Concentrating everything on the Tokaido Shinkansen (2020)

The strength — and the fragility — of betting on a single line

JR Central’s choice was a concentration so thoroughgoing as to be exceptional for a railway. While many rail operators widened their income by developing the land along their lines and moving into retail, JR Central gathered its rolling stock, its timetables and its facilities onto an irreplaceable line joining the three great metropolitan regions, and kept polishing that single line through in-house development of the Nozomi and relentless gains in speed and frequency. Its refusal to diversify was not managerial complacency but the clear expression of an intent to mass its resources on its strongest asset. From President Hiroshi Suda’s words in 1992 to the “twelve-Nozomi-an-hour timetable” of 2020, this selection and concentration, held to for decades, is what underwrote its dominance of the Tokyo–Osaka market — the largest transport market in Japan.

But the strength of betting on a single line is inseparable from its fragility. Let demand vanish, and heavy fixed costs feed straight through to worsening results. In fact, when the pandemic arrived the following year, in 2020, use of the Tokaido Shinkansen collapsed and JR Central booked the first net loss of its existence. The high profits born of concentrating on one line, and the fragility exposed when demand wavers, are simply the two faces of the same structure. And the company is now pouring the profits that same Tokaido Shinkansen generates into the next single line — the wholly self-funded Linear Chuo Shinkansen. How a management that keeps staking the company’s fate on one line will sustain it over the coming decades is a question that looks set to be asked again and again.