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The Making of Japan S Railway System With A Comparison With Britain PDF
The Making of Japan S Railway System With A Comparison With Britain PDF
The Making of Japan S Railway System With A Comparison With Britain PDF
1. INTRODUCTION
Why Britain and Japan have a much different railway transport system, even
though they are geographically similar island countries? The difference of
population density is widely considered as the main factor that makes the
difference: high density population in Japan makes it possible for a profitable
vertically integrated railway transport system, while a franchising scheme for
train operation on the separated tracks has advantage in efficiency especially
for less densely populated countries such like Britain and other European
countries (see e.g. C. Nash, 2007 for a comparison). Given this fundamental
different condition, there may still exist other factors that are relevant to the
formation of the two railway systems. An exploration on what are such factors
and how they possibly affect the formation of a railway system will be helpful
for making correct policies in the future. It would also be worth examining in a
historical perspective how had the two systems come to be todays forms.
Particularly, by investigating what different policies had been taken for the two
systems and what are their consequences, we may know better how have
policies determined the formation of railway systems, this will also certainly be
helpful for making better transport policies in the future. This work is an
attempt toward the exploration of social economic factors and policy decisions
that have affected the formation of railway systems. We will focus on
passenger railways because in both countries freight rail companies run on
tracks of other infrastructure holding companies and their distinctions are not
significant as compared the passenger railway transport sector.
In next section we will make a brief review on major events that happened in
the formation of Japans railway transport system, and give an outline of the
current structure of Japans railway system and some of the financial facts
featuring the management of Japans railway industry. Then in Section 3 some
corresponding financial facts for Britains railways are described for
comparison. In Section 4, we will analyze several factors to which the
differences of the two railway systems may be attributed.
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2. THE MAKING OF JAPANS PASSENGER RAILWAY SYSTEM
All railway infrastructures were assigned to the JR passenger rail firms as their
property except the Shinkansen lines at the stage of 1987. A public
Shinkansen Holding Corporation was established to own the Shinkansen
lines and lease them to JR companies (JR East, JR Central and JR West) in
the mainland of Japan. These JR companies had good financial performances
since their establishment and were to be floated in Tokyo Stock Exchange
(TSE). JR Central and TSE hoped the Shinkansen infrastructures to be sold to
JR passenger companies before they become floated. Actually, there was a
risk that the lease price of Shinkansen could be raised by change of
legislations if the JR companies profits exceed what were expected by the
reform policy designers. Another threat for JR Central was that there existed
the possibility that it might be charged more because it operates the most
profitable Tokyo-Osaka Tokaido Shinkansen and has outstanding financial
performance (Kasai, 2007). JR East and JR West were not so eager to buy the
Shinkansen lines they were operating. Actually JR East objected the proposal
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of JR Central to buy the Shinkansen lines at the beginning. However, since JR
East was endowed with the conventional railway network and attached land in
metropolitan Tokyo and JR West the network and land in Osaka, which had
very high values then due to the asset bubble that occurred in the end of
1980s. Under such a background, an agreement on the division of Shinkansen
infrastructures was achieved among JR East, JR Central, JR West and the
former Ministry of Transport of Japan. As shown in Table 1, a dominating
share of JR Central comes from Shinkansen. Shinkasens revenue share for
JR East is low, this reflects its feature as a huge urban railway company in
metropolitan Tokyo.
The following table shows the track length, passenger trips and passenger
kilometers carried by different categories of railways in Japan in the year
2006/2007.
The Big (Scale) Private companies include eight in Tokyo (Tobu, Seibu,
Tokyu, Odakyu, Sotestu, Keikyu, Keisei and Keio), one in Nagoya (Metestu),
five in Osaka (Kintestu, Hanshin, Hankyu, Nankai and Keihan), and one in
Fukuoka (Nishitetsu). Small Private companies are distributed over the
whole country. Urban Public consists mainly of underground railways in big
cities. (Tokyo Metro, the largest underground company, is a company limited
by shares owned jointly by Japanese central government and the Tokyo
Metropolitan Government, is usually classified in the Big Private category in
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Japanese literature, since it has the form of a company limited by shares.) Big
Private and Urban Public railways have high densities of passengers (Figure
2). The Small Private and JR island companies have very low densities.
Figure 4. Relationship between the log of railway use frequency (y-axis) and
the log of population density (x-axis).
Table 3 shows the operating revenues and profits of railways in the 2006/2007.
It can be observed that Big Private companies have a large share of real
estate both for revenue and profit. Railway is actually not the main source of
revenue and profit for Small Private companies. Private and urban public
companies have road transport sector (bus, taxi, etc.) which are not profitable.
Table 3. Revenues (upper row) and profits (lower row) by railway categories
and sectors billion, Railway Annual Statistics, 2006/2007)
Railway Road Transport Real Estate Other Total
Big 1,276 50 558 316 2,200
Private 262.6 -3.2 130.5 4.6 394.5
Small 390 85 84 2,627 3,186
Private 19.1 -0.7 16.5 324.2 359.2
Local 818 146 0 17 980
Public 127.4 -21.2 0 3.3 109.5
JR 4,280 0 0 116 4,395
751.0 0 0 49.0 800.0
Figure 6. Annual profit of Big Private railway company groups averaged over
2001-2008 (million)
Table 4 shows the composition of the operating revenue and profit of some of
the firms that operate trains in Britain. All of these operators have a large
share both for revenue and for profit from the bus transport sector, this is in
contrast to the case of Japan where bus transport does not make profit. And,
besides transport operations in the United Kingdom, they also have transport
businesses in mainland Europe and North America. Though not included in
this table, there are also train operators whose main body is actually in
mainland of Europe. For example, Chiltern Railways is a train operator owned
by Deutsche Bahn AG and is part of Deutsche Bahns local and regional
service provider DB Regio.
Britains railway does also have property rental as a subsidiary business. This
is conducted by Network Rail, the infrastructure company. However, the share
of property rental among the total revenue is still small. In Japan, railway firms
operate trains and hold infrastructures, and also explore their business
opportunities around the stations to greatest extent. In Britain, it is currently
the business of infrastructure holding company to explore these opportunities.
Does the separation of train operation from infrastructure holding, compared
with an integrated system, pose any kind of limitations to do station based
businesses? This seems to be an interesting issue to be studied when there
are accumulated enough evidences on Network Rails practice in the future.
UK has a much smaller house construction market, which adds difficulty for
the Japanese urban railway company model to work.
5. CONCLUDING REMARKS
Japan and Britain did have difference in social and economic backgrounds,
but their railway system evolution seems have had a path-dependent nature.
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In Japan, national and private railways had long been coexisting. This seems
to be helpful for the growth of profitable urban based private railways, which
eventually have influenced the Japan National Railways reform. However, the
integrated transport and real estate business model seems to hold only in
regions with high density population and with large real estate market. In less
densely inhabited regions of Japan such kind of model does not work and
railway transport is shrinking. The integration of management of rail and
bus/coach transports which is popular in Britain seems to be a natural choice
in less dense regions.
In this paper efforts have been made to explore social economic factors and
policy decisions that have affected the formation of railway systems in a
unified historical perspective that seems have not existed in the existing
literature. However, our findings are very limited simply because such kind of
research has too many factors to consider so that we have inevitably to focus
on several selected aspects of the whole story. For example, EUs policy has
certainly had influences on Britains railway reform. This is one of the important
factors that have not been treated in this paper. We hope that we can explore
more such factors and in greater depth toward the understanding of what and
how social economic factors and policy decisions have influenced the
evolution and revolution processes of railway systems.
Acknowledgements
This work was financially supported by the Grant-in-Aid for Scientific Research
by Japan Society for the Promotion of Science (C 20510133), The Asahi Glass
Foundation Research Grant and Oversea Research Grant of Gifu University.
References
Noda, M., Aoki, E., Harada, K. and Oikawa, Y. eds. (1986) Japans
RailwayIts Formation and Development (Railway History Series), Nihon
Keizai Hyouronsha (Japan Economic Review Press), Tokyo. (In Japanese)