneously, the revised national law to curb exhaust emissions will take effect, requiring a cut in particulate matter and nitrogen oxide emissions from diesel vehicles currently in operation. Both pollutants are believed to cause respiratory diseases, including asthma.

Burden for operators

The tougher environmental regulations will boost sales at truck manufacturers at the expense of users at a time when both parties are having to cope with the economic slump.

Last year, the metropolitan government estimated that 202,000 diesel trucks and buses registered in the capital would be affected by the ordinance that debuts Wednesday.

As of the end of July, measures aimed at clearing the emission rules had been taken on about 60 percent of the vehicles; either their owners attached the required filters to their engines or bought new vehicles.

Under the revised national law, 2.2 million trucks, 300,000 buses and 1 million diesel-powered cars will need to be replaced over the next several years. About 90 percent of them will have to be scrapped over the next three to four years, according to the Environment Ministry.

The new rules place an additional burden on trucking firms that are already struggling amid a bleak business environment.

“I support the policy to reduce air pollution, but the (metropolitan government’s approach) was rash,” Tsuchiya said. “Transportation (income) has been halved from the peak level of the (late 1980s) bubble economy. . . . I was trying to use my trucks longer, but suddenly I am forced to change plans.”

Jiyugaoka Unso, founded in 1956, must replace an 8-year-old truck with a new one this year to meet the metropolitan government regulations even though it could continue operating through the end of September 2005 under the national government law, Tsuchiya explained.

The national government gives trucks that do not meet its emission limits a moratorium of between eight to 12 years from the date of their first registration. But the grace period is just seven years under the metropolitan and neighboring prefectural ordinances.

Trucking sector shakeout

The new regulations will only intensify competition in the trucking industry, which is already severe following the sector’s liberalization in 1990 and the tough business environment, said Toshihiro Atsumi, an analyst at the Mitsubishi Research Institute.

“The current business environment makes it impossible for trucking companies to raise transportation charges” to cover the costs of meeting the emission limits, Atsumi said.

In fact, transport firm Nippon Express Co., which operates about 30,000 trucks nationwide, has no plans to raise service charges, said Akira Miura, general manager in charge of distribution technology and vehicle maintenance at the firm’s work efficiency division.

“If we add the (environmental) cost to our fares, we would lose business and competition,” Miura said. “What we can do is further reduce operating costs and put greater focus on (high profit-margin) services.”

Nippon Express plans to spend 9 billion yen in fiscal 2003, more than it did in each of the past two years, to purchase 1,150 new trucks and install emission filters on 1,050 trucks now in operation.

Filter prices range from 400,000 yen to 1 million yen, while the cost of a new truck ranges from 3 million yen to 10 million yen or more, depending on load capacity.

Although major companies have financial strength and a wide range of businesses to survive the situation, some small and midsize firms may have no choice but to fold, Atsumi of MRI said.

According to the think tank, about 3,900 firms, or 7 percent of all trucking companies, may exit the businesses over the next five years.

Atsumi said more generous support is necessary to help small trucking firms. Measures currently offered by the national and local governments include subsidies to cover part of the cost of installing clean-emission filters and low-interest rate loans to buy new trucks.

Good for truck makers

Truck manufacturers meanwhile stand to cash in.

Domestic sales of trucks with a load capacity of 3 tons or more during the January-June period jumped 34 percent over the same period last year to 48,764 units, according to the Japan Automobile Dealers Association.

“Our sales began surpassing the previous year’s results since last November, as major trucking firms started replacing old trucks,” said Tadashi Ioka, a spokesman for Isuzu Motors Ltd. “Since July, small and midsize trucking firms joined the move.”

Isuzu now predicts that domestic sales of trucks will expand to 109,000 units in fiscal 2003, compared with 81,396 units in fiscal 2002 and the firm’s earlier projection of 95,000 units, he said.

Takayuki Suzuki, executive vice president of truck maker Hino Motors Ltd., said the uptrend will probably continue for two to three years as vehicles are gradually replaced.

Farther down the road, however, truck makers may struggle.

MRI’s Atsumi said demand for trucks will subside after most old trucks are replaced. He added that truck makers will need to continue costly development of more environment-friendly diesel vehicles.

Stricter nitrogen oxide and particulate limits will be imposed by the national government on vehicles marketed in 2005 and beyond.

“We’ve got to develop cleaner trucks and launch them faster than our rivals to survive the competition,” Isuzu’s Ioka said.

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