Yasutake Kojima: Japanese Railways Leap into the World—Entering the Field and Rooting in Culture

December 10, 2017. Having won the rights to operate the West Midlands Railway in the UK, East Japan Railway Company and Mitsui & Co. began operations in partnership with Abellio, a local Dutch-affiliated railway operator. This was the first instance of a Japanese railway operator being involved in overseas railway operations.

West Midlands Railway manages lines of the former British Rail, which were privatized after 1994. These lines extend northwest from the British capital, London, pass through the second-largest city, Birmingham, and lead to the port city of Liverpool facing the Irish Sea. These lines originate from the Liverpool and Manchester Railway, the world's first full-scale railway in 1830, and the London and Birmingham Railway, the first railway to enter London, which opened in 1838. These are historic lines in the country where the railway was born. As a member of a late-coming Japanese railway operator, I could not help but feel a shiver of excitement at taking responsibility for the operation of railways in a country we looked up to as a master in an industry with such history and tradition.

While not exactly evolutionary theory, even if the origins are the same, the direction of railway development differs according to the circumstances of the country or region. As nearly 150 years have passed since the birth of railways in Japan, what awaited Japanese railway engineers returning to the motherland of railways in the UK was a difference in railway culture.

Vehicle specifications were different, the indicators for measuring punctuality were different, and the concept of safety in signaling systems was also different. In Japan, it has long been the case that if a signal shows a stop aspect, a system is in place to ensure the train comes to an absolute stop before reaching it. However, in the UK, signals are merely a notice of the presence of a train ahead or a preview of the signal aspect; regarding stopping, emphasis is placed on the driver's attention, and stopping exactly before the signal is not necessarily prioritized. For this reason, while exceeding the stop position is an accident, it is permitted within the system.

In terms of service, the same applies to the approach to congestion. To reduce congestion, Japanese commuter trains replace cross-seat cars (with many facing seats) with long-seat cars (with seats parallel to the rails) or widen the car width to the limit to secure interior space. In contrast, the UK prioritizes seating capacity, considering it better to install many seats by narrowing the seat pitch with the seat in front or by making the seats themselves thinner.

Like Japan, the UK is a country that "privatized" its national railways, but the nature of subsequent government involvement differs between the two countries. In Japan at the time, although they were special corporations with 100% government investment, the JR companies were given management independence and entrusted with a vertically integrated business model covering everything from train operation to infrastructure management.

In the UK, on the other hand, the lower-level infrastructure is owned nationwide by a quasi-state non-profit organization, while the upper-level railway operations are determined by competitive bidding divided by region or function. Operators pay infrastructure usage fees and vehicle leases to the infrastructure company. Management rights last for about 7 to 20 years, and while contracts can sometimes be renewed through re-bidding, there is basically a time limit, and there is no guarantee of continued management in the same region.

In the UK scheme of outsourcing railway operations from the public to the private sector, the government may require as a bidding condition that two to three trains per hour be run even on quiet lines with relatively few users to satisfy the public's right of access. In some cases, the introduction of new vehicles or the digitalization of services is included as a management condition as a social requirement. There is not much room for discretion by bidders; for functional new vehicle designs or MaaS as a means of achieving seamless travel, the question is not so much "what to do" but "how to realize effective things at low cost as early as possible."

In exchange for this "demanding railway privatization," the government in the UK is willing to bear its share of the burden. Unprofitable measures are reflected in the balance sheet calculations at the time of bidding, and after ensuring a reasonable profit for the operator, government subsidies are paid for any resulting deficits.

Turning to Japan, subsidies are not a given even for third-sector or unprofitable lines. The companies that were split and privatized from the Japanese National Railways are expected to determine the number of runs, service quality, and in some cases, the decision to close lines based on profitability conditions, all while relying on internal cross-subsidization within the company.

So, is the UK loose regarding management? Not necessarily. They attempt to quantify services for which costs and benefits are not always calculated in Japan. How does cleaning a vehicle lead to profit? They predict the increase or loss of users based on the degree of cleanliness using statistical data and determine the cleaning level. To seek approval for a measure, they draft a plan, clarify the costs, and demonstrate the benefits. The reasons for implementation decisions are clarified, and the act of approval at board meetings excludes ambiguity.

Government involvement also extends to service evaluation. If the punctuality of train operations or the customer satisfaction evaluations conducted nationwide twice a year are unfavorable, the operator is hit with penalties involving expenditures. These indicators are agreed upon by both the government and the operator in the contract at the time the operating rights are acquired, but conversely, the operator can receive rewards if they exceed expectations. What is interesting is that if the cost of improvement does not match the penalty, they may decide to simply accept the penalty. In Japan, one might expect a company to spend more than usual to solve a problem as long as management does not deteriorate extremely, but in the UK, things proceed in a strictly businesslike manner.

By nature, railways have a strong public interest, and one can easily forget the spirit of management as a private enterprise. Participating in railway management in the UK was a good opportunity to look at the Western style of corporate management.

During this time, the Japanese railway industry has been expanding overseas in various forms. An easy-to-understand example is railway vehicles; prominent manufacturers such as Hitachi, Kawasaki Heavy Industries, Nippon Sharyo, and Kinki Sharyo not only export but also own factories and sales bases overseas, conducting manufacturing and marketing. Regarding signaling systems and air conditioning equipment, various companies are proceeding with factory production rooted in local areas. In recent years, railway operators, trading companies, and manufacturers have entered overseas business in the software aspect of Operations & Maintenance.

In the early 2000s, when the overseas export of infrastructure began to be championed, nuclear power and other electricity and water resources were at the top of the list. Gradually, however, priorities within public-private partnerships changed, and the level of attention on railway systems increased. Behind this was a global movement to reconsider the positioning of nuclear power as base-load power after the Great East Japan Earthquake, but also the fact that discussions on public transport considering the global environment became active, and historic railway systems began to attract attention as new solutions as part of transport policy in increasingly urbanized regions. Today, railways have become one of the major pillars of Japan's economic diplomacy.

Exporting Japan's excellent railways might seem easy, but the "Galapagos-ized" Japanese railway standards are incompatible with the railways of many countries. This is because EN standards originating in Europe are mainstream for most overseas railways, and so-called JIS standards do not apply.

To begin with, railways have traditionally been positioned as a domestic industry—one of the public utilities with very little need for contact with overseas markets. Originally, the turning point should have been the privatization of the National Railways. However, the JR companies were forced to focus for a long time on establishing the stability of railway management and steadily reducing the National Railways' debt.

During that time, major changes were occurring in the global railway market. High-speed rail, which was Japan's exclusive domain until the 1980s, saw progress in Europe starting with France, and cross-border train operations became active. The deepening integration and expansion of the European Union contributed to the standardization of railway specifications and the expansion of their versatility within the region. While Japanese railways are excellent, they use technology that only works in one country; in contrast, European railways were adopted by various European countries, and versatile rules were established for railways with different languages and backgrounds.

Most Japanese railways adopted narrow gauge (a rail width of 1,067 mm). This differs from the standard gauge (1,435 mm) that was mainstream in the UK. At the time of construction, in a Japan with scarce national resources, it is said that Edmund Morel (the first Engineer-in-Chief for Japanese railway construction, a Briton) advised this because it could be built faster with less capital, and it actually contributed to the early laying of many lines. Subsequently, there were numerous discussions about widening to standard gauge to improve transport capacity, but priority was given to building new lines. The disadvantages of narrow gauge were overcome through various innovations, such as improving transport capacity through double-tracking, increasing operation density by installing signals in small sections, reducing time by automating couplers, and increasing speed by using heavier rails.

Conversely, the global mainstream is standard gauge, the same as in the UK and the US. Even so, there are calls for Japanese technology to realize high-quality infrastructure, but how can we gain competitiveness in a market where European-based global standardization is steadily progressing in Asian countries? How will we compete with Europe, which excels at merging with technical fields like IoT, or with Chinese players who have price competitiveness?

"Japan is amazing, but that's because it's Japan, right?" During the three years I was stationed in New York as an expat, I heard these words many times. Of course, the other party was expressing respect for the accuracy and safety of Japanese railway operations, but it was by no means a compliment I could celebrate wholeheartedly. There was no malice, but it was a sense of resignation: "That might work in Japan, but it won't work anywhere else, or at least not here."

Even something as simple as boarding in an orderly line was met with, "That's Japanese culture; it doesn't fit here." When something is dismissed as "culture," the hurdle for persuasion rises. It is as if a proposal to shorten stopping times and ensure transport stability through smooth boarding and alighting was suddenly given a flat "no." Even if I wanted to adapt it to the local area and work together, I first had to fight the preconception at the gate that "it's only natural that we can't do it here."

Overseas, it is understood that Japanese safety is supported by the diligence of the drivers, conductors, station staff, and dispatchers involved in railway operations, as well as the engineers involved in the maintenance of equipment such as rolling stock, tracks, signals, and power. If this is the case, the strengths of Japan risk being confined as something that does not translate to the rest of the world.

Furthermore, values regarding what level of safety is required are diverse. The pursuit of thorough safety measures with the goal of zero fatalities may be a characteristic of Japanese society, which views the value of human life very heavily, not just in the railway field. From the perspective of railway management, it comes down to asking to what extent the operator is responsible for safety measures and where individual responsibility begins.

When you go abroad, there are railways that operate automatically without platform doors. There are trains that speed past with no fences along the tracks. If someone is injured or killed by being caught in a closing door, does the responsibility lie with the individual or the operator? Discussions that seem obvious in Japan are not necessarily obvious overseas. Even in UK railway management, one can feel the cold management perspective of to what extent the operator implements measures and from what point they hedge risks through insurance.

Currently, from the position of railway construction consulting, we are developing businesses centered on railway laying and measures against aging infrastructure in Southeast Asia and South Asia. In the urbanization of emerging countries, extraordinary traffic congestion occurs due to poor transport networks and the rapid development of a motorized society, and the economic loss is immeasurable. Breaking the deadlock through urban transport is an urgent task.

Railways are an old yet new industry. While there are many former national railways, many plans and constructions for new lines are progressing, mainly in urban areas. In this environment, two projects of completely different character—the rehabilitation of old lines and the construction of new lines—run in parallel. The value of railways in the transport field is being reassessed globally, and the market continues to expand steadily.

Currently, I am involved in urban railway consulting work in Jakarta, the capital of Indonesia. Coincidentally, the number two person at the operator told me, "We know your Japanese railways are excellent. However, if you are going to consult, please speak from our perspective as people who started from zero. Please show respect not just in words, but also for our culture."

Of course, it is also important to instill the spiritual culture that supports Japanese railways. However, in overseas labor markets where lifelong employment is not the norm, forcing a craftsman-like spirit is not something that will be accepted. What is needed is a system that anyone can use and the modularization of tasks that anyone can perform. I feel deeply that going out into the world is not about exporting Japan, but about Japan changing and becoming stronger.

The Japanese railway industry, and specifically the soft power that railway operators consider their strength, is a latecomer among Japan's export industries. The path forward opens from knowing the other party, learning the railway cultures and unique technologies that have developed in each country, and making them our own. That is likely what our predecessors practiced as the way for the island nation of Japan to survive.

If Yukichi Fukuzawa were alive in the new Reiwa era, he would likely have recommended that we be conscious of learning for ourselves even more than teaching others. Japan cannot remain closed in its shell.