TOKYO -- As emerging countries race to build their own transit systems, Japanese rail companies are trying to land orders by helping those nations adopt Japan's know-how on its world-famous train punctuality.
A Japanese consortium made up of Mitsui & Co., West Japan Railway and the public-private fund Join spent 20 billion yen ($188 million) to purchase a roughly 90% stake in SuperVia, a Brazilian railway operator. The goal is to turn around its troubled operation by applying their experience running trains back home.
As rolling stock manufacturers in China and Europe leverage their scale to snap up rail car orders, Japanese rivals are focusing on their unique strength in ensuring punctuality even under an extremely tight train schedule.
SuperVia, which serves the state of Rio de Janeiro, is notorious for significant service delays. The trains arrive so late that many passengers have migrated to buses. Daily ridership has slumped to roughly 600,000 people from the early 2000s peak of 1 million.
"We will introduce our know-how and stabilize business," said Yasushi Shimizu, Mitsui's general manager of the transportation project division.
The Japanese consortium grew out of a 24% stake in SuperVia that was first acquired indirectly by Mitsui, a major trading house, in 2014. By changing the ownership structure to a direct majority stake, the companies can more easily institute reforms to the five-line, 270 km system. The deal represents the first time a Japanese concern took a controlling stake in an overseas rail company, according to Mitsui.
First, the partners will invest about 3 billion yen a year installing a state-of-the-art signal system. The number of signal points will be expanded to better monitor the location of trains and to better maintain arrival times.
This will allow the operator to increase the number of arrivals per hour by shortening the distance between trains. Revamped maintenance of rail lines and updated electrical equipment will decrease the number of service suspensions as well.
The global rail market is expected to enlarge by 2.7% a year through 2023, according to the Association of the European Rail Industry, or Unife. The growth is supported by population growth in the developing world as well as a push for more public transportation as a way to combat climate change.
Home to 30% of the world's annual rail riders, Japan is considered the train capital of the world. Thanks to the expertise of rail operators, trains arrive every other minute during Tokyo's rush hour. Its know-how is particularly useful to developing countries suffering from congestion and pollution.
The Philippines recognized the value of Japanese quality after Manila's rapid transit system ran into trouble.
The maintenance contract for the Philippine capital's Line 3 rail network was initially awarded to Japan's Sumitomo Corp. and Mitsubishi Heavy Industries in the 1990s. But for cost-cutting purposes, the Philippine government later switched to a different set of contractors. But the system soon became plagued by repeated derailments and other problems, and the government decided to reverse course, granting a 35 billion-yen maintenance contract back to Sumitomo and Mitsubishi Heavy last November.
Tokyo Metro is helping overseas companies train personnel in hopes to landing orders. The company in July invited 13 people from the Philippines' Department of Transportation to start training in the Japanese capital. The company hopes such programs will lead to operating contracts overseas.
The Philippine government is scheduled to set up a rail training center during the current fiscal year. About 15,000 new personnel will be needed over the next 10 years to support a number of rail projects planned, including the 25-km subway to start service in the greater Manila area in 2025.
Tokyo Metro will assist in the training of conductors and station staff by creating teaching curricula. To maintain a tight train schedule, station personnel will need to learn how to direct passengers into and out of carriages within a defined amount of time. Only a few Filipinos are currently capable of that task, said a Philippine DOT official who participated in the training in Tokyo.
Japan's export of train technology kicked off with the order for a bullet train in Taiwan, which began service in 2007. Hitachi won orders in the U.K. for high speed train cars, signal systems, and maintenance services.
But Japanese companies face fierce competition from China. In 2015, two state-owned enterprises merged to form CRRC, the world's largest rolling stock manufacturer. German's Siemens and France's Alstom, the second and third largest peer respectively, announced in 2017 plans to consolidate their businesses, though the deal eventually went nowhere.
Thanks to their scale, overseas contenders have elevated their cost competitiveness. Japanese rail companies are now forced to differentiate themselves through train service systems and similar technology.
But such expertise may not be enough to remain competitive. Among European rail companies, it is common for a single company to oversee rolling stock production and rail maintenance, as well as the development of accompanying rail infrastructure. But Hitachi is perhaps the only Japanese rival capable of that integration.