Section 3. Has the railway business been regenerated?


    1. Passenger and cargo transport
    (1) Passenger transport : steadily increased and competitiveness has been strengthened.
    After JNR's division and privatization, the volume of passenger traffic steadily increased due to a fares freeze and improved services (Fig. 6).
    In the three big metropolitan areas, JR East, JR Tokai, and JR West increased their passenger traffic volumes by 25.2% between 1986 and 1994, as against 11.1% by private railway companies for the same period, indicating that these JR companies have regained competitiveness with their private counterparts.
    Moreover, in the distance-zone of 300-750km, the six JR companies account for as much as 50-70%, showing that the JR passenger companies still remain competitive in the intermediate-distance, inter-city transport.
    (2) Freight transport : the downward trend stopped and this section has found a means of survival in the long-distance container transportation
    After JNR's division and privatization, the volume of freight traffic increased significantly between 1988 and 1990, stopping the downward trend of its share to the total freight transport (Fig. 7).
    In addition, the freight traffic volume is growing much faster in the distance-zone of over 500km than in other distance zones, and ・the long-distance container transportation is maintaining its competitive edge.
    2. Business Management
    (1) The management status : better as a whole than expected but gaps among the companies have widened
    After JNR's division and privatization, the .balance of ordinary profit and loss of the seven JR companies as a whole has been in the black. The ordinary profit was larger than the prediction the government made in February 1987 (Fig. 8).
    JAR East,JAR Take, and JAR West continue to run their businesses satisfactorily in general. The balance of profits and losses of the three companies is in the black both on the ordinary and operating basis. The companies are paying the long-term debts and other liabilities carried over from JAR. Note that due to such interest payments, the ordinary profits are significantly small in relation to the operating losses (Table 1, Table 2).
    On the other hand, JAR Hokkaido, JR Shikoku, and JR Kyushu improved the balance of operating profit and loss, supported by an increase in transport demand brought about by the favorable domestic economy. The balances of their ordinary profits and losses remained in the black between FY1987 and FY1993 (between FY1989 and FY1994 for JR Hokkaido) partly thanks to the management profit of the Management Stabilization Funds. Despite such improvement in the balance of operating profit and loss, the managerial situation deteriorated mainly because of a decrease in the management profit of the fund due to low interest rates in recent years. In January 1996, the three companies raised their fares.
    JAR Freight recorded ordinary profit until 1992. However, the freight company experienced ordinary loss for three years in a row from 1993 due to the sluggish economy in recent years and the effect of the Great Hanshin-Awaji Earthquake.
    (2) Fares : frozen with some exceptions
    Except for the fare hike in April 1989 accompanied by the introduction of the consumption tax, JR's fares had been frozen until JR Hokkaido, JR Shikoku, and JR Kyushu increased their fares in January 1996 (Fig. 9), although fares of private railways and consumer prices rose during the same period.
    (3) Productivity : significantly increased
    The productivity of JR has significantly improved. The ratio of personnel expenses to the transport revenue has been low, at a 30% level (Fig. 10).
    (4) Maintenance of discipline at workplaces
    Mainly because the relationship between laborers and managers has been improved, discipline at the workplaces is well maintained, contributing significantly to an improvement in services and business performance.
    (5) Investment : giving priority to investment for improving cars and managerial nature ; the share of investment for increasing transport capacity decreased
    In FY1987, right after the division and privatization of JNR, the amount of capital investment decreased in line with the trend of curving investment just before the reform of the JNR. 'However, the amount of capital investment has been generally on the rise since FY1988. While the share of investment concerning "'cars" and that of " investment concerning improvement of managerial nature to the total investment rose to almost 30% each, the share f,or "developing transport capacity" plummeted.
    (6) Related businesses : the share of related businesses to the total operating revenues steadily expanding
    Both the total revenues from, related, businesses by the JR companies and their share to the total operating revenues are steadily rising. Notably in the case of JR Hokkaido, JR Shikoku, and JR Kyushu, the share of related businesses was 15.3% in FY1995, exceeding the average of all seven JR companies (6.3%) for the same year.
    3. Improvement in services
    (1) Responding to the needs of passengers : speeding-up of trains, easing of congestion, barrier-free facilities, etc.
    In response to the needs of passengers, the JR passenger companies are trying to carry out the following measures :

Enhancing of convenience by means of : speeding-up of trains ; Shin-kansen through operation (e.g. inauguration of Yamagata Mini-Shinkansen line) ; smoother connection between Shinkansen and other limited expresses ; easier access to airports ; and increasing the number of trains
Railway management with close relations with the local community through : increasing of the number of local trains in big cities such as Sapporo, Sendai and Fukuoka to cope with a growing number of commuters ; enhancing the convenience of intercity transportation by increasing the number of limited expresses ; and speeding up of local trains, so as to reduce the time it takes to move to and from the surrounding areas, etc.
Improving of facilities such as cars and stations
Better services for aged and handicapped people by :, installing elevators and escalators, equipping cars with rest rooms for people in wheelchairs, and promoting the introduction of seats for the aged and the handicapped.

    More efforts should be made to ease congestion mainly in the Tokyo metropolitan area because measures to build up transport capacity so far have not led to radical improvement of the situation. In addition, although the share of stations equipped with elevators and escalators is on the rise, it is generally below the level of major private railways.
    (2) Coping with the needs of consignors : expanding the share of containers, etc.
    JR Freight is aiming for better service by not only raising the share of the traffic volume by containers to the total freight traffic volume, but developing new products such as piggy back services. JR Freight is also making efforts to build up transport capacity b,y : reducing the transportation time with the introduction of direct trains by which freight can go directly to their destinations without transshipment ; and increasing the number of trains.
    (3) Maintenance of operational safety ; a decrease in the number of accidents
    The number of accidents, the number of accidents per one million kilometers trains covered, and the number of casualties are on the decrease due to efforts by the JR companies to secure operational safety.
    7. Development of railway technology such as speeding-up of trains
    The JR companies and the Railway Technical Research, Institute are actively developing technology to speed up Shinkansen and other trains on narrow-gauge lines. Expenses of R&D, which had been curbed during the age of JNR, are on the 'increase after the division and privatization.


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