Japan has the safest, most punctual high-speed rail system in the world, so exporting that product would seem to be one of the easier challenges on Prime Minister Shinzo Abe’s agenda. But 51 years after the first shinkansen, or bullet train, pulled out of Tokyo Station — marking in 1964 this nation’s postwar recovery as a modern industrial power — Japan is struggling to convince other countries to buy.
In April 2014, four Japan railway companies — East Japan Railway, Central Japan Railway, West Japan Railway and Kyushu Railway — set up the International High-Speed Railway Association (IHRA), mainly to promote the Japanese shinkansen over other high-speed railway systems in Europe and China. Japanese bullet train makers such as Kawasaki Heavy, Hitachi and other Japanese companies have joined as members of the IHRA. The Japan Railways Group, more commonly known as JR Group, consists of seven companies that took over most of the assets and operations of the government-owned Japanese National Railways on April 1, 1987: East Japan, Central Japan and West Japan are listed, while Kyushu Railway, Hokkaido Railway and Japan Freight Railway are not listed.
Industry experts say Japan may yet manage to export the technology, but only if it can overcome some major disadvantages such as its high cost and the closed-system nature of the product.
‘Galápagos Syndrome’
The main drawback of Japan’s bullet train technology is that its owners are insisting on selling it as an entire system, including the railways, trains and software needed to run them. This has made them too expensive and prevents buyers from combining them with other technologies or systems. Japanese bullet train makers are not willing to adapt their technology and equipment to suit local conditions, having had the luxury of focusing on their big home market for decades. This excessive focus on tailoring products and technologies for the idiosyncrasies of the Japanese market is seen in many industries, including electronics makers and mobile phone operators. Dubbed the “Galápagos syndrome” for the unique developments of the isolated flora and fauna Charles Darwin found on that unusual island, the term was originally coined to refer to Japanese 3G mobile phones, with their specialized features that are popular in Japan but shunned in overseas markets.
The closed nature of the shinkansen system is its biggest handicap, says Satoru Sone, specially appointed professor at Kougakuin University in Tokyo, an emeritus professor of Tokyo University and a leading expert on high-speed rail. “It is not realistic to sell the whole bullet train system as a package,” he says. “For example, foreign high speed railways can run on the right rail or left rail. Japan’s bullet trains can only run on the left side. No country will buy Japanese bullet trains.”
Since Japanese bullet trains run on separate, exclusive tracks they cannot be connected with existing railway systems, unlike European and Chinese bullet train systems, which can. Other high-speed rail experts agree with Sone. “There is a real, practical limitation to promoting the whole system,” notes Rapik Saat, a research assistant professor at the Rail Transportation and Engineering Center and department of civil and environmental engineering at University of Illinois at Urbana-Champaign. “Like in Europe, interoperability is key to the U.S. to ensure competitive and cost-effective development of HSR systems. There probably are very limited opportunities to bid out huge HSR projects under a single package. Japan should understand this, and consider any practical conditions in the U.S. in developing its business strategy to promote shinkansen technology.”
The closed nature of the Japanese system prevented Japan from selling it in Korea or Europe, says Rick Harnish, executive director of the Chicago-based Midwest High Speed Rail Association. A shinkansen train will never leave a shinkansen network in a system designed to ensure zero accidents. For a place like California which does not plan to build a closed system, the high speed trains will be mingled with other types of trains or freight trains. “If you are going to use the closed system approach, the shinkansen does have a cost advantage,” says Harnish. “The challenge is there are very few places where they will have a closed system, especially in the U.S.”
“It is not realistic to sell the whole bullet train system as a package.”–Satoru Sone
Torkel L. Patterson, vice chairman of International High-Speed Rail Association in Japan and a special advisor to Central Japan Railway Co., acknowledges the same limitation. Japan can only expect to compete for projects that are building up entirely new systems, he says. “You are not going to introduce the Japanese bullet train into Europe, which has the existing infrastructure, or China where they have already decided what they are going to do. The opportunities are where you have a chance for a new system,” Patterson says. Instead of aiming for a national network, such as President Barack Obama’s proposal for a nationwide high-speed railway in the U.S., it makes sense to use the shinkansen approach for railways that connect cities. That would be projects “like Taipei- Kaoxiong, Melbourne-Sydney, Kuala Lumpur-Singapore, Dallas-Houston, and Washington, D.C.-New York — where you have viable pairs of cities,” Patterson adds.
An Impeccable Record
Putting the issue of closed versus open systems aside, there can be strong advantages of the shinkansen technology, in addition to its impeccable record for safety and punctuality. Shinkansens can run more frequently and can carry more passengers than high-speed rail systems in Europe or China because they run on dedicated tracks. The safety record results from the dedicated track and also from ATC (automatic train control), which controls the system and maintains safety and speed, preventing collisions. “The shinkansen can run one train every four minutes, but in Europe you run one train an hour or every two hours,” says Patterson.
The Japanese bullet train has never had any accidents because it is not connected with existing systems. “It is not designed to connect with existing infrastructure intentionally because it is not safe. Look at every example in Europe, France or Germany or China — all accidents were because they ran the high-speed trains with conventional rails. The Japanese have had no accidents for 50 years,” Patterson says.
He adds that the higher initial costs of the Japanese technology are offset by lower operational and maintenance costs. “If you want to run just one high speed train an hour, if you want to run freight trains and other trains, sure, use the Europeans’ system…. But if you want an economic transformation for two viable cities, [the Japanese system] is better because it is safer and moves more people with more frequency of services.”
Experts predict that eventually, the global market will side with Japan in focusing on safety over cost. “Japanese bullet trains can carry over 1,000 people in one bullet train and they are safe and punctual systems that have never had an accident, but the Chinese system is very competitive in terms of cost. The countries which intend to buy high-speed rail will use criteria such as safety of operations over a long time period,” says Konomu Dobashi, a professor of modern China studies at Aichi University.
Based on that reasoning, Japan may be able to claim competitiveness in a niche market, but it is facing strong rivals in the global market. China has developed its own high-speed trains by importing and adapting features of the Japanese and European systems and is now trying to export its own bullet trains to the U.S., South America and Asia. Since the industry is considered a strategically important one by Beijing, China’s state-run railway, rolling stock manufacturers and technology companies have strong backing in the form of low-cost credit for any projects they may bid on. China has been much more aggressive in marketing its newly acquired high-speed rail expertise and equipment than Japan, says Richard Di Bona, a transportation expert based in Hong Kong. “Senior Chinese political leaders make a lot more noise in pushing Chinese technology compared with their Japanese or Korean counterparts,” he says.
“If you are going to use the closed system approach, the shinkansen does have a cost advantage.”–Rick Harnish
Selling Abroad
Still, Abe, Japan’s globetrotting salesman, has been pushing hard to win contracts in emerging markets — including India and Southeast Asia — as well as in the U.S. Japan’s track record for sales has been lackluster, so far. It lost its bid to sell the bullet train to South Korea to France’s TGV system in 1993. There is now a possibility that Japan may be able to sell it to Thailand. Japan and Thailand signed a memorandum of understanding in May to do a joint feasibility study for high speed rail link between Bangkok and the northern city of Chiang Mai. But there are many issues to resolve, including profitability and how to finance the huge cost, before Japan and Thailand reach a final agreement. Japan also lost against the group led by France and Germany’s ICE system to sell a bullet train system to Taiwan, though Taiwan opted for a hybrid system combining the Japanese and European technologies, taking into consideration the high speed rail accident in Eschede, Germany in 1998, and Taiwan’s major earthquake in 1999. The Eschede train disaster occurred in June, 1998, near the village of Eschede in the Celle district of Lower Saxony, Germany, when a ICE train derailed and crashed into a bridge. One hundred and one people died and nearly 100 were injured. “Japan’s export of bullet trains to Taiwan is a hybrid of some European standards and the Japanese bullet train system, but mostly a Japanese bullet train,” says Kailash Chhaya, a vice president and senior analyst at Moody’s’ Japan K.K.
Japan may be able to compete with its rivals in the U.S. market, as long as its customers opt for a closed system. But U.S. domestic political issues and funding difficulties are a challenge since huge bullet train projects require commensurately significant government support. “The U.S. will be the best destination market for Japanese bullet trains because they do not have their own bullet train technology and they put a high value on Japan’s safety record. India says it values safety, but in reality will it buy the safest bullet train system at maybe twice the cost of China’s system? I doubt they will buy the Japanese system. India would prefer the cheaper system,” Sone says.
To sell to the U.S., Japan would likely have to customize the trains and technology, however, since the U.S. planners want to mix the bullet trains with existing railways. “In the U.S., they may want to use freight trains or commuter trains on the same tracks as the bullet trains. This kind of customization can be done, but it will impact the speed of the bullet trains,” Chhaya notes.
Among the various high speed railway projects in the U.S., the high speed rail link between Houston and Dallas planned by the private company Texas Central High Speed Railway is the only one intended to be a closed system. The company announced on February 17 that it has finalized the route and informed the Federal Railway Administration. Texas Central estimates the line will cost US$10 billion and will be privately funded, without public subsidies. Assuming it manages to fund the project, Texas Central said it hopes to begin operations by 2021. It has chosen Central Japan Railway’s N700I bullet train system. “There will be only a few places that would use a closed system in the U.S. like the one between Dallas to Houston. It is unlikely that other places would also use a closed system,” Harnish says. Elsewhere, the systems will likely be hybrids, says Patterson. “California is under construction and is going to do a mix and match project, so Japanese companies are offering to sell train systems or signaling systems and training. They may end up buying Japanese cars and using German signaling system,” he says.
The entire line between San Francisco and Los Angels is scheduled to be fully operational by 2029, with tracks stretching more than 800 miles and trains stopping at as many as 24 stations. Planned spurs eventually would run from San Francisco to Sacramento and Los Angeles to San Diego.
While Japan is keen to peddle the bullet train technology, it is even more interested in selling its newer “magnetic levitation,” or “maglev” technology. In October 2014, Central Japan Railway got Japanese government approval to build a maglev line from Tokyo to Nagoya with a possible extension to Osaka. The nine trillion yen project, funded by Central Japan, is intended to begin operating between Tokyo and Nagoya by 2027 and between Tokyo and Osaka by 2045. In the U.S., Northeast Maglev, a private company, wants to build a maglev line that would provide a one-hour link between Washington and New York and is planning to seek federal regulatory approval this year. “It is a very safe and robust system and the technology is mature enough to put into operation. The Japanese government said it would help support construction of the line’s initial legs between Washington and Baltimore because Baltimore is not a huge population center. Between Washington, D.C., and New York is a more viable project,” says Patterson who is also president of the U.S.-Japan Maglev LLC, a U.S. company that is working to promote Central Japan’s maglev system.
“I don’t think there’s the political will to build high-speed rail in the U.S. yet, nor in the near future.”–W. Bruce Allen
Political Roadblocks
Despite Patterson’s optimism, others are more skeptical about the immediate prospects for big high-speed rail projects in the U.S. “I don’t think there’s the political will to build high-speed rail in the U.S. yet, nor in the near future,” says W. Bruce Allen, a Wharton emeritus professor of business economics and public policy and a transportation expert. “There has been talk in Texas, Florida, in the Midwest … [and] Pennsylvania for quite a long time and no ground broken, except in California. Lots of talk but no action. Financing is the big issue,” he notes.
The key would be the increasingly popular public-private partnership approach involving little or no public money, with the government providing eminent domain for land acquisition, environmental impact remediation, speeding up land use approvals, etc. “But I don’t see the politicians … having the long term vision and the willingness to fund such massive investments,” Allen says. “It’s hard for politicians to get elected if they advocate spending lots of money. Voters don’t believe in benefit/cost ratios, especially since the costs are now large and highly publicized, and the benefits mostly accrue in the future and are based on things like value of time savings and reducing negative externalities — things the ordinary voter can’t comprehend.”
Harnish agrees that ultimately, politics are a bigger problem than the economics or other issues when it comes to high-speed rail projects. That spells trouble for Japan and for other potential suppliers of bullet train technology. “It is very difficult to build the high speed train, politically. The market is not the problem; the geography is not the problem; the population density is not the problem. The only problem is the politics and an inability to change policy quickly,” Harnish says. But a key project like the one in Texas could provide the “tipping point” needed to nudge policy in the direction toward acceptance of high-speed rail as a modern infrastructure needed to make the U.S. economy more competitive. “In the 1930s, when there was an urgency to help people to get to work, there were a couple of key guys who stood up and said they had a plan to build highways. They figured out how to get the money flowing in a different direction. That is the kind of thing it takes,” Harnish says.
