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5. Japan
5.1 Japan has one of the world's largest networks of island ferry services. It is also one of the most fragmented markets, with small operators running 279 island lines serving 350 island routes.
5.2 Most remote island ferry services in Japan suffer from problems such as imbalanced traffic flows, traffic seasonality, and low levels of vessel utilisation. "Designated Sea Routes" are sea routes where there are no other transport modes other than vessels, such as a route connecting remote islands. The objective of the "Designated Sea Routes" is to maintain a minimum level of ferry service to maintain the daily and social life of residents on or around the designated routes. "Designated Sea Routes" are determined by the Minister of Land, Infrastructure and Transport (MoT) after consulting with related prefecture governor(s).
5.3 110 of the "Designated Sea Routes" in Japan, operated by 106 different operators, received subsidies from the central government in 1998. In addition to these national grants, each prefecture has its own means of subsidies, as the national subsidies do not cover all loss making routes.
5.4 The domestic ferry market in Japan is not very profitable compared to the other modes, and as such is not very competitive. Subsidised routes are exclusive by definition, as the government would not subsidise any route where there is more than one operator.
5.5 Subsidies in the Japanese ferry market are a form of guaranteed top up to meet the losses of the operating companies. Factors such as the relative remoteness of a particular island, access, journey time, cancellation rate, availability of alternative transport, etc., are also taken into account when calculating the subsidy amounts. The concession period is one year, and operators must reapply for the subsidy each year.
5.6 The operation of ferry services in Japan is based on a notification system as opposed to a contractual one. As such, there is no tendering process.
5.7 A case study on Japan is in
Appendix C of this report.
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