12/07/2020 – By Frédéric de Kemmeter – Railway signalling and freelance copywriter- Suscribe my blog
🟧 Back to homepage 🟧 See our brief news 🟧 UK 🟧 China 🟧 Japan 🟧 USA 🟧 the rest of the world
Austria – Baltic States – Czech Republic – Finland – France – Germany – Italy – Netherlands – Norway – Poland – Portugal – Republic of Ireland
– Slovakia – Spain – Sweden – Switzerland – Ukraine
We know little about Japan and its railway policy, which is often the subject of various fantasies. Contrary to European countries, there is not a single national railway but dozens of integrated railways at local and regional level. Some make many money while others suffer from the depopulation of rural areas and an ageing population.
They are today six private entities which manage the railway network in Japan, including five which run Shinkansen long distance high speed trains. Collectively known as the Japan Railways or JR Group, they emerged from the 1987 privatization of the heavy indebted old Japanese National Railway (JNR). As well as the JR companies, there are around 135 local private companies throughout Japan. Most of the larger, and more successful, companies are based around the large urban areas in Kanto and Kansai, for example, Seibu, Tōbu, Hankyū, Kintetsu, Meitetsu, etc.
Over the years, the Tokaido Shinkansen, Japan’s bullet train, became internationally famous for its impeccable safety record, with zero fatalities in over 50 years of operation, as well as its punctuality and low pollution levels. The Tokaido Shinkansen carries around 430,000 per day, making it by far the busiest high-speed line not only in the Japan but also the world.
Traditional picture of Japan’s railways: the famous Shinkansen in an urban atmosphere. Here a serie 500 bullet train from JR West (photo pixabay)
However, all these companies have not the same business revenues. The company JR Central, for example, is strongly linked to the Shinkansen services. In the last quarter 2019, its bullet train business earned more than 12 times the revenue of all its other railway operations combined. JR Central only exists because the Shinkansen is such a massively profitable business. The Shinkansen is vitally important to the future success of the company as it generates such a high proportion of its revenue, but JR Central which told in 2014 on the International Railway Journal, recognized that it has entered a time when “we must think of drastic ways to deal with feared future aging as it takes a very long time to plan and build a new railway.” JR Central was talking about his Maglev, which is the subject of debates in Japan about his necessity, but that’s another subject.
Conversely, more than 50% of JR East’s revenue comes from Tokyo-area commuter services, with less than 30% from high-speed services. The three Shinkansen companies on heavily populated region of Honshū – JR East, JR Central, and JR West – have done well. But this partially because These railway companies gain much of their revenue from operations other than their railways, for example, hotels, shopping malls and housing.You can see, for example on this page all the activities of JR-East. However, the analysis of the Japanese railway situation is too often based on the yardstick of the majors and their great success. However, the situation is more contrasted when we look at the other regional railways. In the Japanese context, horizontal separation seems indeed improved the overall performance of JR companies and regional needs have increasingly been met, particularly with improvements in train frequency. The integration of railway services into different regional organizations has been relatively smooth, although the number of interregional rail services has decreased. Each JR company took responsibility for both train operation and infrastructure management within its territory. This means however that drivers can only drive trains on their own company’s network, hence the existence of « border station » where a change of drivers is operated.
The station of Osaka: gigantism and futuristic architecture (photo yagi-s via wikipedia)
A major reason Japan’s private rich rail lines are so successful, including railway suburban companies, is that they’ve diversified the business beyond transportation into real estate holdings and retail outlets. With the exception of local private railway companies engaged in unprofitable railway transport, Japanese private railway companies are not fully covered government subsidies for capital or management expenses. Government regulation of fares coupled with limited subsidies for railway operations pushed the private railways to innovate and diversify into a wide variety of related businesses, most notably real estate. This is a fundamental difference with Europe. This policy explains why the infrastructure and the trains remain within a unified whole, since for these Japanese companies it is part of a larger whole linked to land use planning which brings them significant revenues. Private railway companies have strived to increase passengers by developing large residential areas along their lines, building shopping centers, expanding business quarters near railway terminals, creating recreational facilities and sports facilities, inviting in universities, etc.
That fills the coffers of the companies concerned. In 2017, according the newspaper Nikkei Asia, property private railroad operators in Japan relied on office buildings and mixed-use developments to increase profits. Ten of the country’s 14 big listed railway groups reported higher net profit for the period than 2016. For example, Tokyu Group’s net profit was lifted by the Futako Tamagawa Rise residential-commercial complex in Tokyo, thanks to Tokyu’s office leasing business in Shibuya Ward and other urban neighborhoods was strong.
The Futako Tamagawa Rise residential-commercial complex: more revenues than the train operations (photo lightdesign.jp)
Among other examples, Hankyu Hanshin Holdings which enjoyed high occupancy at Grand Front Osaka, a mixed-use complex adjacent to Osaka Station. By contrast, Kintetsu Group Holdings’ net profit fell by 26% due to disappointing condominium sales. These are just a few examples of real estate realities, but we are talking here about a highly urbanized Japan.
Because not all railway undertakings are concerned by these real estate advantages. Some benefit from some degree of public subsidies. The intervention of politicians is much broader than we think. Central government and local authorities, for example, contribute of funding to develop new Shinkansen lines, up to a certain level, which varies from line to line. Today, some local politicians in more rural areas continue to call for the national government to revive 1970s plans to extend lines to their own cities and towns, arguing that high-speed linkages will spur economic revitalization. It makes one think of the French elected representatives who imperatively demand their only daily TGV in order to feel disenclaved…
Of Japan’s six major railway companies, the three companies JR Hokkaido, JR Shikoku and JR Kyushu provide their rail services on Japan’s smaller islands where the railway operations are unprofitable. They do not benefit from the land policies of their big sisters in the heart of Japan. Thus, the government had from the beginning allocated Management Stabilization Funds (MSF) to these companies at the time of the JNR reform.
In rural Japan, far away from the major metropolises and the large flows of commuters, the ageing of the population as well as its depopulation is a cruel reality. Many regional railway services are struggling to break even. As reported Bloomberg, a 2020 report from the World Economic Forum spotlights the structural challenges that decreased population density raises for transportation providers in smaller Japanese cities and towns. In one region of western Honshu, for example, 60% of rail lines report that revenues cover less than 50% of costs. These smaller local rail companies don’t have access to the supplementary lines of income that the JR companies generate from their valuable real estate holdings in major cities, and in the case of JR Kyushu, those densely built developments account for about 60% of revenue.
Two diesel trainsets awaiting their departures at the Platform 3 of Oshamambe Station. A completely different image of Japan… (photo Yasu via wikipedia)
JR Hokkaido, in the large and particularly depopulated northern island, announced in November 2016 that about 1237 km of lines cannot be sustained only through the revenues from the businesses and the Management Stabilization Funds (FMS). 3 lines covering 179.4 km transport less than 200 persons in average passenger transport density and it has 8 lines covering 926 km with the passenger transport density between 200 and 2000 persons. In these conditions, the company wishes to start negotiation with local governments about the future direction of the lines.
Like the Hokkaïdo railway, the number of unprofitable railways in Japan has increased in recent years. To manage the financial difficulties of those unprofitable passenger railway services and other public transport, the government has enacted or revised many Acts regarding public transport. As a background to the establishment of these Acts, several issues, such as urban sprawl, motorization, a decrease of the passengers of public transport, and management difficulties in public transport companies. The central government explains that the next step is for local areas to take the lead. It has underlined that regular bus routes can provide the required minimum of local public transit and so it is not necessary to prioritize railways. This reminds us of identical debates in Europe and shows that, everywhere in the world, the train is a matter of volume, whether there is a pandemic or not. It is interesting to note that even in Japan, the maintenance of an unprofitable local railway line is sent back to a local level.
One of the trains of the Kintetsu Railway, a 500-kilometre network operating around Osaka, Nagoya and Kyoto, still on narrow gauge 1,067mm (photo japanibackpacker via pixabay)
Japan now has several cases where regional governments took over the ownership of infrastructure to sustain unprofitable railway lines, based on the “Act on Revitalization and Rehabilitation of Local Public Transport Systems”. In these cases, the railway company not only operates the trains but also manages the infrastructure as part of its daily operation processes. This shows that while this situation has the appearance of an integrated railway, it is the local authorities who retain ownership of their lines and decide on the work to be carried out. That means for local authorities to find sufficient engineering capabilities to take appropriate measures to manage works on the railway lines. Otherwise, they should be content to follow what the railway operator wants on doing, and contracts would tend to be expensive. This brings us back to the same problem as in Europe: controlling costs while guaranteeing an optimal and safe rail network. The responsibility of the local authorities is important because, if we take the example of many European countries, shortcomings in infrastructure works (stations, tracks, switches) have affected operators’ quality indicators. This was also one of the reasons that pushed the British franchises to become obsolete (but not only).
Japan thus presents us with a contrasted landscape, but some elements of which are in line with European concerns. Japan has not followed the principle of competition with several operators on the same network, as in Italy, Austria, Sweden or the Czech Republic, but on the other hand it enjoins its operators to do without subsidies as much as possible and to seek all possible sources of financing, an idea that is not found in Europe, at least not with such intensity.
Moreover, the Japanese government is strongly decentralising the responsibilities of rail transport to the local level and to different operators, unlike some European countries which advocate a single state owned operator. The fact of owning the infrastructure in Japan is in no way a guarantee of the perpetuation of rail transport. Only companies with high traffic levels can make their rail lines profitable thanks to the associated real estate. It remains to be seen how the local level, ageing and depopulated, can find resources for its loss-making railways…
Sources:
2012 – Tokyo-podcast.com – Christopher P. Hood – How The Shinkansen Rebuilt Japan
2014 – International Railway Journal – David Briginshaw – Shinkansen: half a century of speed
2019 – Medium.com – Sam Holden – End of the line for the Shinkansen?
Hokkaïdo, the Furano line. Another world…(photo pixabay)
Similar articles:
How real estate can financing railways?
09/28/2020 – The railway is a sector that brings very little return. Other adjacent areas could bring in additional income, but not by selling frenetically. Explanations.
Why are Japanese trains so punctual? – 03/22/2020 – Japan’s railways date back 140 years. Over this period, an impressive amount of know-how has been accumulated to ensure the smooth running of the railways. The result is a system that is now considered one of the best in the world. Japanese society, which may appear to be very strict, has developed a way of managing the work of railway…
This is the new commuter train – 09/22/2019 – Since last March, new Emus with an unusual design have been operating on two railway lines in the Tokyo area. Hitachi is the builder. An inspiration for our trains in Europe?
Dear railway commuters : be glad you’re not japanese !
06/25/2018 – Tired of your commuter life, standing up, squeezed in a bad train to get to the center of London or New York? You hate the Thameslink? Be grateful not to be Japanese! By reading these lines, you will realize that you are finally a privileged person. Diving into another world, far from home.
US passengers railways are bad, but Americans don’t care. Why? – 11/22/2019 – The webzine Vox explains that Americans view public transit as a welfare system for those who can’t afford to drive. Public transport is considered as the transport of the poor, of the one who has not succeeded. The same picture is applied to passengers railways.
Sweden, 30 years of railway liberalisation
05/20/2019 – In 1988, rail infrastructure was vertically and institutionally separated from train operations in Sweden. 30 years have passed since 1988, and some lessons can be drawn from this transformation.
Mediarail.be - Rail Europe News 
Vous devez être connecté pour poster un commentaire.