Issues on modal shift of freight from road to rail in Japan: Review of rail track ownership, investment and access charges after the National Railway restructuring

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Abstract

When Japanese National Railways was privatized and separated in 1987, the government established a new freight train operation scheme where rail tracks were owned by six JR Passenger companies, and JR-Freight was allowed access to the JR Passenger company's tracks by paying an access charge under the avoidable cost rule, regulated by the national government. The aim of this scheme was to reduce the track costs for JR-Freight. We found that rail freight infrastructure investment had not been high enough because it was only conducted by JR-Freight, and it only included investment in a few facilities owned by JR-Freight but excluded investment in the rail tracks owned by the JR passenger companies. Additionally, the track access charges, calculated by the avoidable cost rule, could not compensate for the track maintenance costs and would induce an undersupply of rail tracks for rail freight traffic. In conclusion, the track access charges paid from JR-Freight to the JR Passenger companies were too low, causing difficulties in the promotion of a modal shift to rail freight.

Introduction

More than 35 years have passed since the Japanese government officially mentioned the necessity of a modal shift for freight from road to rail, or coastal shipping. In 1981, the main purpose of the modal shift was to limit fuel consumption during the second oil crisis. Since 1981, the purpose of a modal shift has been expanded to deal with global warming and a shortage of truck drivers (MLIT, 2015). However, the government could not easily promote a modal shift from road to rail. Fig. 1 shows the modal split change of inland freight transport in Ton-km from 1955 to 2016. We found that the share of commercial trucks continuously increased, and its share in 2016 was 53%. On the other hand, rail had lost its share of freight transport from 53% in 1955 to only 4% in 1985 because many short-haul cargoes had shifted from rail to commercial trucks and that share of rail freight was still 4% in 2016. Inland shipping kept their large modal share stable at about 40%, as Japan is surrounded by sea.

We review the reasons why the modal shift of freight from road to rail has not moved forward, from the point of view of the freight train supply sides of rail track ownership, investment and access charges after the Japanese National Railways (JNR) restructuring. When JNR was privatized and separated in 1987, the government established a new freight train operation scheme where rail tracks were owned by six JR Passenger companies (JRPs) and the JR-Freight company (JRF) was allowed to use the tracks by paying an access charge under the avoidable cost rule1. There are many studies of the intermodal relationship between road and rail, however, most of them focused not on the supply side but on the demand side of the freight train service (Woodburn (2003), Bontekoning, Macharis, and Trip (2004) and Blauwens, Vandaele, van de Voorde, Vernimmen, and Witloxt (2006)). With reference to national railway restructuring, many studies examined the impacts of vertical separation of track management and train operation, and those of open access, on passengers' and freight shippers' surplus and operators' productivity (Drew (2009), Cantos, Pastor, and Serrano (2010) and Mizutani and Uranishi (2013)). These studies focused on the vertical separation scheme in the EU, however, the vertical separation in Japan is different from that in the EU, since freight service is vertically separated but passenger service is vertically integrated in Japan. The JNR restructuring was implemented prior to EU railways and there are several empirical analyses, however, these studies mainly focused on passenger service but not on freight service (Mizutani and Nakamura (1996), Mizutani and Uranishi (2007)). We try to add some implications in the effects of railway restructuring on modal shift by conducting the case study of the unique vertical separation scheme for rail freight in Japan.

This paper consists of the following four sections. Section 2 shows the national railway restructuring scheme in Japan and the operating results of JRF. Section 3 and 4 review the modal shift measures from road to rail, the investment in rail freight infrastructure and the regulation of track access charges. Finally, we conclude our research in Section 5.

Section snippets

Privatization and separation of JNR and rail track ownership2

JRF was established as a result of the privatization and separation of JNR. JNR had provided not only passenger service but also freight service with a nationwide network of 20,000 km. In 1987, JNR was privatized and separated into six passenger companies by region (JRPs: JR-Hokkaido, East, Central, West, Shikoku and Kyushu) and one freight company (JRF) as shown in Table 2. The JNR restructuring scheme directed that JRF should not be separated by region because many of freight trains were long

Investment in rail freight infrastructure

Rail freight transport flow is concentrated to a trunk line between (A) Tokyo and (F) Fukuoka, through the Tokaido, Sanyo and Kagoshima lines as illustrated in Fig. 5, Fig. 6. For instance, 40% of freight tons are carried on the Tokaido line and 30% are on the Sanyo line. After the JNR restructuring, JRF did not own the rail track infrastructure and had to rent the rail tracks from the JRPs. But JRF owns some facilities along the trunk route and has continuously invested in these facilities in

Track access charge on JRP routes: Avoidable cost

The JR Companies Act was established to regulate the privatized JR companies in 1986, just before the JNR restructuring in 1987. The JR Companies Act implemented the avoidable cost rule for track access charges paid by JRF to the JRPs (Type (1) in Fig. 2). The aim of the avoidable cost rule was to reduce the track infrastructure costs for JRF and to expand the rail freight transport market by offering lower fares to shippers. Actually, the avoidable cost rule had been adopted prior to the JNR

Conclusions

We reviewed the possible reasons why the modal shift of freight from road to rail has not happened. As a result of the JNR restructuring in 1987, the government established a new freight train operation scheme that moved rail track ownership to the six JRPs, and that allowed JRF to use the JRPs tracks by paying an access charge under the avoidable cost rule. The aim of this scheme was to reduce the track costs of JRF, and this was in fact achieved. But this rule displeased the JRPs and induced

Authorship statement

Manuscript title: Issues on Modal Shift of Freight from Road to Rail in Japan: Reviews of Rail Track Ownership, Investment and Access Charges after the National Railway Restructuring.

All persons who meet authorship criteria are listed as authors, and all authors certify that they have participated sufficiently in the work to take public responsibility for the content, including participation in the concept, design, analysis, writing, or revision of the manuscript. Furthermore, each author

Acknowledgements

This work was financially supported by JSPS KAKENHI Grant Number 19H01538 and Research fund of International Maritime Research Center, Kobe University.

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