The Impact of Privatization on Railways: A Comparison Between Japan and Britain

One of the biggest questions in the transportation industry is whether the privatization of rail companies can lead to better service and efficiency. A fascinating case study comes from the contrasting outcomes of rail privatization in Japan and the United Kingdom. While Japan’s rail privatization has led to some of the world’s best trains, the UK’s privatization has resulted in more complicated and mixed results.

Factors of Privatization

The biggest two factors between Japan and the UK from an outsider’s perspective are the extent of privatization and which assets were given to relevant parties. In Japan, Japan Railways (JR) was simply split into several private regional companies, each granted full control over everything the railroad owned in their respective jurisdictions at the time. In contrast, British Railways was broken into three broad groups based on asset control: infrastructure, rolling stock, and operations.

Impacts of Privatization

Japan: By owning everything from the land the railroad runs through to the trains themselves, each JR company could tailor their services without compromising their competitiveness. This allowed for rapid improvements and innovations. Conversely, a railway operator in the UK must coordinate with Network Rail for track improvements or petition their rolling stock company for new trains. This complex process slows down the ability to improve major metrics needed for effective and competent transport.

Car Industry Parallel

There is a parallel between the railroad and car industries. Japanese car companies ended up building the most reliable cars in the world, while British car companies went bankrupt because of their poor reliability. This might indicate a question of mindset and process management. Japan is renowned for good process management and improving things, which they learned from American Deming post-war.

Government Involvement

In the UK, the government still owns the railway but offers franchises for operation. One of the biggest weaknesses has always been Network Rail, the entity that runs the railway network but not the trains. This highlights the importance of clear management in the railroad system.

Conclusion

The results of privatization in Japan and the UK demonstrate the importance of a well-structured and managed approach to rail operations. While Japan’s privatization model allowed for tailored and efficient service, the UK’s model, though initially fragmented, still shows the need for a coherent strategy to improve efficiency and reliability.