Financial Analysis of the Efficient and Effective Development and Operation of Ports and Harbors: Structural analysis of development, regulation and operation

Author Name AKAI Nobuo  (Faculty Fellow) /UEMURA Toshiyuki  (Kwansei Gakuin University) /SAWANO Koichiro  (Nagoya City University) /TAKEMOTO Toru  (Tezukayama University) /YOKOMI Muneki  (Osaka University of Commerce)
Creation Date/NO. May 2009 09-J-010
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Ports and harbors (hereinafter "ports") have been developed at many locations in Japan as important public infrastructure through a government redistribution policy designed to achieve the balanced development of the national territory. Given low growth and fiscal reconstruction, however, the uniform development of the past will no longer be possible. A more selective approach will be required, and efficient and effective operation will also be needed. The question now is how effectively will Japan-given the heavy debt burden carried by both the central and local governments-be able to use its limited financial resources and how will it develop and operate ports to facilitate economic growth and affluent lifestyles.

The government understands that an "appropriate sharing of roles" between what it calls "Super Central" ports and regional ports is important in terms of both development and operation as "specific tasks for the future to enhance the international competitiveness of industries." The government also believes that it is important to strengthen regional cooperation among ports in Japan and to clarify cooperation between the central and local governments.

Given these trends, there is a need to (1) examine the development of ports by the government in light of the appropriate sharing of roles between super central ports and regional ports, and (2) consider the operation of ports through regional cooperation of ports and management of ports (by cooperation among central and local governments and the private sector) that are already developed.

However, these perspectives were not verified using data in past studies.

In this paper, therefore, the following four studies are conducted as new research:

1. (Chapter 2): The allocation of fiscal funds for port improvement in the past is demonstrated for the first time.

2. (Chapter 3): The current status of regulations is organized, and barriers to efficient operation are clearly specified.

3. (Chapter 4): The effect of policy toward efficient operation of ports is revealed using the lead time data as an efficiency indicator for the first time.

4. (Chapter 5): The cost structure of ports is clarified using financial data of ports for the first time.

As a result of these studies, the following points have been identified:

1. (Chapter 2): Ports have been developed based on the principle of the balanced development of national territory. Also, funds have been allocated to cities in recent years. Meanwhile, debt of approximately 8 trillion yen has been incurred for the development of ports, and the allotment of the debt between the central and local governments will become a problem when the decentralized system is introduced in the future. Further transparency is needed for future development.

2. (Chapter 3): Although various undertakings were made in the special deregulation zone, the effect is limited. Customs peculiar to Japan will need to be reformed to follow international trends.

3. (Chapter 4): It is revealed that efforts to improve the efficiency of port operation contributed to improvements in the efficiency of port operation in terms of lead time and other aspects.

4. (Chapter 5): It is clear that cooperation among ports is effective in improving cost efficiency, given the cost structure of ports.

As just described, the studies of this paper show that the Japanese government should seek more transparent and effective development of ports and further improvements in port operation, while reforming customs peculiar to Japan. The cost analysis of ports has also revealed that links among ports with externalities are effective.

This paper provides some important perspectives for considering future port policy: discovering new data that were not used in the past from the standpoint of evaluating public and fiscal policies, assessing polices for the development and operation of ports, and clarifying the cost structure of ports that is related to the future direction of policies. Although the strictness of verification remains an issue, the findings of this paper should contribute to the development of future studies.