Japanese Rail company eyes Exports to cover Maglev Costs

Japan MagLev TrainTokyo: When Central Japan Railway’s magnetically levitated train set a world speed record on Tuesday by zipping along an experimental track at 603kph, the project’s chief promoter was in Dallas, Texas.

Yoshiyuki Kasai, Chairman Emeritus of the train service operator, generally known as JR Tokai, was in the U.S. city trying to sell the company’s Shinkansen high-speed train technology to local government officials and investors.

Exporting shinkansen technology is crucial for the company’s commercial outlook, as its planned maglev train service, to be launched in 2027, entails tremendous investment.

Four decades in the making

The moment came at 10:48 a.m. on Tuesday. Only four minutes after it began acceleration on a test track in Yamanashi Prefecture, the L0-series maglev train reached a speed of 600kph. Kept floating above the track by powerful magnets, the train traveled along the guideway at a speed above that mark for 10.8 seconds, covering about 1.8 km.

Some 50 JR Tokai employees were on board, including Yasukazu Endo, the head of JR Tokai’s Yamanashi maglev test line experiment center.

For the nearly four decades since he joined Japanese National Railways, the forerunner of the now privatized Japan Railway group, Endo has been involved uninterruptedly in the maglev project as a design engineer.

“It is a much more comfortable ride now,” Endo said with evident satisfaction. “The train seems to be more stable when traveling at speeds over 500kph.”

When it goes into service in 2027, the maglev train is expected to travel at a maximum speed of 505kph, whisking passengers between Tokyo and Nagoya in 40 minutes.

MagLevConstruction of the Linear Chuo Shinkansen Line, which will connect Shinagawa, in Tokyo, with the central Japanese business center of Nagoya, is slated to start this year or early next.

Finding the funding

While the company was celebrating its speed record, Kasai was looking for buyers. In Dallas, he visited local government officials and investors to convince them of the benefits of building a traditional shinkansen train line between the city and Houston.

JR Tokai is also lobbying for the construction of a maglev train line between Washington and Baltimore.

Kasai officially retired from the company last year and is now an chairman emeritus. He retained his role as the company’s representative because, he said, the U.S. project will not progress smoothly unless he remains in charge.

The good news for JR Tokai is that Kasai has won the backing of several U.S. political heavyweights.

Kasai plans to travel to Washington in time for Prime Minister Shinzo Abe’s meeting with U.S. President Barack Obama on April 28.

Kasai is one of Abe’s advisers and confidants. He has been promoting the prime minister’s policy of expanding Japan’s infrastructure technology exports, a key component of the prime minister’s growth strategy.

Kasai is eager for Abe to pitch JR Tokai’s state-of-the-art train technology during his meeting with Obama.

Crushing costs

JR Tokai will spend 9 trillion yen ($74.7 billion) to complete the maglev line, which will be extended to Osaka by 2045.

That amount is equivalent to 20 years of the company’s group operating profit, even with its Tokaido Shinkansen line between Tokyo and Osaka continuing to generate hefty returns each year.

Exporting its shinkansen technology would allow the company to diversify its revenue sources and cover costs for building and operating the maglev line.

In an attempt to lure American buyers, JR Tokai has told U.S. policymakers that it won’t demand license fees for the technology. Abe has also pledged massive Japanese financial support for the construction of a maglev line in the U.S.

Last autumn, a senior JR Tokai executive said the company is making “steady progrress” toward exporting its technology to the U.S.

In December, however, Kasai cautioned against any unwarranted optimism. “Since President Obama’s support [for the high-speed train project] is not necessarily very strong, we need tenacious, long-term sales efforts,” he said in a speech in Tokyo. “We may make major progress within a couple of years.”

The U.S. political schedule is complicating Kasai’s job. A new president will be elected in autumn next year and come to White House in early 2017.

There are also some sticky issues that could strain Japan’s relations with the U.S., including those concerning trade and U.S. military bases.

At the same time, JR Tokai is facing stiff competition from such formidable foreign rivals as Bombardier of Canada, Alstom of France and Siemens of Germany in the global high-speed train market.

The 74-year-old Kasai is working against the clock in his maglev train sales promotion drive. Despite its technological excellence, the maglev train will continue to be a hard sell for the company.