Long-term Trends and Challenges of Modal Shift in Japanese Container and Truck Transport: An Analysis of Realities from Fiscal Year 1990 to the Present

Regarding the "modal shift (transport conversion from trucks to rail and coastal shipping)" which the government has promoted for many years from the perspectives of reducing environmental impact and securing labor, we will comprehensively discuss macro data analysis from the 1990s to the present, as well as the "feeder transport barrier," which is the greatest factor hindering this conversion.
To state the conclusion first, as far as macro statistical data (on a ton-kilometer basis) is concerned, contrary to policy intentions, the modal shift has not progressed overall; rather, the cold, objective fact is that reliance on trucks has relatively increased.

1. Comparative Analysis of Modal Split by Transport Mode (Ton-Kilometer Basis)

We will examine the trends in the modal split based on "ton-kilometers (transport activity volume)," which is the product of cargo weight and transport distance. By comparing data from fiscal year 1990 (Heisei 2) with the latest confirmed figures for fiscal year 2023 (Reiwa 5) and the preceding fiscal year 2022 (Reiwa 4), we will highlight long-term structural changes.

Data Sources
Fiscal Year 1990: Ministry of Internal Affairs and Communications Statistics Bureau "Japan Statistical Yearbook," Ministry of Land, Infrastructure, Transport and Tourism "Collection of Transport-Related Statistical Data"
Fiscal Years 2022/2023: Japan Federation of Logistics Organizations "Logistics in Numbers" latest edition (confirmed figures compiled from the Ministry of Land, Infrastructure, Transport and Tourism's Annual Report of Motor Vehicle, Railway, and Coastal Vessel Transport Statistics)

The "Heavy Reliance on Motor Vehicles" Indicated by the Data

As the table shows, the combined share of rail and coastal shipping, which should ideally serve as the recipients of the modal shift, has recorded a decline of approximately 50% in fiscal year 1990 to approximately 43% recently, a drop of about 7 percentage points. Conversely, the truck share has continued to expand from approximately 50% to the 57% range.

Reference: Comparison of Modal Split on a Ton-Basis (Weight Only)

In the weight-based modal split that does not account for transport distance, motor vehicles accounted for approximately 90.2% in fiscal year 1990 and approximately 91.7% in the most recent fiscal year 2023 (rail was approximately 0.9%, coastal shipping was approximately 7.4%), and the absolute structure where "trucks carry over 90% of Japan's cargo" has not changed at all for over 30 years.

Decrease in Absolute Volume (Ton-Kilometers) and Asymmetric Trends

By looking at the trends in absolute volume (ton-kilometers) rather than just share fluctuations, more essential structural changes become clear. From fiscal year 1990 to 2023, while the total domestic cargo volume itself shrank by approximately 27%, clear differences have emerged in the rates of decline for each transport mode.

• Rail: From approximately 27 billion ton-kilometers to approximately 17.8 billion ton-kilometers (a decrease of about 34%).

• Coastal Shipping: From approximately 245 billion ton-kilometers to approximately 154 billion ton-kilometers (a decrease of about 37%).

• Motor Vehicles: From approximately 274 billion ton-kilometers to approximately 229.2 billion ton-kilometers (a decrease of about 16%). In other words, in an environment where transport activity volume is decreasing across all modes, the rate of decline for rail and coastal shipping, which were strongly affected by the
  hollowing out of industry (the contraction of heavy, thick, long, and large industries such as steel and cement), significantly exceeded that of motor vehicles. As a result, a reversal phenomenon is occurring where relative reliance on trucks is increasing.

2. The Greatest Factor Hindering the Conversion from Trucks to Rail and Shipping

As described, the greatest structural bottleneck preventing the modal shift in macro statistics is the "cost and time barrier of transshipment (feeder transport)."
Truck transport is completed by "going directly from the shipper's base to the destination (door-to-door)." However, when using rail or coastal shipping, the following complex processes are inevitably required.

• Origin-side feeder transport: Truck transport from the shipper's base to the freight station or port.

• Origin-side transshipment: Cargo handling work at stations or port terminals (loading containers, etc.).

• Trunk line transport: Long-distance transport by freight train or ship.

• Destination-side transshipment: Unloading work at the arrival station or port.

Feeder transport on the arrival side: Truck transport from stations and ports to the final destination
The challenges caused by this "truck transport at both ends" and "two transshipment operations" are mainly summarized in the following two points.

1. Overwhelming loss of "time" and uncertainty

Because cargo must be brought in according to the schedules (operation times) of trains and ships, the agility of "departing immediately once the cargo is ready," as is possible with trucks, is lost. Furthermore, it is not uncommon for truck waiting times (waiting for unloading turns) at cargo terminals and ports to reach several hours. As a result, the total lead time (time from order to delivery) becomes one to several days longer than direct truck shipments, and cases where the "high-frequency, small-lot, just-in-time" demands of modern supply chains cannot be met occur frequently.

2. The barrier of overlapping "costs"

Although the unit price of trunk transport (rail/ship) itself is cheaper than trucks, when the feeder transport costs at both ends and the cargo handling costs at stations and ports (terminal handling charges such as container transshipment) are added together, the total cost exceeds that of direct truck shipments for medium-to-short distance transport (generally less than 500km). There is a geographical and economic limit where modal shift only generates cost benefits when the distance is "long-distance (500km to over 1,000km)" enough to absorb these transshipment costs.

3. Latest corporate approaches to breaking through the "transshipment barrier"

With the critical shortage of truck drivers due to the so-called "2024 Logistics Problem," companies are embarking on overcoming this "transshipment barrier" to survive.

Hardware innovation: Swap bodies and RORO ships

To eliminate manual cargo handling, an approach of moving the entire container rather than the cargo itself is becoming widespread.

• 31-foot containers and swap bodies: This is a technology that uses containers of the exact same size as the cargo bed of a large truck, separating only the cargo bed from the truck chassis and loading it onto a train. Without changing the loading method on the shipper's side, transshipment at the station is completed in a few minutes using a forklift.

• Unmanned chassis transport by RORO ships: This is a method of separating the truck's driver cabin (head) from the cargo bed (chassis) and transporting only the cargo bed on a ferry or RORO ship. It achieves mass transport while reducing the driver's waiting time at the port to zero.

• Software innovation: Joint transport platforms between competing companies
  Factors that increase costs, such as "not being able to fill a container" or "only having cargo one way" when operating alone, are being resolved by rival companies joining forces.
  For example, by beverage manufacturers and food manufacturers jointly establishing logistics companies or jointly chartering the same freight train (block train method), they bring the round-trip load factor closer to 100% and share the fixed costs of feeder transport and transshipment among the companies, creating economic rationality.

Summary

From the mid-to-late 2020s, Japanese logistics has completely shifted its phase from mere "modal shift as an environmental measure" to "modal shift to avoid the crisis of being unable to transport goods." While the reality is that dependence on trucks remains strong in macro figures, it can be said that supply chains that have overcome the "transshipment barrier" through digital technology and inter-company collaboration are establishing the next generation of stable logistics networks.