Ichiro Suzuki
In April, 2024, ride share services have kicked off in Japan at long last, more than ten years after Uber and Lyft cars started roaming New York, San Francisco, London and other major cities around the world and similar services sprang up in Chinese and other Asian cities. Within the ruling Liberal Democratic Party, the pro-deregulation camp pushed hard for opening ride share service as one of the measures to drive economic growth. On the other hand, there is no shortage of politicians who take pains to defend the ancient regime’s vested interests, raising safety concerns.
Ride share is legal in Japan finally, but here’s a catch. Uber operates under the auspices of taxi companies, in order to argument the demand that the existing operators find it hard to fill. The scheme is designed so that Uber doesn’t steal business from authorized taxi companies. On the surface, this might make sense. The taxi industry, however, has been suffering from chronic shortage of drivers and there are not enough taxis roaming in the city to meet customers’ demand. This is the case in large cities, and experiences in the rural area are much worse. Taxis simply don’t show up in response to a call, it is said.
After all Japan is a country where working age population has been falling already for a generation, and population decline has been more acutely felt in the rural area. Worse, COVID-19 drove a number of drivers out of taxi jobs amid collapsed demand, which proved to be temporary. After the pandemic was over, the industry is struggling to find new workers to fill vacancy, as were the cases in service industries in general in Japan and elsewhere.
Worse, taxi companies seem unwilling to open drivers’ jobs to foreigners. A driver’s license issued in foreign countries can be switched into a license in Japan after exams that are offered in 20 languages. So it can be done, but taxi companies are reluctant to let their cars be driven by men (or women) who not only look differently but also speak only inadequate Japanese. Some customers would almost certainly complain vocally about drivers who don’t look and speak like them. This is a stark difference from taxis in New York or any other large city in the U.S., where driving taxi is often the first job an immigrant land upon their arrival in the U.S., often with a very basic English speaking capability. Perhaps, taxi drivers in Tokyo are more reliable than those in NYC but they are nowhere near the professionalism offered by London taxi drivers, to whom licenses are issued only after rigorous exams.
In recent years, there is no shortage of news on car accidents by aged drivers, many of whom have mistakenly pressed the accelerator in stead of the brake pedal. There are many other incidents caused by aged drivers’ declining cognitive ability. Authorities are often encouraging aged drivers to give up their driver’s license though few people respond to such a call. One simply can’t live in a rural area without a car. That’s understandable but can the same thing be said about taxi drivers? Average age of drivers is approaching 60, along with the population that is leading the world in aging. For every 45 years old driver, there is a 75 years old man, roughly speaking. Why should they be driving a car carrying passengers when their cognitive ability may be falling. Safety concern is a main reason that the taxi industry has been opposing ride-share. (It has been always a reason to oppose deregulation from the end of those who have been protected by existing regulation.) On the other hand, Uber must be fielding a considerably younger legion of drivers than taxis, potentially offering safer rides from this perspective. Ride share operators must have accumulated vast amount of data on safety, and what can be expected in Japan probably would not deviate too much from what had already happened in the rest of the world. The number of accidents does not fall to zero and authorities and the public would have to accept this at one point.
While authorities are still unable to genuinely allow ride share services to operate in Japan, footsteps of fully autonomous taxi service are already heard. The U.S. and China have been pushing hard on driverless robotaxi. In the U,S, Google’s Waymo and GM’s Cruise are offering its service in San Francisco and are expanding it to other cities. While Uber has dropped its own robotaxi project, the company has announced that Waymo and Cruise cars can be hailed through Uber app as a step forward for driverless taxi, even if not all passengers are comfortable with riding a driverless taxi car. There is no reason that robotaxi isn’t allowed one day on Japanese roads, but resistance from the ancient regime appears especially strong compared to past deregulation episodes. While Japan is hesitating, the rest of the world could leave Japan further behind.
About the author: Mr. Suzuki is a retired banker based in Tokyo, Japan.
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