Leasing a container terminal to a joint public/private entity or a strictly private entity is a frequent form of partial privatization. There is no change in the ownership status of fixed assets that remain with the port authority.7 Privatization comes in many shapes and forms. It is not limited to the transfer of ownership of property and assets from the public to the private sector. In general, privatization does mean the transfer of ownership and control of an existing enterprise, activity or service from the public to the private sector. Privatization is complete when the entire ownership of the public port's existing interests is transferred or sold to a private sector organization. In this case, it means that all land and assets are transferred to full private ownership and that the private sector organization fully controls and manages the enterprise.8 In the U.S., a form of partial privatization is the method most ports have chosen. This is a partial transfer where only a portion of the ownership is transferred. It all depends upon the negotiations and agreements reached between the public/private partners.
Improving the Competitive Position of Japan's Ports
The Council for Ports and Harbors' report on the construction and improvement of Japan's ports and harbors has stressed the need to focus priority investments at ports and harbors of greatest importance. The report states that in order to further strengthen and encourage regional authorities' independent efforts for the betterment of local ports and harbors it is necessary not only to widen the range of discretion to be left to such administrations, but also to help them in their effort to upgrade and enhance the efficiency of dock related logistics activities by creating a comprehensive subsidy fund and support businesses. It also says that it is necessary for the nation's port administrative measures to be diversified further and for a port-user oriented flexible formula for the charging of port fees.9
Japan's Government, its local port authorities, stevedoring companies, and marine carriers have spent large sums of money to improve infrastructure, superstructure, efficiency and service in their terminals. Japan's national government and its local port authorities need to come up with new institutional arrangements to improve equipment utilization, to make operations more competitive with other container ports in the East Asia Pacific Region. The Port and Harbor Law needs to be revised in order to accommodate improvements to the construction, control, and operation of container ports in Japan. International carriers are permitted to operate private berths at various terminals under the PTPC. This type of arrangement needs to be expanded. Laws that restrict private terminal operations limit growth. These laws need to be changed to enable private sector operators to develop relationships that will effectively support multiple global marine carriers. Partial privatization of port operations with the public in mind should be encouraged and implemented to enhance Japan's competitive position by reducing cost to government, shippers, stevedores, carriers, and consignees.
Container terminal costs need to be reduced. Land values as well as ancillary port fees need to be considered in the evaluation of costs. New information technologies need to be adopted and implemented to offset high labor costs and become more competitive. Fees for services provided must correspond with services performed. The messages from the shipping companies are that port charges are high and the container terminals need to reduce costs. Terminal lease arrangements need to be changed to allow an extended recovery time for a reasonable return on capital investment and to provide a “Win-Win”situation for both the lessee and lessor in a “Landlord Port” to user relationship. A short lease puts pressure on an operator to pay a higher rent and there is less incentive to invest and develop a container terminal.10 If the recovery time were more like 30 years for Japan's container terminals, the annual lease rate would be much less and would attract more carriers. The flat rate lease is commonly used in Japan where the outcome is a Zero-Sum Game. If times are bad, the carrier looses and the port wins. If the port and carrier agree to a“shared revenue”lease, it becomes a “Win-Win” situation. When times are bad neither the carrier or the port suffers too much and then, on the other hand, if times are good, both win. Japan should move towards a“shared revenue”11 lease with alliance carriers using the “landlord port” model. MOT needs to change the law to allow revenue sharing and longer term leases.12
Foreign and domestic marine carriers, terminal operators, motor carriers and rail carriers should be invited to share their views on an advanced intermodal network for moving containers to and from container terminals and Japan's hinterlands. This also should include more consideration for domestic container movements by various marine modes. The rail carriers should work with the port authorities, shippers and marine carriers to develop an efficient intermodal network in Japan.
