### 1. Trends and measures of railway-related industries

## (1) Railway industry

## 1 ) Trends and measures of the railway industry

The number of railway passengers in FY 2008 was affected by the unfavorable business environment due to sluggish economy, and the aging population and the low birth rate. However, it has increased slightly and continuously from last year. For the Japan Railway (JR), the number of passengers on Shinkansen lines and old railway lines is decreasing. On the other hand, for private railways, the number of passengers is increasing generally due to the increase in the number of student/worker passengers and non-regular passengers, especially in the Kanto area.

Regarding the railway freight transportation quantity of FY 2008, growth in the quantity of container freight transportation in the $ 1^{st} $ half was comparatively smooth, although there were transportation incidents because of the local downpour during August and September. However, affected by the business recession in the $ 2^{nd} $ half, the total transportation quantity decreased. For freight transportation by vehicle, there was a decrease in the demand for petroleum transportation accompanied by the development of fuel switching.

Every railway enterprise is working to ensure the provision of a comfortable and secure railway environment. For example, most of the railway enterprises in urban districts have been establishing the steady introduction of female-friendly carriages. Moreover, beginning with the introduction of “Suica” by JR East Japan in 2001, the introduction and cross-application of the IC Card ticket are being carried out in every region and expanded to the whole country, such as the “SAPICA” of Sapporo City Transportation Bureau, the “Desuka” of Tosa Electric Railway, the “SUGOCA” of JR Kyushu and the “Hayakaken” of the Fukuoka City Transportation Bureau, established in 2009. In the future, the introduction and cross application of the IC Card ticket are expected and are being continuously planned for, for further enhancement of user convenience.

## 2 ) Measures for total privatization of Japan Railway

For more than 22 years after the Japan Railway (JR) companies broke off from the national railway due to privatization in April 1987, each region has continuously endeavored to run their business with their own particular features. Recently, the East Japan Railway, Central Japan Railway and West Japan Railway completed the disposal of the shareholdings of railway construction and transportation facility development support companies and were completely privatized. However, the measures for running business management with the aim of reforming national railways have to be steadily applied and for some time, in accordance with the progress of the nation railway reform.

Furthermore, the Hokkaido Railway, Shikoku Railway, Kyushu Railway and Japan Freight Railway are playing important roles in ensuring regional transport convenience and promoting railway freight transportation with less of a negative impact on the environment. Therefore, the government is continuously working to secure and enhance the management foundation by extending support measures for reducing the fixed asset tax, etc. Moreover, measures for increasing revenue and reducing costs are being carried out.

## (2) Railway carriage industry

The sales of railway carriages fluctuate with the ordering circumstances of the year. However, in recent years, it has been consistently moving sideways (in FY 2008, the number of new carriages was 2,232 and the gross sales was 208.9 billion yen).

In FY 2008, there was a decreasing trend for the domestic market (79% of FY 2007). Additionally, for overseas export, there was an increasing trend for Asia but a decreasing trend for Europe. As a whole, there was a decreasing trend (94% of FY 2007).

Railway carriage manufacturers are cooperating with railway companies to develop carriages that fulfill the various social needs of enhancements in speed, security and comfort as well as a low-noise and barrier-free environment. Moreover, cost reduction is being carried out by working out laborsaving on design work and promotion of standard products with reference to the “Guidelines for Commuting and Suburban Train Standard Specifications” that standardize the basic design and parts. Furthermore, referencing the recent standard specifications of urban carriages, the “STRASYA” which illustrates overseas urban railway system standards has been drawn up and will be utilized in the export of railway systems in the near future.