Long read: Why Japan has such good railways

Among many things that impressed us in China, the high-speed rail stood out – 50,000km of network all built over the last 15 years where train speeds go north of 350kmph routinely. Japan’s historically famous high-speed rail or the Shinkansen network (~3,000km) might now pale in comparison. Leaving aside the scale given the sheer difference in the areas of the two countries, unlike the Chinese state driven model, it is the Japanese railway model that presents as something replicable in other countries. Just to give a sense of how widely used it is as a means of transport in Japan: “28 percent of passenger kilometers in Japan are travelled by rail, more than anywhere else in the developed world. France achieves 10 percent, Germany 6.4 percent, and the United States just 0.25 percent. Travel in Japan is over a hundred times more likely to be by rail than travel in the United States.”

And unlike most railway networks across the world which tend to be subsidised by the state, Japan’s is profitable and mostly private: “ …Japan’s vast railway network is divided between dozens of companies, nearly all of them private. The largest of these, JR East, carries more passengers than the entire railway system of every country other than China and India. Each year, JR East carries four times as many passengers as the whole British railway system, even though it has fewer kilometers of track, serves about ten million fewer people, and competes with eight other companies. Japan’s railway system turns a large operating profit and receives far less public subsidy than European and American railways.”

And as the authors highlight, it isn’t the Japanese obedient culture that makes it a success as some tend to attribute it to: “….their system excels because of good public policy: business structure, land use rules, driving rules, superior models for privatization, and sound regulation have given Japan its outstanding railways.”

The article elaborates on each of these. We highlight the business structure piece here which is central to its success – Japanese railway companies don’t just run railways:

“Take the example of the Tokyu corporation, one of the legacy private railways in southern Tokyo. You can not only travel on its trains, but also ride a Tokyu bus, live in a Tokyu-built house, work in a Tokyu office complex, see a doctor in a Tokyu hospital, buy groceries in a Tokyu supermarket, spend an afternoon at a Tokyu museum-theater-cinema complex, take your children to their amusement park, and even die in a Tokyu retirement home. The positive spillover effects of the railway on these things are captured by Tokyu because it owns them. The president of Tokyu has said: ‘I think that though we are a railway company, we consider ourselves a city-shaping company. In Europe for instance, railway companies simply connect cities through their terminals. That is a pretty normal way of operating in this industry, whereas what we do is completely different: we create cities and then, as a utility facility, we add the stations and the railways to connect them one with another.’

This model was pioneered in the 1950s by what became Hankyu Railways. Hankyu’s network connects central Osaka to its northern suburbs, as well as Kyoto and Kobe. Its innovative founder Kobayashi Ichizo first built suburban housing, then a department store at the terminal station; he then created a hot spring resort, a zoo, and his own distinctive brand of all-women musical theater, the Takarazuka Revue. He also began to run bus services to and from his stations. Other companies emulated Hankyu’s example: Tokyo Disneyland is a collaboration between Disney and the Keisei Railway, while Hanshin in Osaka owns the Hanshin Tigers baseball team.

Core rail operations are profitable for every Japanese private railway company, but they usually only account for a plurality or a small majority of revenue. The rest is contributed by their portfolio of side businesses. There is a natural financial synergy between the reliable but unremarkable cash flow of train fares and the profitable but riskier real estate and commercial side of the business. Railway companies’ side businesses also attract people to live and work on their rail corridor, reinforcing the customer base for the railway services themselves.

This virtuous circle is enabled by transit-oriented development. Japan’s liberal land use regulation makes it straightforward to build new neighborhoods next to railway lines, giving commuters easy access to city centers. It also enables the densification of these centers, which means that commuters have more places they want to go.”

Another reason that underpins the success of Japanese rail is urban density in a very unlikely way: “Railways cost a lot to build, but once they are built, they can move enormous numbers of people, far more than a road of similar size. This means that they work best in cities with a high density of people, jobs, and other activities.”

But it isn’t residential density: “The urban area of Tokyo, the densest Japanese city, has a weighted population density less than that of many European cities, including Paris, Madrid, or Athens. Japanese cities have vast low-rise, predominantly residential suburbs, built at densities that might be higher than what is typical in the United States, but that would be quite normal in Northern Europe.

What makes Japan’s cities particularly suited to rail is thus not their residential districts, but their huge and hyperdense centers. These really are special: the cores of Tokyo or Osaka are unlike anything that exists in Europe or North America. Many of their features are famous worldwide: the vertical street zakkyo buildings, underground streets, shopping streets under rail tracks, covered arcades, elevated station squares, and vertical cities. Getting millions of commuters and shoppers into these downtowns is where rail excels because its extreme spatial efficiency means that infrastructure with a relatively modest footprint can transport vast numbers of people into a small area.”

The authors elaborate on the other factors which are equally fascinating, particularly how cars and motorways did not outcompete rail in Japan unlike elsewhere and again thanks to some sensible policy making. Our urban planners would do well to dig deeper into this.

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