Cargo flows depend on geographical features
Located in the Pacific Ocean east off the coast of the Asian continent, Japan stretches from Hokkaido in the north to Okinawa in the south over thousands of kilometers. The metropolitan population lives in densely populated plains on the coasts of the main islands of Honshu (especially the center and south), Shikoku, and Kyushu. The three islands form an inland sea that has numerous port towns. It enables large-scale freight transportation on water for domestic and international shipments. Despite its mountainous geography, Japan has a well-developed railroad infrastructure. Railroads, however, are mainly used for passenger transport. Road vehicles, arguably the most flexible mode of transportation, provide for most cargo shipping. This is especially true for inter-prefectural freight transports. Japan is an island nation and has no direct road connection to other countries. Hence, international trade occurs via sea or air.Industry structure and challenges of freight transportation
The industry structure of transport segments in Japan varies. The road transport segment, for instance, is mainly comprised of small- and medium-sized enterprises (SMEs). Despite many market participants, express parcel delivery and other sub-industries show higher market capitalizations, featuring big companies like Yamato Holdings that compete with one another. At the other end of the market capitalization spectrum, the public JR Freight Corporation holds a monopoly over the comparatively small railway cargo industry. Maritime transportation lies in the middle of the spectrum, with "the big three" playing a role in the international market and a few thousand domestic carriers and forwarders, which are mainly SMEs. Domestic air freight transport is also highly concentrated, with about two hundred companies constituting the whole industry.One of the main long-term challenges of the transportation industry in Japan is linked to the country's demographic situation. The workforce engaged in transportation is shrinking and aging even more than the overall average in the economy. The workforce in the road transportation segment alone is expected to shrink by several tens of thousands of employees during the upcoming decade, which will inevitably further affect transportation prices.
