On-demand bus services in Yamagata

Back in 2015, I spent about two weeks travelling from Morioka in the North of Japan via the slow and picturesque local train network back down to Tokyo. After experiencing the seafood and beef delicacies of Sendai, I wove my way through the mountainous interior on the Flower Nagai railway line before branching west towards the Sea of Japan near the town of Kawanishi. Without knowing it, I was passing by one of the longest-running on-demand mobility bus service program in Japan.

For this town with a population just shy of 19,000 and 30% of the local population classed as elderly, running the local bus network has been a difficult operation with just one bus line (the Chomin bus line) generating losses of over 1% of the town’s yearly revenue. Another bus line, the Higashisawa bus line was closed in 2006 due to ongoing losses considered irrecuperable. Earlier that year, the Ministry of Land and Transport kickstarted a scheme to revitalize local mobility by revamping the local bus network from scratch. The idea: using local taxi company personnel downtime (ie when taxis are idling at the depot) to ferry people on-demand instead of buses on a rigid schedule yet at a similar price (one ride = $5). According to a 2009 analysis by the Japan Transport Research Institute, the system allowed to slash the losses to half.

Two 5-passenger buses and one 10-passenger bus (and sometimes taxis) were hired out, and registered local citizens would call into the taxi call center (from 8.30am to 4pm) to make a reservation. The on-demand service would recruit idle drivers who would head out and pick up multiple citizens, and take them on to their respective destinations. Surprisingly the three taxi companies each needed to pay a $1,000 license to operate, and vehicle hire prices were rather steep ($110-130/day = $17/hour!). The cost of the operator was only $4.6/hour which is below most regular personnel rates. So in this case, (1) operator costs = $4.6/h x 7.5h/d x 20d of operation x 3 vehicles = $2,070/mth, (2) vehicle costs = $120 x 20d of operation x 3 vehicles = $7,200/mth. Actual costs of the program over the first 9mths of the service was $9,000/mth, while revenue was only $2,500/mth, meaning our back of the envelope cost assumptions are overall correct.

So it is no surprise this on-demand system is more of a cost improvement than a solution to the problem facing Kawanishi. While the cost of the buses etc could be halved, it’s going to be difficult to reduce hiring prices to zero. In the end, if $5 is the only price that can be realistically paid by families/elderly in the community for a ride, then it means that both vehicle and operator costs essentially need to come down 72%, or service is reduced to 5 days/month to meet the payable amount, or both. A recent pamphlet online for the service limits the time when the service can be used to nine hourly slots any day of the week, but I wonder if this is really economically feasible.

To reduce vehicle hire cost to zero there may need to be a mandatory regulation of personal and commercial vehicles to be used during office hours (or when owner is at the office/vehicle is idling) as automated pickup vehicles, where those needing it would punch in their request, wait for the vehicle to arrive, jump in and be driven to their destination. Considering personal vehicles are idle 92% of the time at a minimum, such regulation would help remove the vehicle hiring cost component and automation the remaining operator component, excepting fuel & repairs/insurance which would be covered by the $5 fee. It would be guaranteed by the local authority to remove costs regarding operating licenses that would make it more expensive for the user (creating in effect an indirect tax). Taxis would still be used for life-threatening/critical needs such as acute hospital treatment, food etc, but the town hall supported by data analytics would help citizens plan forward their trips as much as possible to keep their prices down.

Even assuming full automation, it is a difficult balance between offering mobility as a right to all citizens (that should be supported in cases of economic losses for the most needy via taxation prioritization) and recognizing that a service no matter how efficient will always generate a cost that needs to be fulfilled by the user. Should total cost of mobility be taken into account and regulated as such? In other words, reducing costs of not just the transportation part but hospital cost, fuel cost, food cost etc, to spread the burden of the support more evenly across the mobility chain from the point of view of the mobility consumer? Maybe disposable income could be kept at a fixed floor, with services free beyond a certain point (eg OAP coupons and free bus passes), and a fixed percentage above the floor (to ensure that non-transportation costs don’t eat into the citizen’s disposable income = economic breathing space). With so much money used in shoring up the banking system since the economic crash of 2008, the governments of the world may find it politically expedient to their regional constituents to shore up their rural transportation system before it deteriorates completely in the next decade stranding voters in their own homes.

Another alternative to mandatory regulation would be to invest in a fleet of first-hand and second-hand refurbished automated pickup vehicles that would serve that purpose, with basic costs covered by users and supported by technology. The service should not be restricted only to the elderly/rural areas, but also to economically active parents in both rural and city areas who need to eg drop off their kids to daycare/bring them back home safely. It keeps them in work, their kids active & safe, and the system humming. But it would mean revamping the entire way we look at private vehicles and public transportation. Not as a choice for personal mobility vs others, but rather as a single safety net for the entire community across all their needs.