Dialogue with the Chief Lumada Business Officer
2023-06-28
The affiliations and positions of persons in this article are current as of the date of this interview (February 2023).
People have high expectations of trains as a green, ecofriendly mode of transportation. However, it is not easy to both pursue comfort and promote efficiency and green mobility. Here, Hiroaki Koiwa, Chief Lumada Business Officer of the Railways System Business Unit of Hitachi, Ltd. (hereinafter Hitachi), talks about major changes to business trends brought about by city lockdowns across Europe in response to COVID‑19. In a conversation with Lumada Innovation Hub Senior Principal Yoshimitsu Kaji, Koiwa reveals Hitachi’s vision for mobility in the context of the future of urban transit.
―What is Hitachi doing to promote the digital transformation (DX) and green transformation (GX) of mobility?
Koiwa: It’s said that Japan has some of the busiest train stations in the world and so we’ve also made the most progress in DX concerning operational precision and efficiency. But it seems like we’re behind when we look at the progress of DX within society as a whole. That’s because safety is of the highest priority when it comes to railways. In particular, in terms of maintaining rolling stock and equipment, there are many situations where, even if something is technologically possible, we have to proceed carefully and minimize risks.
Kaji: How does that compare to the aviation industry?
Koiwa: In the areas of device status monitoring and preventive maintenance, the aviation industry is a step ahead of us. That being said, the highest priority for the aviation industry is also safety and, in fact, they have to hedge risks in a completely different dimension that those of us in the railway industry don’t have to deal with. So, while we are in a sense rivals, we still cooperate when it comes to safety, exchanging and sharing our knowledge.
Kaji: But railways are ahead in terms of GX, right?
Koiwa: Right. Our CO2 emissions per unit volume transported is about 20% that of privately owned cars and other means of transportation*1—a huge difference. In Europe, where I’d been relocated, a lot of people choose trains over planes, because trains have a smaller environmental footprint. Another reason is that, because many countries are connected by land, there’s not too much of a difference in travel times between trains and planes. A lot of people are of the mindset that they need to make choices not simply based on immediate convenience, but rather taking into account future generations. From what I can see, there’s quite a strong commitment to going green.
Kaji: Can you tell us about your GX strategy?
Koiwa: As announced at the recently held Hitachi Social Innovation Forum, Hitachi’s MaaS*2 is at the heart of our GX strategy. The development of MaaS is the foundation that allows us to support the GX of society as a whole. Going forward, I think we can take great strides in GX with the cooperation of all different stakeholders related to mobility.
Hitachi’s strategy for green mobility
―Based on Hitachi’s policy to promote MaaS, various initiatives have been deployed in Genoa and Trento in Italy, including a handsfree ticketing service and a digital transportation network.
Koiwa: Promotion started quite a while ago, but even in Europe where most people are eco‑conscious, the main challenge was, as we’d expected, improving the transport capacity. Thus, proactive endorsement was a bit hard to come by. The turning point was the lockdown of cities due to COVID‑19. Then the situation changed completely.
Kaji: Here in Japan, we didn’t have a complete lockdown.
Koiwa: I relocated to Genoa in October of 2019 and, by March of the next year, we were not allowed to leave our homes except to buy groceries and to undergo medical checkups or treatment. We could hear sirens all day long and it felt like we were constantly in danger. At the beginning of May, we were finally permitted to move about on the condition that we didn’t use public transportation, and from there, restrictions gradually lifted.
When railway operations first resumed, a limit was set on the number of passengers allowed on board, but Genoa’s subway system couldn’t adapt to this and the troubled railway operator turned to us for help. Even though we didn’t know if there was a business to be made from it, we really wanted to be of use and put all our effort into helping.
By the way, when we actually got started, besides counting the number of passengers, other client needs began to emerge, such as understanding the data trends for each season or day of the week and identifying things that passengers wanted in order to make their trips more comfortable. It took time for the number of passengers to return to pre‑pandemic numbers and, to keep costs proportionate to their proceeds, the client needed data from which they could understand demand.
Kaji: So that’s where the opportunity for a new business arose.
Koiwa: What we came up with at the time was to provide services in the form of options to choose from. After going through the pandemic, the circumstances of the railway operator—who had previously been preoccupied with increasing its transport capacity—had changed, as had the minds of passengers. After being subject to travel restrictions, people were rediscovering the joys of traveling and they began wanting something safer, smoother, and more comfortable. We wanted to create a business that responded to the needs of both the railway operator and the community by offering a number of options. From the perspective of the operator, we would not only improve transport capacity, but also support their efforts to increase the number of users. I think, one of Hitachi’s advantages is being able to pursue both of these at the same time.
―How did understanding trends in demand lead to building a handsfree system?
Koiwa: Visualizing demand was much harder than we thought it would be, but we started by creating data on people passing through ticket gates and the degree of congestion in station concourses. After that, we had to tackle the problem of ticket gates. Although ticket gates had been installed in Genoa subway stations, they weren’t always used. People used paper tickets or tickets purchased through apps, which we couldn’t track. Our idea was not to change the gates, but rather the ticketing system itself. The result of implementing this idea was a handsfree system that uses smartphones. How the system works is that, each time a passenger passes a checkpoint, such as a public transportation vehicle, train station, or bus stop, their location data is obtained via Bluetooth. Based on that data, their travel itinerary is confirmed and they are later charged the amount they used.
Kaji: You’re talking about the app GoGoGe, right? Why did you decide not to use ticket gates?
Koiwa: After some investigation, we realized that a handsfree system would be significantly cheaper in terms of both initial costs as well as maintenance costs. The main initial investment consisted only of installing small Bluetooth transmitters or beacons at each checkpoint. The actual mechanism itself had already been developed and was in use in places such as airports, to guide people to check‑in counters. In our case, we needed to use short‑range transmission to verify that a customer was unmistakably at a certain location, so we developed technology that would both improve accuracy and ensure quality.
Kaji: Ultimately, the solution was adopted by all public transportation services in the city, including buses and cable cars, and a digital transportation network was thus created.
Koiwa: That was in response to a request to understand demand for public transportation services other than the subway. As a result, the convenience to users increased. We’re also looking into combining this data with data on CO2 emissions, which we think will be useful for GX.
Kaji: The solution went into operation in July of 2022. What was the reaction of users?
Koiwa: They praised the convenience of being able to move around with their smartphones in their pockets. Also, some people previously avoided using public transportation in new places because they didn’t know how to buy tickets there. However, now that everything can be done on their smartphones, we can expect an increase in people using public transportation.
Kaji: So, we can look forward to even more results in the future.
Koiwa: Our accomplishments in Genoa were even featured in a report by the BBC*3 and people from other cities came to observe and learn about our solution. The mayor thanked us, saying, “Genoa’s reputation has improved. We were able to come this far because of the difficulties we faced.” It made me really happy.
People say that the travel restrictions imposed during the COVID‑19 pandemic gave them the opportunity to rediscover their neighborhood, including local shops and other fun spots. We asked the community what they needed or wanted, thought about what was possible, and then provided services as options. Co‑creation projects like this one form the philosophy behind Lumada, and I hope we can expand the Lumada Intelligent Mobility Management project.
―Are there any activities underway to expand to other cities?
Koiwa: Following our success in Genoa, we began to expand the business to Trento at the end of November 2022. In Trento, there’s a huge difference in the number of users between the tourist seasons of summer and winter and the off‑peak seasons of spring and fall. Actually, even before the project in Genoa, I’d wanted to test our technology in a city like this.
After our proof of concept in Genoa gained notice, we were approached again by transportation operators in Trento, which made me think that our technology could be used to promote MaaS. Currently, we’re looking into promoting the solution in various cities around the world.
Kaji: What about in Japan? For example, Kamakura seems like a tourist destination of the right size.
Koiwa: That would work. There is more inbound travel than travel within the region, and a noticeable spike in the number of public transportation users on weekends. I think areas like this could benefit greatly from our solution.
Kaji: The solution could even turn the community into a smart city.
Koiwa: In Japan, we don’t see many initiatives to create ecosystems through this kind of approach, so I’d definitely like to give it a try. In such a case, the revitalization of the local economy would be key. When people use credit cards, not all of that money reaches the region in question, but it would with a region‑specific app. Attracting more fans of the region and increasing the influx of travelers would facilitate regional revitalization and community growth.
Kaji: That matches the Japanese government’s vision for a Digital Garden City Nation*4, which is being promoted by various agencies such as the Cabinet Secretariat and the Digital Agency. Starting from social issues, Hitachi hopes to play its role through the Lumada Innovation Hub by collaborating with diverse stakeholders, including not only big corporations but also startups, local governments, and even the central governments of other countries. Looking beyond the government’s vision for a Digital Garden City Nation and setting our sights on people’s wellbeing, I hope we can contribute to creating something that we can leave to future generations.
In 2022, in a bid to accelerate this, we revised our business structure, integrating the previously separate energy and mobility sectors into a single sector for green energy and mobility—a really groundbreaking and historic move, in my opinion.
Koiwa: Right. Businesses that only had their eyes on meters and tickets can now, thanks to digitalization, see the people behind those meters and tickets. I hope we can work together to think about how to grow human‑centered businesses. Since we are expanding globally, Hitachi’s acquisition of ABB’s power grid business—a precursor to the integration—came as welcome news.
Kaji: The strategy of strengthening DX through M&As has already been in place in Europe and America. To carry out social innovation, we must be ready and willing to take bold, proactive measures.
