The Japanese

Japan’s unique seclusion from the world trade for more than two centuries, makes its maritime
history of the last 100 years quite extraordinary. The Japanese could not escape integration into
the world economic system; the United States needed bases for their merchant fleets and were
able to persuade Japan to open up to the “barbarians" in 1853. The demand for modernization
brought the end of the old feudal system and the shogun. Japanese business, its dominance in the
world economy of the twentieth century has attracted the attention of a number of economists
and historians; the incredible “otherness” however, combined with the language barriers, still
means that its maritime business history remains, for many, a terra incognita.69 For the purposes
of this chapter we will limit ourselves to a short analysis of the continuity and change of the
Japanese maritime business, which remains highly comparable to that of its European
counterparts.

It was really by following the Meiji (the enlightened power) Restoration in 1868 and the nation’s
industrialisation that Japan’s shipping showed a remarkable expansion: in the mid-nineteenth
century Japan did not own a single ocean going vessel – 60 years later it was third in the world
maritime powers. The rapid development of Japanese shipping was the product of a combination
of government initiative and active entrepreneurship. Japanese shipping developed, like the
British, by serving the country’s external trade and has been equally divided between liner and
tramp. The competitiveness of Japanese shipping firms however, was to a great extend the result
of a strategy of creating cooperating links with foreign companies in global webs that connect
networks of different countries.

The first period of Meiji Restoration was marked by the government support to the private line
Mitsubishi Shokai. In the early 1880s the Government provided half of the capital for the
establishment of a new firm, the Kyobo Unyu Kaisha. The intense competition between the two
companies led. the Government to pursue their amalgamation, thus, a new state aid firm, the
Nippon Yusen Kaisha (NYK, Japan Mail Steamship Company Ltd) was established.

Japanese shipping companies were of two types. The first type was called shasen and included
those companies that owned most of their ships, operated regular lines and were receiving
government subsidies. The second type was called shagaisen and included firms that, usually,
operated irregular lines and did not receive subsidies. This second type included firms that were
owners of their ships, others that were operators and others that combined both functions. Since
these two large shipping companies were distinguished from all others in terms of their size, type
of operation and government subsidy, their ships were called shasen (company ships), while all
the others were called shagaishen (noncompany ships). These terms roughly indicated the
difference between liner and tramp shipping.

The ships lost during the World War II were quickly replaced by new, technologically advanced
ships. Demand conditions and the existence of related and supporting industries are considered to
be among the features that can define the prospects of a national industry to compete in the world
markets.80 During its modern history, but especially in the second half of the twentieth century,
Japanese shipping developed to respond on the needs of a high volume internal demand. In 2001
the import dependency of Japan in major resources accounted 97.9% for coal, 99.7% for crude
oil, 96.9% for natural gas, 100% for iron ore, wool and raw cotton, 94.7% for soy beans, 88.8%
for wheat and 84.6% for salt.81 Japan’s dependency on seaborne trade led the shipping industry
in search of technological and managerial innovations that, on the one hand would increase the
effectiveness of shipping companies, while on the other would decrease the transport cost of both
the raw materials and the final products of the industries. These innovations have allowed, for
example, the Japanese steel firms to be competitive in world markets, although they have to
import very much of their needed raw materials.

The internationally competitive shipbuilding industry of Japan played a crucial role in this effort
and continues to do so. Its development however, was not depended on the development of
shipping industry. Of course, it offered the demand conditions that defined the prospects of
shipbuilding industry to become competitive and penetrate the export market and to attract
orders by shipowners of new dynamic fleets, like the Greeks, who became the main customers of
the Japanese shipbuilders from 1960s onwards. This self-contained path of shipbuilding industry
explains why its market share achieved the 50% (the late 1960s) while the respective of the
shipping industry did not exceed the 15.5% (in 2008).

Japanese shipping continues to be dominated by a few number of giant shipping groups, who
manage a great number of owned ships, as well as an even greater number of chartered ships,
many of them owned by other Japanese companies. For example, Mitsui OSK Lines operates a
diversified fleet of more than 800 ships, the NYK a fleet of almost 800 ships and the K-Line a
fleet of almost 500 ships. In parallel, a great number of medium sized operators, active mainly in
bulk shipping add to the dynamism of Japanese shipping industry.