Japan’s Railways We Can Be Proud Of III: Is Rail Transport a Profitable Industry?

We will continue our series on “Japanese railways we can be proud of.” In the previous two installments, we discussed the greatness of Japan’s railways from the perspectives of ‘transportation personnel’ and ‘usage rates.’ This time, I would like to talk about the remaining angle: the overall ‘railway business.’

As you know, last time we talked about “transportation personnel.” It was clear that Japan is the undisputed world number one, far ahead of second-place India. However, a question might pop into your mind. In France, Germany, and India—every country has essentially only one company covering its entire national network. But in Japan, there are six JR companies, and among private railways, there are 16 major operators. It sounds like someone might say, “Aren’t they just counting what each individual company counts?” For example: taking the JR from the nearest station to downtown, then transferring to the subway to get to work… That already counts twice! This is what we call ‘intercompany transfers.’ So, are these accurate numbers?

You are right. While Japan is clearly number one in terms of sheer boarding frequency, the total distance traveled by a person in a year ranks second globally—it’s not number one. By the way, the top spot belongs to Switzerland at 2,400 kilometers, Japan at 2,000 kilometers, and third-place France at 1,400 kilometers. There isn’t actually a huge difference between these countries.

Some might think, “Maybe it’s not that big of a deal?”
This system of ‘intercompany transfers’ is a unique development specific to Japan. We have trains that connect JR lines and subway lines, or private railway lines connecting other private railway lines—some even run through direct services. For example, if you take the Shinkansen from Tokyo to Hiroshima, “Tokyo to Shin-Osaka” is operated by JR Tokai, and “Shin-Osaka to Hiroshima” is operated by West Japan Railway Company (JR West). If you go from Ikebukuro to Motomachi-Chukagai in Yokohama, you might use Tokyo Metro for “Ikebukuro to Shibuya,” Tokyu for “Shibuya to Yokohama,” and the Minatomirai Line for “Yokohama to Motomachi-Chukagai”—that’s already three companies! If I start listing examples, it never ends. From Kagoshima by Shinkansen to Okayama, then via Chizu Express to Tottori, and from there through the Kita-Kinki Tango Railway for sightseeing at Tempaiji, and then by Shinkansen from Kyoto to Tokyo, and finally taking the sleeper train Cassiopeia via IGR Iwate Galaxy Railway to Sapporo… It’s a network of transfers so vast that I almost want to stop counting.
Even the staff at the green ticket windows are certainly experts at cross-referencing route maps and terminals. You might feel like saying, “I’m sorry, staff member.”

But what does this mean? While some local lines survive as third sectors because they face deficits, the 16 major private railway companies are all profitable; each is self-sufficient, and thus, a ‘private railway’ industry has flourished. Conversely, in other countries, railways are often unprofitable or deficit-ridden ventures. Japan is unique in that its railways generate profits. In many foreign countries, the system is primarily “state-owned” or “nationalized,” rather than being an inherently profitable business. This leads to another question: “Didn’t JNR (Japanese National Railways) collapse due to massive deficits?” The debt incurred when JNR was dissolved in 1987 was a staggering amount: 37 trillion yen. JR East, JR Tokai, and JR West were saddled with 12 trillion yen, and the Railway Clearing Corporation was responsible for 25 trillion yen. Today, the debt of the three major JR companies has been cut by about half, and the Clearing Corporation’s debt is around 17 trillion yen. Perhaps being state-run made them complacent, but I would like to discuss this separately. Nevertheless, they are generating profits and repaying their debts.

It seems like this article might be longer than expected, so I will wrap up here for now. Next time, we will continue discussing the “railway business.” I have written a lot of thoughts freely, so the ending might feel abrupt, but I would appreciate it if you could follow along with an open mind.

See you next time!

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