JAPAN'S POSTWAR SHIPPING POSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01082A000100030004-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 25
• Document Creation Date: December 12, 2016
• Document Release Date: May 30, 2001
• Sequence Number: 4
• Publication Date: November 23, 1949
• Content Type: IS

Approved For Release 2j1,2RDP79-01082A000100030004-3
con NO. 3O.....
FAR EAST/PACIFIC DIVISION
OFFICE OF PWORTS J UM LSTI1,21"9S
CENTRAL II TELLIG {ICE AGEItiCY
STAFF STUDY NO. 12
NOTICE: This document is a corking papers not
an official CIA issuance. It has been co-ordina-
ted within ORE,., but not with the IAG Agencies.
It represents current thinking by specialists in
CIA$, and is desi-ned for use by others engaged in
similar or overlapping studies. The opinions ex-
pressed pressed i Herein may be revised before final and
official publication. It is intended solely for
the information of the addressee and not for further
dissemination?
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Copy for;
F>S. CHANGE[) TO: TS S C
DECLASSIFIED
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DATE REVIEWER: 372044
C(ET'IDEH
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Japan's Merchant Shipping Position - 1949
Table of Contents
I
The Problem .......... ..........,............. ............. Pg. 1
II
US Security Aspects .............. ......................... Pg. 1
III
Importance of L ipping to the Japanese Economy .?.......... Pg. I
IV
Growth of the Japanese Merchant Marine .> .................. Pg. 2
V
The Merchant Fleet During 'orld War II ..,..w.............. Pg. 3
VI
Shipbuilding and Ship Repair During rorld rar II ......... o Pg. 4
VII
Size and Composition of Japan's Postwar Merchant Fleet .... Pg. 6
VIII
Post isr' Use of Japanese Vessels .......................... Pg. 3
IX
Postwar Shipbuilding ........ ............................. Pgw 9
X
Postwar Shipbuilding Facilit3,es ........................... Pg. 13
XI
Japan's Balance of Payments Position ...................... Pg. 14
XII
Postwar Shipping Rates .,...w...? .......................... Pg. 17
XIII
Inadequacy of the Postwar Merchant Fleet .................. Pg. 12
XIV
Future Marc: 'ant Marine Requirements . w .... ? ..... e . ....... ? p g. 19
ACV
Future Plans .............................................. Pg. 22
Note: This study has been prepared as one of a series which will
form the begis for a prof ected estimate of the war potential of the
Far, East
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 Approved For Release 2001/A9-01082A000100030004-3
JAPA f WS P iCUANT SHIPPING POSITICTI - 1949
1 7~he Prob1
To determine the size, composition and condition of Japan's merchant mar-
ine and Shipbuilding facilities; to present some of the factors involved in con-
sideration of post-treaty limitations on the Japanese merchant marine and ship-
building facilities e
II ority Aspects
Determination of the proper size of the Japanese fleet mast be conditioned
by various US security factors? Cn the one hand, unless Japan can transport a
large share of its raw material imports and manufactured exports in ships opera-
ting at low costs consistent with its own tfi dard of living, US efforts to re-
build a eelfmaupporti Japan an a deterrent to Commoniam are difficult, if not
impoecible. High costs of f oro cn ship?ing, and Japan' a ,babillty to earn foreign
exchange through sale of shipping services are substantial factors in Japans un-
favorable balance of pants position, and require the expenditure of substantial
US aid funds. On the otherhand, revival of the Japanese merchant marine would
force considerable Allied shipping into retirement, which would unfavorably affect
domestic sconoriee of the Allied countries and would reduce their ability for rapid
mobilization of their feats in the event of era To this,, must be added the ever-
present threats particularly in the view of the Pacific and Par East nations, of a
revival of the Japanese military potential..
III .62911099-9-T 1 to the Japanese Eeonc
Japan, being an is ud country,, is vitally dependent upon shipping to link
its econemr with the flow of international commerce. Incapable of producing many
of its most basic noods, continuous imports are required to sustain its growing
CaMPOOM
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Population. For domostic use alone,, at least one fifth of its food? one-third
of its wood, 88% of its petrol..eum, three fifths of its iron, one-half of its
phosphates, all of its aluminum, and nearly all its lead, tin, manganese and an-
timony must be imported. Its Industrial plant, produ ,e g both export and domes=
tic goods depends upon foreign sources for roughly one-third of its raw material
requirements. Japan thus faces, a serious long-term food and raw material paro"b-
lem, perhupe unprecedented in modern times. To this dependence upon fozeign im-
ports,, mur-,.a be added Japan's dependence upon water transportation to carry a sub -
stantia.'l portion of her domestic, inter-island commerce
r .n f t & we e ffi. M Was I
Although Japan carried can limited foreign trade prior to the 17th century, the
ball on foreign commercial relations by the Tokugawa ahoganato completely suspended
ocean shipping for over tvo centuries. Following the Meiji Reatoration, th> econ-
omic necessity of developing a substantial foreign and domestic trade,, plus reali-
zation that a merchant fleet was a requisite to imperialistic expansion, caused
rapid growth of the fleet. From 27,000 gross tons In x` 70, the Japanese by 1920
had attained sixth place among the maritime nations of the world with a merchant
tonnage of 1..1 6,000 GT,
Japanese shipping received its greatest impetus as a result of preparations for
foreign military operations. The Sino-Japanese Clar of 1894-5' and the Russo-
Japanese War of 1904-5, brought about substantial increase in the size of the fleet.
t ith the withdrawal of British and German merchant fleets from Asiatic waters at
Sections IV, V, and VI of this study are based larg upon the United States
Strategic Bombing Survey series &48$ 53, 'and 54.
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km~
.3 am
the stari of World War I, Japan found itself in a position to absorb virtually
all the maritime commerce of East Asia. Expanding shiphuiiding capacity 10 times,
the merchant marine doubled during World War I, and by 1920 had surpassed 39000,000
OT.
During the decade of the tcienties, another 1,3009000 gross tons were added,
bringing the float to a crest of 4,316,000 GT in 1930. The depression of the ,
early thirties, coupled with a "scrap and build program" caused the fleet to re-
cede during the next four years. During this period, however, the efficiency of
the fleet was increased, with over 450,000 GT of superannuated ships being re-
placed with 250,000 OT of new ships.
Increased commercial and military activity in ? nthuria and Korea in the mid-
dle thirties, plus world conditions favorable to Japanese shipping rates again
spurred deliveries temporarily However., a st:ift in emphasis to naval shipbui .d-
ing after 1937 tended once again to hold down merchant ship construction. On
Pearl Harbor icy, Japan's merchant marine, surpassed only by those of Britain and
the US, consisted of 6,651,,535 GT of ships over 100 tons, plus an additional
575,,461+ GT of tankers.
Cdr a
Japan entered World War II apparently secure in the belief that' its merchant
marine was adequate to its assigned task. This confidence was reflected in the
shipbuilding plans of December 15.E 1941, which continued the emphasis of the pre-
vious three years on naval rather than merchant shipbuilding. / Iniuial17,, na
effort was made to protect the merchant fleet? The ships were unarmed at the
This plan called for 398,000 GT in 1942, retrogressing to '7:;,000 GT In 1945,
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4-
km~
Japanese failure to estimate both the demands upon its merchant marine and
the force of allied retaliation minimized plans for merchant shipbuilding prior
to, and during the initial months of the war. Priority for construction of com-
batant ships and military competition for scarce materials were reflected in an-
nual merchant ship construction before the war wh1 ch declined steadily to 210,000
GT in 1941 after reaching a peak of 374,000 GT in 1937. Construction still lag-
god in 1942; only 241,000 tons were build in the first 11 months of the year,
during which time 880,000 tons of ships were sunk.
It vas 'not until Japan had lost over a million tons of shipping, that an amm
bitious shipbuilding plan was undertaken. The program called for expansion of
shipyard capacity from its previous estimated max mum of 500,000 GT annually to
a goal of 1,400,000 GT in 19". The plan resulted in the construction of
769,000 GT in 194,3, and the peak of 1,699,000 GT in 1"344,. Growing labor and
material shortages started the shipbuilding index on its decline in the fall of
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outset, no enti {subs arine indoctrination was presented, and it was not until 19,44
that even limited convoy was attempted.
?despite the initial relatively weak Allied attacks and the augmentation of
823,000 GT of seized foreign shipping, the Japanese merchant marine started its
dovunvard trend in April 1942. By the time a substantial merchant shipbuilding
program was undertaken in late 1942 it was too late to relieve the shipping shor-
tage which plagued Japan! a economy for the remainder of the war. Total sinkinga
of 8,1,1,1,591 GT of shipping (ships over 500 GT) reduced the merchant fleet at
the end of the war to only 533 serviceable ships aggregating 768,411 GT (ships
over 100 GT)
 Approved For Release 20019 P79-01082A000100030004-3
o5-
1944, and construction during 1945 amounted to only 559,000 tons (to Aul t 15
The following table shows the timing and extent of wartime epansion of ship-
building facilities
s
Table It '7a2-time Expansion of Shipbuilding Facilities and Employment
Fiscal Year
Floor Space
Length of days
Employment
1941
100
100
100
1942
111
104
129
1943
20
120
188
194
170
126
226
1945
178
126
185
Review of Japanese wartime merchant shipbuilding indicates that capacity of
the shipyards vas never a limiting factor in production excapt during the per-
iod November 1942 - December 190 which was characterized by a rapid increase
in the rate of production., For three years prior-to the mu* and until, the and
of 1942, merchant shipbuilding hold a low priority in relation to naval construo-
tion, Sing the period of peak production (January to October 1944) a shortage
of steel was the primary factor Mich prevented full production? Although air
attack destroyed 24% of the floor space of commercial shipyard, this damage, for
the most part, occurred after the decline due to the steel shortage had set in,,
During the war Japan had a total of 71 shipyards capable of producing or re-
pair steel ships of over 100 tons. Twelve major yards performed about '74% of
the total. rrork using 71% of the steel, 65% of the labor force and one-half 'of the
physical plrant. These 12 yards produced 68% of the steel merchant tonnage and
of the naval tonnage which was produced in Japan durizng the war years,
MASAWTIw-
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Totes, new ship construction 1%1-5 amounted to 3,293,000 OT of stool nor-
chent shipping (including tankers), 328,000 GT of powered wooden vessels and
1,321,781 DrT of combatc:nt vessels. To this effort must be added conversion
and repair work, both of which tended to interfere with new conetruationg Alp
though maintenance was postponed to the maximum, tonnage actually repaired in
2943 and 1944 amounted to 8,595,000 OT and 9,576,000 +T respective3,y.
VU "I -a gmsmium at Lamle
Fleet
Japan't+ merchant fleet presently consists of 1,013 ocean-going ships (over
100 GT) aggregating -1,739,037 GT, including 67 ships amounting to 130,989 GT
which are laid and salvable. The fishing; fleet comprises an additional 384
vessels of over 100 GT aggregating 153,684. GT. The distribution by type is as
follows s I,/
MM
Total gross
Tonnage
Dry Cargo
1,156,028
Sen-Cargo
71
144,933
Passenger
35
56,850
Tankers
93
198,249
Passenger Ferry
95
24,728
Train Ferry
25
55,098
ITii alers
3
25,657
Refrigerator
30
71,164
11jace11 noaus
2073
1 lt739s,037
Present tonnage to about equal to the 1934 merchant fleet, and slightly more
than one-third of the 1930-4 average.. Not only the quantity but also the qual-
ity of the fleet has depreciated, nth approximately tow-thirds the current
fleet consisting of wartime standard vcsselsg 60,E coal fired, and estimated less
than 50% efficient when compared r,ith prewar vessels, Since the best of the pre-
Compiled from data included inirport of~fCa2pt..JJosoph IH.~rger to the US r ari-
time Co lppraove o~ru" ell ~"100TiIST29 ' PA-KDP99='vYVHhg00100030004-3
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war vessele were requisitioned by the Army and Navy during the early stages of
the war (and subsequently sunk), those of prewar construction still remaining
are, for the most part, antequated and inefficient. The poor quality of the
fleet is indicated by the fact that the percentage relationship between ships
laid up and ships afloat is now 25-30% compared with 10% prewar.
SOAP estimates that Japan now has only 42 ocean-going ships which are usuable
now or after minor repairs. y These ships have a total lift capacity of 360,000
tons, which, on the basis of 60 day turnaround, provides an annual lift capacity
of 2,161,800 tons. However, only four of the 42 ships viith total lift capacity
of 29yS00 tons are long-ranges prewar diesels or oil ~mrners suitable for farseas
trade. The balance, consisting of 3 pre-rar, 22 war-time and 11 postwar vessels
are best suited for trading within Far Eastern raters.
Japan also has a few vessels which co-.-id be altered to provide adequate bunk-
er space for foreign trade within Far Eastern raters. These consist of 11 war
time and 2 prewar cargo vessels with lift capacity of 88,000 tons, and ten ves-
sels now in repatriation duty, which would provide an additional lift capacity
of about, 70,000 tons after alterations.
In addition to the vessels listed above, the Japanese Government operates 67
US vessels of which 49 are LSTs, 10 are Liberty ships and j Cl type cargo ships.
Loaned to Japan to expedite repatriation, these ships are US-ornedbut manned by
Japanese crews. V
25X1A 3/ SOAP radio _ to Dept of the Army, dated lS August 1949
"t'eeI?kly Intelligence Digest," Pacific Command, USE, 26 August 1949
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Poste ttse of Ja!3m5 VessQ11
Since the m r., Japanese shipping has been confined to home paters kept for
expecial1,y authorized anus. During the one year period July 191 'July 19499 Jap-
anese owed cargo vessels made the following lifts from foreign ports, exclusive
of runs to Rorea:1
123,079 tons
27,97 tons
62,650 tans
87,739 tans
%,1.73 tons
28,646 tens
17,643 tons
2,OOO tons
phosphate rock in 19 lifts from Anguar
phosphate rock in 19 lifts from the ;mss
semi-coke in 41 lifts from Sakhalin
gas coal. in 12 lifts from Sakhalin
iron ore in 12 lifts from the Philippines
coal pig iron and from ore from Calcutta
cement to Calcutta in 6 lifts
cement to Pondichery in 1 lift
8,930 tens [snganese in 1 31ft from Vizagapatan
64,092 tons
15.,994 tow
11,968 tons
50,000 tons
2,951+ tons
salt in 7 lifts from Taiwan
salt in 2 lifts from Tsingtao
copra in 3 lifts from Guam
rice in 10 lifts from Bangkok
payer in 1 lift from Salkhalin
A recapitalati of the employment of Japanese oecancgoing Vessels of 100 GT
and over in June 1949 shows the following distrihutic as
25X1A SOAP radio- to Dept of the Army, dated :18 August 1949
Report of Captain Joseph H. Burger to 1Tv Maritime Service m 4 June 1949
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Ana {^.i
9-
NO Of Gross
Japan - area
15
40,470
Japan - Formosa
1
608.72
Japan - India
2
13,834
Japan - Sim
4
20$476
Japan - South Seas
6
13,163
japan - Fhilippinea
2
11,232
Zapan - Persia
16
118,290
Attic
34,
83 p274i
Zapaness 'Waters
896
1,300,437
laid up and Salvable
.62
. M
Total
1033
1,739,037
25X1A
L& &&=
Japan still possesses the 51311, , ch once enabled her to build fine, fast
transocesnio liners and a formidable navy" }btpansior, of the postraar shipbuild-
ing Industry$ however,, has been hindered by shortage of steel and seasoned tun-
bere shortage of operating ids;, deteriorated equipvent, and to a decreasing ex'
tent, a lack of modern tschniquss From the end of the war (to 1 Ault 1949) the
ri
apansse completed 238 steel vessels aggregating 42x,.030 0T, exclusive of dishing
Tesse.$ a
In additi on f, on 1 August 1949, they had 39 steel vessels of 78,813 GT
under construction Gil The following table shows the yearly poat-war construction
of all types:
Como
dated 20 Ault 1949
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10
Table 2t Posts" Shipbuilding
Vessels Cozleted I
Wooden Vessels
No.
GT
9om
GT
No.
GT
1946
455
186,684
324
159,384
144
27,300
1947
536
111,682
437
92,932
99
18,750
3948
346
185,202
282
1723922
64
.28280
1949
110
91,448
83
84,998
27
6,450
With nanny maritime nations suffering from a shorte& of merchant shipping
due to wartime losses, foreign orders are providing a stimulus for Japan a ship-
building industry. On 1. August 1949, 17 steel ships e;mounting to 78,000 tons
were under construction or had been delivered for export as indicated on page 11.
Since that date, additional contracts have been reported signed with Franc,
for one 9,200 ton cargo vessel.. with Panama for one 89500 ton cargo vessel- , with
Indo-China for eight ;50 ton steel barges, with Argentina for ten 550 ton catcher
boats and with US interests for two 8500 ton cargo vessels. Although no wooden
ships over 100 tons have been produced for export, 120 wooden tug.- and 175 wooden
barges of 100 tans have been delivered to the 'USSR,, and 6 fishing boats of 90 ton;;
have be delivered to Gnu?
3/ Excluding barges, See Vapaaese Economic Statiatiesa, ESS/SOAP, Duns 1949
Pg. 96.
To 20 Jun 1949
OMBaperm,
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Table 3: Steel 'easels for Export Completed or 'Under Constractir 3/
fiber
end Gross Two Total Gross Country of
Each T M2 Registry
1era
470
940
Norway
6
Wha ers
4'70
2,820
Norway
Cargo
3,360
10,080
D, rk
Cargo
6,100
18,300
Philippines
i
Cargo
6,000
60000
Francs
1
Cargo
6,500
6,500
Denmark
l
Tanker
10,,000
11,000
Dirk
1
Tanker
11,.600
11,600
Denmark
Tanker
1.1,700
Norway
? 17
729000
Despite Japan's great need for shipping, the current demand of foreign buy-
ers for steel ships and the relatively high potential earnings in foreign exchange
have encouraged planning for considerable export construction4 SOAP projections
indicate export construction of 100,000 GT in Japanese fiscal year 1950, 125,000
GT in 1951 and 1952, and 150,000 GT in 1953.0 or about 30% of the entire estimated
production during these years. 31
25X1A Com 8'av Fe dated 20 August 1949
Cletod before 1 August 1949
3/ "Program for a Self-supporting Japanese Econor, " Dept of the A=W*
January 1949, pg 78
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The Japanese anticipate some difficulty in the profitable construction of
ships for export trade. The construction cost of Japanese slips before the
pound sterling devaluation was reputedly 20% and 40% lorer than Scandinavian
and British ships. However, Japanese-built ships can command a price only 60-
70% of other foreign-built ships because of uncertain quality. Establishment
of the 360-1 exchange rate in April 1949 hit the shipbuilding industry especi-
ally hard because 1) it had previously been enjoying a considerably higher ex-
change rate, 2) it already suffered from general shortf-ge of operating funds and
3) of the difficulty of cutting costs in an industry which is largely so depend-
ent upon other industries. Moreover, the anticipated 30% rise in steel prices
on 1 January 1950 Cue to cuts in import subsidies plus devaluation of the pound
sterling will hurt Japanva competitive position in bidding for world shipbuilding
contracts.
Some financial relief currently is being extended to the shipbuilding indus-
try through loans from the US Aid Counterpart Fund, However, the Japanese rely
upon expanded domestic production to offset some of their current financial d..if-
ficulties. I/ As an interim measure, SOAP in April 1949 recommended a construc-
tion program to build 300,000 GT of shipping during each of the Japanese fiscal
years 1949/50 and 1950/51, which, including normal attrition, is designed to bring
the Japanese merchant marine proper (cargo, semi-cargo, passenger vessels and
tankers) to slightly more than 2,000,000 GT by April 1, 1951.
The Japanese Government announced that 62 shipbuilding concerns applied for
permission to construct 76 ships, tote.ling h85,170 DT during the next fis-
cal year.
25X1A / ComNavFe
dated 22 July 1949,
.ISTIAL
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/c, 23 ..
Z Fc,,,t Shy nbaina .F ti.
There is no.precise method of determining capacity of shipyards, since out-
put depends upon such things as, condition of equipment,, supply of matorials,
efficiency of labor and management, etc. For example, during World ft r n. the
Japanese increased steel ship deliveries from 237,000 GT in 1941 to 1,699,000
GT in 1944 with only a 78% increase In length of rap. However, taking all fac-
tors into consideration, Overseas Consultants, Inc, have estimated that Japan's
total capacity for new ships over 100 GT is 801,300 GT per ,year,, divided agog
80 yards1 I/ Baal repair opacity is estimated at 7,2190,840 GTp A more re-
cant SOUP report has estimated that a total of 87 yards has an annual new con-
struction capacity of 641,840 0? and annual. repair capacity of 6,497,712 GT.
Only 49 of the commercial shipyards are capable of building vessels of 1000 G?
or over.
The foU ng table shows the total capacity of all Japan's dry docks in
terms of the membma size of ship which can be aecc mod?ated s
Mass ifi.cation of Docks by
Capacities
Uo
Capacity
Grose Tons of Ships
Under 1000 GT 17
89100
1000
-3000
19
281,900
3006
- 5000
10
36,200
5000
- 70000
14
82,300
7000
- 109000
1!+
111,000
Over 10,000
89
500
490
,
deport on Industrial Reparations Survey of
Feb. 1948 Exhibit 6al
/ F - 340/7 dated 8 September 191+9
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attempt to estimate annuml drydock capacity must be approximate since
capacity depends not only on the dimensions of the drydock but also upon the
sire of the chips, the number of days the ships occupy the dock and unavoidable
idle time. However,, utilizing a formula based upon the maximum dock capacity,
the max1num annual doss and the use factor, the Overseas Consultants, Inc.
ban estimated the above drydock capacity to be 79219g8 4O gross toss. Based on
past dock-feet ratios,, rith due al1oeauce for the poor condition of the present
fs`eet2 it has been determined that a drydock capacity of 7,219,840 grass tons
will service a merchant fleet of 4?,813,200 gross tons. 31
X1, F eats 1o t tom.
Since Japan is already exploiting its natural resources to the maximum, and
since consumption is already at a minims standard, the key to a self-supporting
economy lies in a balanced foreign trade account. The posts unfavorable bal'
anee in trade is indicated by 1948 figures, which show imports including in i.sa-
able trade of $683,5 million and exports of $V7.1 million despite intensive
screening by SOAP to import only prime necessities. The current year (to
August 20) sho?ss imports of 405.6 million and exports of $293.9 m3II i on.
"Ripon an Industrial Reparations Surcrey of Japan,;, ? verseas Consultants Inc
Feb. 1948, Pgo 45
Japanese Economic Statistics,, ESS$/SCLP, June 1949, Pg r 5.
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The si,;ficant contribution of its prewar merchant marine to Japans bal-
ance of payments position is indicated below:
Table 4s Japan' s liarchandise Account and Net Receipts from Shipping (10000,,000
rm) I/
Expo
Excess of
IM 2 Od A
Net Shipping
Recein' s
_,,,
,_?~
1920
2502.7
2011.2
491.5
267,0
1921
1730.5
1297.3
433.2
140.1
1922
2023.0
1685.5
337.5
111,0
1924
2597.7
2872,0
725.7
117.8
1925
2734.7
2377.9
35648
128.9
1926
2563.6
2118.9.
4".7
125.1
1927
2359.1
2065.1
294.0
132.5
1928
2373,0
2038.1
334.9
138.3
3929
2389.2
2217.7
171.5
159.1
1930
1680.3
1518.6
161.x'
125.3
1931
1319.4
1179.2
140.2
100.6
1932
1524.5
1457.3
67.2
9907
1933
2017.5
1932.1
85.4
126.3-
1934
2400.5
2258.1
342.4
11,4.6
1935
2617.9
2603.1
14,8
177.7
1936
2928.0
2797.6
130,4
193.8
(1')2o--36 includes Formosa and Korea; 1923-36 includes South Seas Territories)
' Source: Compiled from statistics contained in "The Industrialization of
Japan and Nanchukuos 1930-1940. E. P. Schumpeter0 et al-
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Net receipts from the sale of shipping services to foreign countries earned
more than sufficiont foreign exchange to offset the excess in imports Curing the
years 1932-36, the period which SOAP ca sid6rsg represents the best available
measure of the recovery of the Japanese economy in relation to the allocable
standard of living recommended by the Far Eastern Ct mis,lon, For the period
1920?36, not shipping receipts offset more than half of the commodity trade de-
ficit. Since shipping rates have risen considernbly more than commodity prices,
the future of shipping receipts to the economy is expected to be even More siCLi-
ficant,
Of even greater significance to the Japanese economy then, shipping receipts
is the current loss of foreign exchange caused by the .lack of an ocean going mer-
chant fleet, In US fiscal year 1949, less than 5% of both imports and exports
(by reight, excluding Korea) were carried in Japanese ships compared rith a 1930-
34 average of more than 60%. The total freight charges sere about 0237 million; the
portion earned by Japanese vessels is estimated :.t only $17 mi-lion. This expend-
iture compares v th average annual net earnings of more than (29 million in 1930-
34, 2/ The significance of the expenditure lies in the fact that it, amounted to
more than half of Japan's merchandise exports Curing the some period.
The National Federation of American shipping tends to discount the importance
of the net balance of payments earnings from Japanese shipping, contending
that such figures. are overstated by the cost of imported fuel and other sup-
plies purchased in Japan, and because of the Japanese method of valuing im-
ports CIF and exports FOi?. See letter, National Federation of American Ship-
ping to Dept, of the Arm=, dated September 22, 1948.
"Japanese Economic Statistics 37", Section I7, Pg 36, September 1949,,
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SOAP estimates of future b1savingss" through the use of Japanese bottoms is
more conservative. With 1953 estimated imports doubled and exports quadrupled
over the 1949 forecasts, $CAP estimates that by carrying nearly 50% of imports
Japan can save $135. million through use of its own shipping. The Japan-
ose Gov t9 on the other hand, estimates that in 1955, 20,000,000 tons (of
a total 32,250,000 tons) will be imported from distant points at an average
cost of $20 per ton. At this rate, freight costs alone would amount to $40O
minion, or almost one-third of Japan's prolaeted export trade for that year,
if foreign shipping were used exclusively.
XZE Poa ERatss
In order to realize maximum revenues for the Japanese shipping industry
WA the 3concey.. SOAP has followed a policy of endeavoring to establish a fixed
tariff rate agreeable to shipping interests of all flags. "Japanese vessels,
when necessary to obtain the business, are permitted to meet the lowest rate
quoted by foreign comercial operators, as long as such quotation bi'ngs suf-
ficient revenue to cover actual operating costs including depreciation, ineur-
ance,and a minimum profit on such individual quotation of 2%. This procedure
has been instituted in order to prevent a rate war between Japanese and Allied
shipping interests v
Japanese importers and exporters claim that current shipping rates are so
high that Japan is ,placed at a competitive disadvantage in world markets. The
to Dept. of Army dated 38 August 1949
' OProgram for a Self-Supporting Japanese Economy" ? Dept of the Arm - Jan
194%% Pg 77
"Japanese Shipping" Foreign Office, Japanese Goverumest march 1948
24M A 3,1 SOAP Radio
COT,
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Japan Iron Federation estimates that the freight costs of coal, iron ore and
fuel amounting to 30% of value when carried in foreign ships cou'd be reduced
to 17;r through the use of Japanese bottoms. As further examples, the Orierta .
Economist 2/ states that US iron ore quoted at fob ^05.98 becomes 020.98 cif
.Japan; Brazilian ore fob $6.10 becomes 021.10 cif Japan; Red Sea salt fob 05.75
becomes 016.85 cif Japan; and Italian and Crest Indian salt ;4.90 and $5.10 be-
comes $19.00 and 18.20 respectively. Exports too, are frequently quoted an
foreign mar' ets at three to four times the Japan fob price, according to the
same source.
XIII jadeauaov of the Postwar Uerchaut Fleet
During the period 1930-34.. Japan's imports averaged 27,399,000 freight tons,
and exports 9,029,000 freight tons per annum. In value, Japanese ships carried
74% in export and 63% in import trade. Assuming the same relationship between
value and tonnage.. Japanese ships probably carried an avora;e of 23,700,000 tons
per num in this period. During the peak year of 1937 when total tonnage car-
ried amounted to 39,923,000 tons, 23,954,000 tons or 54w wore carried in Japanese
vessels.
SCAP estimates that the maximum amount of freight which Japanese ships can
carry in foreign trade is 2,161,800 MT In US fiscal year 1950 and 2,881,800 VT
in fiscal year 1951. This estimate is based on the amounts which can be car-
ried by vessels now in classification, or which can be converted to secure classi-
Oriental Economist - July 2, 1949
2f "Japan Shipping",, Foreign Office, Japaneso Government, March, 1948.
25X1A / SCAP radio _ to Dept of the Jrny, 18 August 1949
COTS L
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fieation within this period. An additional 528,000 tons of cargo could be car-
ried annually in vessels which can be altered in about six months time to provide
adequate bunker for foreign trade, but rhioh probably could not secure classifi-
cation. Total imports carried in calendar year 1948 amounted to 6,976,000 freight
tons, and exports totaled 2,096,000 freight tons. In the first six months of
1949, imports amounted to 5,340,294 tons, and exports to 1,388,983 tons. I/ Thus
the inadequacy of Japan's present ocean-going fleet, even at the current low vol-
ume of trade, is readily apparent.
XIV g s P.1e chart a Re9uu1 m nts
Estimates of future requirements in respect to a merchant narlne depend not
only upon the quantity of needed imports, but also on the point of purchase, and
the percentage which vrill be carried in Japanese bottoms. According to Japanese
government eFtimates, foreign imports in 1955, exclusive of petroleum, will amount
to 29,250,000 freight tons. , Based on the assumption that Japan will be per-
mitted to carry 50% of its import trade with maritime nations and 80-90% of im-
port trade with non-maritime nations, it is estimated that Japan wo':.ld require a
merchant fleet of 4,030,000 GT, of which 2,470,000 GT rould be assigned to foreign
routes, 870,000 for domestic shipping, and 690,000 GT of miscellaneous tugs, bar-
ges etc. 3/ This is claimed to be a conservative estimate for foreign routes
since it represents a ratio of only 8.5 to 100 (2,470,000 GT of shipping to
29,250,000 tons of cargo) against a 1934 actual ratio of 13 to 100 (3,380,000 GT
of shipping to 26,800,000 time of cargo).
f Imports include approximately E32,697 I.;/T of petroleum nroduets.See'Uapanese
Economic Statistics", SE3jSCAP, July 1949,PC 5510
f See Table 5, Pg 20
f See T??^ble 6, Pg 21'
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SCAP estimates of Japanese shipping needs for 1953 are considerably more
conservative, since they are based on a greater shift of trade from distant to
near-seas areas, and anticipate that slightly less than 50% of all imports and
loss than 2% of exports gill be carried in Japanese ships. These estimates,
envision a merchant tonnage of 2.4 million GT, of which lao million would be
devoted to overseas routes. I/
Tablet Estimated Imports - 1955
(Unit: 1.9000 freight tons)
Coal:
5.9000
Non-ferrous Metals and Ores:
!a 6
Iron Ore:
15940
Paper Pulp:
266
Pig Iron:
2,475
Phosphorous Ore:
1,000
Fibres
775
Ctrganic Fertilizer:
1,543
Salt:
1,500
Soda:
41
Potassium:
320
Coke:
45
Fats and Oils:
256
Plate Glass:
91
Machinery:
100
Fodder:
1,300
Rubber:
96
Graphite:
80
Lumber:
3,065
Asphalt:
60
Food--
7,610
Chemicals:
129
Magnesia Clinker: 30
Sundry Goods:
1,095
Total:
Source: "Japan Shipping"
29,253
Foreign Office, Japanese Government March 1948
t'Program for a Self-Supporting Economy", Dept of the rny, Jan. 1949, Pg 77
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Table 6% Estimated Imports by Region and Shipping Required - 1955
North & South
Americas
Europe
Australia
'India & Near
Fr. I'ndo-China,
Siam, Malaya
NET, Philipp-
ines, So. Seas
Islands
China,, Formosa,
Nay?uria
Saghalien
Korea
Others
Total
Percentage
Type of
of Japanese
Japanese
Ships
IO
Bot B9 t
JkLuo-W
10000
freight
D~00
D~00
DAT
6,683
2,470
50%
1,240
103,000
357
170
50%
90
100000
1,453
340
50%
170
10,000
1,796
515
50%
260
10-8,000
381
105
80%
90
10-x,000
2,558
380
88071,
310
10-4,000
33,360
575
50%
290
10.6,000
9,23.6
995
80%
800
8-3,000
1,926
260
90?
240
8-3,000
542
40
90%
40
3-1,000
10000
360
50%
ISO
10-6,000
29,250
6,230
3,710
(4,140 G/T)
(2,470 G/T)
Source: ,Japan Shipping" - Foreign Office, Japanese Government March 19480
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XV Ltu?e 9lr.
Under its terms of reference, the Far Eastern Commission is empowered to
formulate broad policies for the Occupation of Japan. The policy towards Jap-
anese shipbuilding and shipping, rhich is still on the agenda, proposes a Jap-
anese merchant fleet (including fishing vessels over 100 GT) not to exceed
1,800,000 GT, and a shipbuilding capacity of not more than 150,000 GT annually. .L/
Since no firm decision has come out of the MC, and is not likely to in view of
the US decision against further industrial reparations and levels of industry,
the only policy relative to the size and composition of the Ja-Lanese merchant
fleet and shipbuilding facilities is that which may be determined by SCAP to ':!e
necessary to meet the need of the Japanese economy.
In SC,APts program for a self-supporting Japanese economy, ,.&/ minimum
shipbuilding objective was established which envisioned a Japanese merchant mar-
ine of 2.4 million gross tons at the beginning of US fiscal year 1953, estimated
to be sufficient to carry nearly 50N of Japan': imports. New construction is es-
timated at 325,000 GT, 425,000 GT, and 450,000 GT in US fiscal years 1950, 1951
and 1952 respectively, but net increases to the Japanese fleet will be only
225,000 GT, 300,000 GT and 325,000 in those years due to normal attrition and
construction for e ort..2/
FEC 297/10 2 November 1945
"Program for aSelf--supporting Economy", Dept of the Army, January 1949
f IBID
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A later plan, which may be too ambitious in vi'-.w of current financial,
steel, and power shortes, is indicated by a SCAP recommendation in April. 1949
that the Japanese build for their own account 300,000 GT of shipping during
each of the Japanese fiscal years 1949/50 and 1950/51. This increase, consid-
ering attrition of 164,000 gross tons during the same periods will bring the
Japanese merchant fleet on April 1, 1951 (cargo, semi-cargo, passenger vessels
and tankers) to slightly more than 2,000,000 GT. Ner construction under this
plan rill be linited to vessels with a maximum tonnage of 6000 GT and speed of
15 knots.
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