The FT: Chris Grayling looks to Japan to make the most of privatisation.

[RailWonderer]

The article is linked below, but since you probably don't have a subscription, I will summarise.

Rail privatisation: the UK looks for secrets of Japan’s success
https://www.ft.com/content/9f7f044e-1f16-11e9-b2f7-97e4dbd3580d

For transport secretary Chris Grayling, a true believer in privatisation who even contracted out Britain’s probation service when he was justice secretary, Japan’s success offers the appealing prospect of fixing the railways in the private sector. He has launched a review that will specifically look at Japan as a model for the UK.

It starts by saying UK Retail Price index is 280 points and the rail is rising at just over 400. While in Japan rail fares rise at ~110 pts and general Consumer PI in Japan is 125pts, inflation is rising faster than the rail fare in Japan and over here it is the opposite. How?
Well, there are a few key points:

-Japanese rail operators own the track, stations and trains outright for the regions they operate and infrastructure that benefits two or three operators is split between them. If parts are leased, leases are longer, so operators have a stake, and generally feel a responsibility to society.

- UK ToCs have to rely on Network Rail for signal fixes and the DfT for permission to improve the railway but in Japan operators have more power.

- There is no incentive to invest with short franchises. This is why old rolling stock is still running. Pacers in the North, 321s and 313s in the South East and more. In Japan operators sometime share rolling stock (neutral liveries)

-Japan has multiple operators in a most region much more than we do (Virgin and LNWR, TPE and Northern)

-the only unprofitable part of Japan's railways is the Hokkaido network, which is the only state owned part.

-However Japanese planning laws are easier and much of their infrastructure in newer.

It isn't all perfect, their peak trains are too loaded, as we all know from the images and videos of the pushers to cram people on, because they don't have peak and off-peak fares.

Basically if any amateur tells you all the problems would dissipate if we nationalised the rails, look at Amtrak. Ironically for the most capitalist society on Earth their rails are mostly state funded and are awful. Japan with a private railway has given operators incentives to treat their railway like their own rather than a borrowed property with low contestable costs, so they can make for a quick exit should they lose their franchise in a few short years.

Take from this what you will, there is a general point of argument but several points to think about. Sorry for any spelling mistakes I'm typing this on my phone at lunchtime.

P. S. British engineer Edmund Morel brought the first railway to Japan 150 years ago and since then they built on it and improved and the infrastructure of the original stretch bares some resemblance if you look carefully.

 

[Bantamzen]

A precursor for future franchise bids from Japanese operators perhaps? I must admit, there probably is a lot we could learn from their rail industry although it is far from a perfect beast. Still, if we can learn at least a few lessons it might not be such a bad thing, though it would doubtless not be received well by all quarters.

 

[Alfie1014]

Greater Anglia is already a joint venture Abellio and Mitsui as is LNW I think?

 

[baz962]

Watched a TV program on C5 just last night about the world's busiest station in Japan. The staff are worked almost militarily and even sleep in pods at the station. A driver that was fined and apparently humiliated for being a little late , broke the speed limit and had a crash that resulted in fatalities to avoid lateness on a subsequent journey. Profit and service before lives possibly. Would it work here. I would rather be late than dead.

 

[Bletchleyite]

What he's talking about sounds remarkably close to the Chiltern model...

 

[Carlisle]

Japan with a private railway has given operators incentives to treat their railway like their own rather than a borrowed property with low contestable costs, so they can make for a quick exit should they lose their franchise in a few short years.

It reminds me of John Majors desire for a return of the big four 20 years ago, and how successfully it was enacted

 

[swaldman]

Hmm. Interesting. I will highlight the words "[operators] generally feel a responsibility to society.". That's a cultural thing that we don't have.

It's true that Japanese railways run rather efficiently and reliably. It's also true that shinkansen services (which are in some ways analogous to things like the ECML - speeds are greater, but so are the distances[1]) are horrifyingly expensive. Think UK Anytime fares, but with no off-peak or advances available. IME theyre mostly used by businesspeople on expenses, and tourists with cheap foreigners-only tickets; others use low-cost airlines, again similarly to here. I don't know how either of these things (the reliability or the costs for long distances) relate to the way the companies are structured.
I also recall reading that most of the JR regions have had significant financial troubles. The FT says that they all (but Hokkaido) turn a profit, but then I guess most of the UK operators do as well. I'm not sure what level of government subsidy the Japanese operators get.

I don't think comparisons to Amtrak are terribly useful - that's a very different situation when compared to .uk or .jp.


[1] And yes, I'm aware that there are other ways in which they are not a good analogy. You don't need to explain this.

 

[yorksrob]

The article is linked below, but since you probably don't have a subscription, I will summarise.

Rail privatisation: the UK looks for secrets of Japan’s success
https://www.ft.com/content/9f7f044e-1f16-11e9-b2f7-97e4dbd3580d

It starts by saying UK Retail Price index is 280 points and the rail is rising at just over 400. While in Japan rail fares rise at ~110 pts and general Consumer PI in Japan is 125pts, inflation is rising faster than the rail fare in Japan and over here it is the opposite. How?
Well, there are a few key points:

-Japanese rail operators own the track, stations and trains outright for the regions they operate and infrastructure that benefits two or three operators is split between them. If parts are leased, leases are longer, so operators have a stake, and generally feel a responsibility to society.

- UK ToCs have to rely on Network Rail for signal fixes and the DfT for permission to improve the railway but in Japan operators have more power.

- There is no incentive to invest with short franchises. This is why old rolling stock is still running. Pacers in the North, 321s and 313s in the South East and more. In Japan operators sometime share rolling stock (neutral liveries)

-Japan has multiple operators in a most region much more than we do (Virgin and LNWR, TPE and Northern)

-the only unprofitable part of Japan's railways is the Hokkaido network, which is the only state owned part.

-However Japanese planning laws are easier and much of their infrastructure in newer.

It isn't all perfect, their peak trains are too loaded, as we all know from the images and videos of the pushers to cram people on, because they don't have peak and off-peak fares.

Basically if any amateur tells you all the problems would dissipate if we nationalised the rails, look at Amtrak. Ironically for the most capitalist society on Earth their rails are mostly state funded and are awful. Japan with a private railway has given operators incentives to treat their railway like their own rather than a borrowed property with low contestable costs, so they can make for a quick exit should they lose their franchise in a few short years.

Take from this what you will, there is a general point of argument but several points to think about. Sorry for any spelling mistakes I'm typing this on my phone at lunchtime.

P. S. British engineer Edmund Morel brought the first railway to Japan 150 years ago and since then they built on it and improved and the infrastructure of the original stretch bares some resemblance if you look carefully.

Amtrack is a freight railway with a few passenger services bolted on.

It is basically an irrelevance in any discussion about the relative merits of large scale passenger railways.

 

[RailWonderer]

Amtrack is a freight railway with a few passenger services bolted on.

Acela Express, MARC, lots on the East Coast, many commuter services the state run rail is just highly concentrated in that area.

 

[yorksrob]

Acela Express, MARC, lots on the East Coast, many commuter services the state run rail is just highly concentrated in that area.

There isn't a cat in hell's chance of this country choosing an Amtrack style model of nationalisation. A more meaningful comparison would be with some of the pre-liberalisation railways of Europe, the large national operators today such as SNCF or DB, or indeed BR of yesteryear.

 

[pdeaves]

How the system is portrayed to foreigners is not necessarily how it is seen by natives. I seem to recall we were all told how wonderful Japanese manufacturing is, but it turned out not to be as good as it at first looked.

 

[jon0844]

Isn't the Government keen to privatise Network Rail, and sell it off in chunks to private operators? If so, it would make perfect sense to find examples to suit that argument.

There's such a difference in culture in Japan that I am not sure many things are easily compared with each other. It's not just the ownership but the way people think and work.

 

[jimm]

Basically if any amateur tells you all the problems would dissipate if we nationalised the rails, look at Amtrak. Ironically for the most capitalist society on Earth their rails are mostly state funded and are awful.

As noted above, no one is likely to ever look to the US for ideas on how to run a passenger railway. Amtrak has been a political football since it was created and apart from the North East Corridor and some routes in Michigan it is not responsible for managing the infrastructure its trains use, which mostly belongs to the big North American privately-owned freight railways.

How the system is portrayed to foreigners is not necessarily how it is seen by natives. I seem to recall we were all told how wonderful Japanese manufacturing is, but it turned out not to be as good as it at first looked.

Oh really? Perhaps look at the latest Modern Railways and see how Hitachi is getting on when it comes to actually getting new trains delivered (from plants in three countries) and into service, compared with a number of other manufacturers.

 

[DarloRich]

Oh really? Perhaps look at the latest Modern Railways and see how Hitachi is getting on when it comes to actually getting new trains delivered (from plants in three countries) and into service, compared with a number of other manufacturers.

Are you sure about that? Delivered, perhaps. In service? ( i assume you missed the Scotrail issues)

Isn't the Government keen to privatise Network Rail, and sell it off in chunks to private operators? If so, it would make perfect sense to find examples to suit that argument.

you might think this. I couldn't possibly comment

There's such a difference in culture in Japan that I am not sure many things are easily compared with each other. It's not just the ownership but the way people think and work.

Indeed - a vast cultural difference.

 

[OxtedSignaller]

I do have a suspicion that the UK Rail Industry is moving towards longer concession type arrangements, with infrastructure and train operation being run together. Similar to the Chiltern model perhaps as described above. Problem is Its going to have to continue to be heavily subsidised, and there is a high rate of failure with these type of PPP schemes like we've seen before on the Underground just giving one example. I think everyone knows that which is why they are trying to make the so called alliance system work. I do think franchises are to short however I believe the government want the flexibility and choice to get rid of the franchisee and also generally speaking the specification soon becomes not enough and out of date like what we saw on Arriva Trains Wales. But then how come Chiltern have managed it all these years and also expanded services to cater to demand.

 

[ABB125]

I like the idea of the railway being a sideline (albeit a very large one) to a real estate organisation - all the money generated by property (which I believe would, regardless of where in the world, be quite a large amount) could then be ploughed into the railway.
But it wont happen. Instead Network Rail is selling its property that isn't directly used by the railway. Which personally I think is one of the worst decisions ever made in this country when it comes to railways.

 

[swaldman]

Interesting - thanks for the full text.

 

[NorthernSpirit]

Maybe Chris Grayling should look at the sectorisation (e.g. Network South East) that we had in the late 80's and early 90's and use that as a base model for a proper privatised rail network than the current mess at the moment.

Saying that, both the West and East coast mainlines along with the Great Western mainline and the TransPennine Lines should be retained in public ownership with the rest sold off. I say this as it would avoid franchises disagreeing over which lines they can use at certain points on the network but would allow Open Access Operators to operate too.

As for rolling stock, if Britain was using the Japan model Northern would be running around in a generic livery since it wouldn't be able to own its own units let alone afford the paint to paint them even if they could. The rolling stock that would be in a generic livery would most certainly be the High Speed Trains, the Pacers and Sprinters.

 

[LNW-GW Joint]

It's wrong to portray Germany and Switzerland as having completely nationalised networks.
They are both in the process of opening up to competition (initially on local services, but long distance will follow), thanks to EU competition policy.
Freight is already unbundled with many operators, large and small, even if they are mostly subsidiaries of the national majors.
Switzerland anyway for a long time has had a multiplicity of private, semi-private and publicly-owned railways/buses/ferries, but they do at least all cooperate with the nationally planned timetable and integrated transport regime.

We may be able to learn a lot from the JR experience, but you can't take it too far.
The cultural differences are huge, and not just on the railway.
Japan has also been economically in austerity if not recession for about 20 years, since the growth of rival "tiger economies" in Asia.
That's why interest rates, and therefore fares have been static for a long time.
There's a note somewhere in the article that the Shinkansen lines are actually government-owned and the TOCs pay tolls, so not that much unlike our setup.

Our Treasury has battled with the long/short franchise balance and apart from Chiltern, has taken the view so far that short franchises gave the best return.
Maybe we are about to have a go at long contracts now, with greater vertical integration.
BR may have lasted 48 years, but it was a different animal in each decade of that period (BTC, varying BRB/Regional control, selloffs, business sectors etc).
The Big 4 only lasted 25 years (and were under government control for 6 of those).
The longest individual franchise (not a single continuous one), VTWC, is coming up to 22 years now.

 

[RailWonderer]

There isn't a cat in hell's chance of this country choosing an Amtrak style model of nationalisation.

I never endorsed the US rail system, I said expressly that it was, and has been for as long as anyone can remember, failing.

For the other comments, I think we can learn a thing or two from Japan but ultimately we can't take too much from it since Japan has a very unique economy and it's like chalk and cheese to Europe and the US. It always has been.

 

[coppercapped]

I never endorsed the US rail system, I said expressly that it was, and has been for as long as anyone can remember, failing.

For the other comments, I think we can learn a thing or two from Japan but ultimately we can't take too much from it since Japan has a very unique economy and it's like chalk and cheese to Europe and the US. It always has been.

The US rail system failing?
The major (Class 1) railroads have been remarkably successful in financial terms. See for example this Reuters report from 24th January 2019 - "Union Pacific Corp, one of the biggest U.S. railroads, on Thursday reported higher-than-expected quarterly profit and said efficiency gains will bolster profits in 2019".
It's just that they don't operate passenger services...

 

[AndrewE]

It's wrong to portray Germany and Switzerland as having completely nationalised networks.
They are both in the process of opening up to competition (initially on local services, but long distance will follow), thanks to EU competition policy.
Freight is already unbundled with many operators, large and small, even if they are mostly subsidiaries of the national majors.
Switzerland anyway for a long time has had a multiplicity of private, semi-private and publicly-owned railways/buses/ferries, but they do at least all cooperate with the nationally planned timetable and integrated transport regime.

Except that I believe that nearly all the shares in the "private" railways are owned by local authorities who take their public transport obligations a lot more seriously than most of our councils - who are mainly focused on road provision.

 

[Esker-pades]

A Japanese model of privatisation seems to be the best that's out there, but I have a concern: What happens to rural railways that are not pulling their weight?

March 2018 saw the closure of the Sanko Line because of falling passenger numbers meaning it no longer made commercial sense (50 passengers per km per day in 2014). Much of the Hokkaido network (the northernmost island of Japan) is unprofitable and there are proposals (dating from Nov 2016) to close ~50% of the railway lines on that island or transfer them to other operaters (government, "third sector" etc).

There is a reasonable comparison to draw between Hokkaido and Scotland. There are some cities and major passenger flows, but a large amount of rural areas with challenging terrain with railway lines that are unlikely to break even.

I am a big supporter of the Far North Line, and spend too much time looking at timetables and ways to improve the current service. Previous threads on the subject of the FNL have had many members proposing the closure of the line north of Tain. Luckily, this is a crayonista cutting which is unlikely to happen anytime soon.
There is a counterpart in Hokkaido Island called the the Soya Main Line, which runs from Asahikawa to Nayoro to Wakkanai (the northernmost station in Japan). It mirrors the Far North Line in many ways: There is a southern section which has increasing commuter traffic (Asahikawa to Nayoro/Inverness to Tain) and a northern section which passes through some very isolated parts of the country as well as linking several small towns together (Bifuka, Toyotomi/Lairg and Helmsdale) to a port at the very northern end (Wakkanai/Thurso).
As part of this 2016 proposed rationalisation, the Soya Main Line north of Nayoro would be shut unless the government or the third sector stepped in. Thus, it is not a big jump to make to see that bringing Japanese-style privatisation would close similar lines or parts of lines (like the Far North from Tain to Thurso and Wick).

I don't think that it will make our railways more efficient either. JJapanese privatisation works for several reasons, with cultural and social ones being very important. Importing that culture here simply will not happen to any great extent (bar the more infantile parts of anime) and is arguably not desirable. See the Amagasaki Derailment (which has previously been cited) but also the phenomenon of Karoshi (translated as overwork death) which is fairly widespread.

Efficiency at what price?

 

[Japan0913]

It's wrong to portray Germany and Switzerland as having completely nationalised networks.
They are both in the process of opening up to competition (initially on local services, but long distance will follow), thanks to EU competition policy.
Freight is already unbundled with many operators, large and small, even if they are mostly subsidiaries of the national majors.
Switzerland anyway for a long time has had a multiplicity of private, semi-private and publicly-owned railways/buses/ferries, but they do at least all cooperate with the nationally planned timetable and integrated transport regime.

We may be able to learn a lot from the JR experience, but you can't take it too far.
The cultural differences are huge, and not just on the railway.
Japan has also been economically in austerity if not recession for about 20 years, since the growth of rival "tiger economies" in Asia.
That's why interest rates, and therefore fares have been static for a long time.
There's a note somewhere in the article that the Shinkansen lines are actually government-owned and the TOCs pay tolls, so not that much unlike our setup.

Our Treasury has battled with the long/short franchise balance and apart from Chiltern, has taken the view so far that short franchises gave the best return.
Maybe we are about to have a go at long contracts now, with greater vertical integration.
BR may have lasted 48 years, but it was a different animal in each decade of that period (BTC, varying BRB/Regional control, selloffs, business sectors etc).
The Big 4 only lasted 25 years (and were under government control for 6 of those).
The longest individual franchise (not a single continuous one), VTWC, is coming up to 22 years now.

Shinkansen is not a company.
Https://En.Wikipedia.Org/wiki/Shinkansen#List_of_lines
JR Central, is the JR East, JR West, JR Kyushu , the high-speed railway JR Hokkaido has managed.
JR Central, JR East, JR West , JR Kyushu, was publicly traded.
Currently the Japanese government does not own the Shinkansen.

 

[Japan0913]

A Japanese model of privatisation seems to be the best that's out there, but I have a concern: What happens to rural railways that are not pulling their weight?

March 2018 saw the closure of the Sanko Line because of falling passenger numbers meaning it no longer made commercial sense (50 passengers per km per day in 2014). Much of the Hokkaido network (the northernmost island of Japan) is unprofitable and there are proposals (dating from Nov 2016) to close ~50% of the railway lines on that island or transfer them to other operaters (government, "third sector" etc).

There is a reasonable comparison to draw between Hokkaido and Scotland. There are some cities and major passenger flows, but a large amount of rural areas with challenging terrain with railway lines that are unlikely to break even.

I am a big supporter of the Far North Line, and spend too much time looking at timetables and ways to improve the current service. Previous threads on the subject of the FNL have had many members proposing the closure of the line north of Tain. Luckily, this is a crayonista cutting which is unlikely to happen anytime soon.
There is a counterpart in Hokkaido Island called the the Soya Main Line, which runs from Asahikawa to Nayoro to Wakkanai (the northernmost station in Japan). It mirrors the Far North Line in many ways: There is a southern section which has increasing commuter traffic (Asahikawa to Nayoro/Inverness to Tain) and a northern section which passes through some very isolated parts of the country as well as linking several small towns together (Bifuka, Toyotomi/Lairg and Helmsdale) to a port at the very northern end (Wakkanai/Thurso).
As part of this 2016 proposed rationalisation, the Soya Main Line north of Nayoro would be shut unless the government or the third sector stepped in. Thus, it is not a big jump to make to see that bringing Japanese-style privatisation would close similar lines or parts of lines (like the Far North from Tain to Thurso and Wick).

I don't think that it will make our railways more efficient either. JJapanese privatisation works for several reasons, with cultural and social ones being very important. Importing that culture here simply will not happen to any great extent (bar the more infantile parts of anime) and is arguably not desirable. See the Amagasaki Derailment (which has previously been cited) but also the phenomenon of Karoshi (translated as overwork death) which is fairly widespread.

Efficiency at what price?

Japan is an aging society.
In the countryside, it is the automobile is required. .
However, it is difficult for the elderly to drive a car.
A new means the elderly can easily move is necessary in the countryside.

 

[Esker-pades]

Japan is an aging society.
In the countryside, it is the automobile is required. .
However, it is difficult for the elderly to drive a car.
A new means the elderly can easily move is necessary in the countryside.

I'm very sorry, but I don't quite understand the point that you're making.

 

[Welly]

I can picture Grayling suggesting that the British train drivers start adopting the Japanese drivers habit of pointing at the signal and saying what the signal shows!

 

[LNW-GW Joint]

From the Wikipedia link above, it seems the privatised JR companies acquired the Shinkansen lines from the government for Yen 9.2 trillion, which was about one third of the construction cost.
That's quite a hefty subsidy.
The article doesn't make it clear, but presumably subsequent new lines have been funded by the private companies (at zero interest, it seems).

 

[HowardGWR]

I'm very sorry, but I don't quite understand the point that you're making.

It was crystal clear to me. If elderly people who live rurally cannot drive to the station they need some other provision.

 

[Esker-pades]

It was crystal clear to me. If elderly people who live rurally cannot drive to the station they need some other provision.

Yep, entirely my fault. Sorry @Japan0913 .