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Social Value Creation Report "Lifeline Infrastructure"

Digitalization of transportation and logistics
Regional revitalization and sustainability by improving access to transportation for all people in Japan.

With the declining birthrate and aging population in Japan, there has been a significant increase in the number of areas where the transportation infrastructure, including public transportation, cannot be fully maintained and operated. This has brought rise to the issue of "transportation limitation," referring to the numbers of people who cannot secure means of transportation necessary in their daily lives. In addition, a decline in demand, shortages of successors of small businesses, shortages of manpower for land transportation companies, and various other factors leading to weakened logistics functionality have led to the decline of local economies, including the withdrawal of retail stores. In order to address these issues, the government, industrial organizations, and companies are working together to make proactive efforts toward revitalizing the transportation and logistics infrastructure by making use of AI (artificial intelligence), IoT (Internet of Things), and other cutting-edge technology.

This report introduces issues and changes in social trends surrounding public transportation and logistics, and provides examples of government and corporate initiatives for handling these issues. In addition, we also introduce NEC's thoughts, initiatives, solutions, and services for supporting the lives of people and economic growth by improving the quality and efficiency of the transportation and logistics infrastructure, a lifeline for society.

Increasing difficulties in maintaining transportation and logistics infrastructure for our lives and industries

The transportation limitation issue grows more serious day by day

Since the aging population in Japan began increasing significantly, the number of people who cannot secure means of transportation necessary in their daily lives has also been on the rise. This issue is called transportation limitation. Increasing numbers of people lack easy access to the public transportation network and experience difficulties in their daily lives when they go shopping or visit the hospital. There are also many elderly people who refuse to give up driving as a means of transportation, leading to an increase in traffic accidents. This is also becoming a social issue.

These issues are particularly serious in provincial areas. The declining population has made it difficult to maintain the transportation infrastructure, and transit deserts are expanding. The reduction in revenue from passenger fares and the decrease in drivers have caused declining public transportation networks of buses and trains. In the Tokyo, Nagoya, and Kyoto-Osaka areas, the reduction in the numbers of bus drivers between the years 2000 and 2016 was only 2%. Compared to these three major metropolitan areas, however, the numbers in other regions of Japan were reduced by as much as 24%.*1 All this, added to the fact that the lengths of defunct railways across Japan is increasing year by year, brings the difficulties in maintaining transportation infrastructures into focus.

  • *1
    "Results of survey based on interim report" by the Study Group on New Mobility Services Brought About by IoT and AI; Ministry of Economy, Trade and Industry

Population outflow and economic reduction in provincial areas due to the decline of the transportation and logistics infrastructure

In regions with declining populations, decline in demand, shortages of successors of small businesses, shortages of manpower in land transportation companies, and various other factors leading to weakened logistics functionality have led to the decline of local economies, including the withdrawal of retail stores. In some cases, the situation has progressed to the point that people cannot easily go shopping for things they need in their daily lives.

The declining birthrate and aging population of Japan are behind these problems. Declining populations lead to declining transportation and logistics infrastructures, which in turn leads to declining regional economies, which then causes further population decline.

To solve this negative spiral, it is necessary to develop solutions based on two perspectives: support for transporting people, and improvement of access to goods. However, it is difficult to guarantee profitability by just implementing different measures for each industry. This approach will not help realize sustainable transportation and logistics infrastructure in the aging society. Therefore, in addition to improving efficiency of the entire transportation infrastructure through the use of the latest digital technologies, it is also urgent to make the overall processes of the logistics infrastructure more efficient.

Public and private sector collaboration toward the next generation of transportation and logistics infrastructure

Social implementation of new mobility services backed by the government

The rapid spread of automobile transportation services from overseas, like Uber and Lyft, has attracted attention in the search for potential measures to solve the transportation limitation issue. However, the introduction of these services is also disrupting previously existing industries. Provoked by overseas efforts, implementation of "new mobility services *2" using cutting-edge AI and IoT technologies has begun in Japan through collaboration of public and private sectors.

One such initiative is the "Project for Promotion of New Mobility Services" run by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). This initiative promotes development of business models for solving regional transportation issues by conducting demonstration experiments of MaaS*3 and other new mobility services. They are planning to select 19 remarkable Pioneering Model Projects which lead trends in Japan, and will provide support for demonstration experiments in the future.

In addition, the Ministry of Economy, Trade and Industry (METI) is sponsoring the Study Group on New Mobility Services Brought About by IoT and AI, at which experts and companies discuss current conditions and future initiatives. In April 2019, they collaborated with MLIT to launch the Smart Mobility Challenge project, an effort meant to support regions working on social implementation of new mobility services.

Movement of economic organizations for the realization of the next generation of logistics

Economic organizations from the private sector are proposing policies concerning the next generation of logistics and mobility. In October 2018, Japan Business Federation announced "Logistics in the Age of Society 5.0." This policy proposes real-time logistics tracking and management by constructing a supply chain integration platform using RFID*4, as well as joint transportation beyond industry boundaries, self-driving/convoy-based truck transport on major roads, and small cargo delivery using self-driving vehicles and drones to reduce man-power needs. In February 2019, the Japan Association of Corporate Executives proposed "Logistics Reform for Promoting Economic Growth and Strengthening Competitiveness," which advocates for the construction of a logistics platform and the unification of standards with the goal of improving efficiency and standardization of logistics by using cutting-edge technology.

In this way, we can see that the public and private sectors are collaborating on initiatives for new mobility services and logistics reform. However, the realization of these initiatives will require even further cooperation and collaboration from government offices, municipalities, companies, and research institutions.

  • *2
    Mobility services: services which provide functionality of automobiles as a means of transportation of people or things.
  • *3
    MaaS: Mobility as a Service. A new concept of mobility, which considers movement via transportation methods other than personal home vehicles to be a certain service and connects them all seamlessly. Since this is a comprehensive service made from multiple forms of transportation, it covers a wider range than mobility services.
  • *4
    RFID: Radio Frequency Identification

Digital transformation is the key to the future of transportation and logistics

Accelerating co-creation of new mobility services

Private corporations are also showing interest in MaaS and next-generation logistics, with a variety of efforts underway.

According to the "Results of Survey Based on Interim Report" published by the Study Group on New Mobility Services Brought About by IoT and AI, METI, public transportation and automobile companies have started various projects.

The East Japan Railway Company established the Mobility Innovation Consortium, which aims to solve various social issues surrounding public transportation through open innovation made possible by collaboration between transportation companies, manufacturers both inside and outside Japan, universities, and research institutions. At the consortium, the working groups are organized by task to perform demonstrations.

The Door to Door Promotion Working Group aims to strengthen the connection between railways and taxis/buses to realize seamless transportation. The Smart City Working Group aims toward new community development that centers on train stations and is based on the community's characteristics. The Robot Application Working Group improves quality of services, makes operations safe and efficient, and uses robots for reforming maintenance operations. Lastly, the Congestion Reduction Working Group aims to transport people safely and comfortably by making congestions at and around stations visible.*5

As for initiatives by automobile companies in Japan, SoftBank and Toyota are working together through their joint venture MONET Technologies Inc. to provide new mobility services. One of their specific initiatives involves the collaboration of 17 municipalities across Japan*6 (as of July 2019) on demonstrations for providing next-generation on-demand mobility services in which people can simply set a location and a date/time to reserve a bus to pick them up.

In March 2019, they established the MONET Consortium*7 as a way of promoting next-generation mobility services to solve social mobility issues and create new value, calling for participation from a wide range of industries and businesses.

NEC is also participating in these consortiums and working toward transformation through digital technology.

In this way, mobility services utilizing technologies such as MaaS, AI, and IoT are progressing from the demonstration phase to the implementation phase in Japan as well. The further promotion of these initiatives will make it possible to solve social issues like transportation limitation and regional economic decline, as well as improve our competitiveness as a company.

  • *5
    Source: East Japan Railway Company press release "Starting demonstrations at the Mobility Innovation Consortium"
  • *6
    Source: MONET Technologies Inc. news release "MONET works with 17 municipalities to provide next-generation on-demand mobility services"
  • *7
    Source: MONET Technologies Inc. news release "MONET Consortium Established"

NEC's initiatives for mobility innovation

Realization of self-driving buses by co-creation

NEC is collaborating with a variety of other companies to solve the issues of the transportation infrastructure through the use of NEC's ICT solutions and cutting-edge AI technologies "NEC the WISE"*8. One part of our initiatives includes participating in the self-driving bus demonstration experiments implemented by the Mobility Innovation Consortium established by the East Japan Railway Company.

In a joint press release on December 7, 2018, the East Japan Railway Company (JR East), Advanced Smart Mobility Co., Aichi Steel Corporation, Kyocera Corporation, SoftBank Corp., Nippon Signal Co., Ltd., and NEC Corporation announced that the Mobility Innovation Consortium would be implementing a self-driving bus test project on JR East BRT*9 lines. On a BRT dedicated road of the Ofunato Line BRT operated by JR East, self-driving bus technology demonstrations, including automated lane-keeping control, speed control, parking assist, and alternating passage tests will be conducted. *10

In these demonstrations, NEC has contributed to the provision of technologies that enable position identification of automobiles that use magnetic markers. Straight lines, curves, slopes, and other road information on design drawings are digitized and formatted as a road map (linear information data)*10-2, and then changed into electronic data for autonomous driving and sent to the bus to support smooth operation. Furthermore, magnetic markers and RFID tags are scanned by the vehicle's reader to determine the vehicle's position and enable operation on an accurate path.

NEC solutions for Connected Cars

In regions with insufficient public transportation, efficiency is an urgent issue. In response to these issues, NEC is collaborating with automobile manufacturers to provide Connected Car Solutions that support efficient operation of public transportation.

For example, we are supporting secure and safe autonomous driving through the use of Surround Sensing for detecting pedestrians and the vehicle's surroundings, and Danger Prediction ECU that avoids dangerous situations ahead of time. Additionally, a communications platform for automobiles, Connected Gateway, connects to the IoT infrastructure to provide mobility services, uses AI to detect known and unknown cyber-attacks and irregularities in the car, and securely and safely performs efficient information transmissions for connected cars.

In addition to providing cutting-edge technologies for the operations of these automobiles, NEC collaborates and co-creates with public transportation companies and automobile manufacturers to improve the convenience and efficiency of public transportation to support the revitalization of regional economies.

  • *8
    NEC the WISE is NEC's cutting-edge AI technologies, which maximizes human intellectual creativity activities.
  • *9
    BRT: Bus Rapid Transit
  • *10
    Source: NEC press release "Self-Driving Bus Test Project on JR East BRT Lines"
  • *10-2
    Source: Kameoka, Amemiya et. al. (2019), Utilization of linear information data to support autonomous driving, Traffic Engineering Vol. 54 No. 1, pp 39-42

Transformation of logistics for sustainable economic growth

Visualization of overall logistics for higher efficiency

In the field of logistics, NEC is working with a variety of companies toward solving issues with ICT solutions that utilize such AI and IoT technologies as NEC the WISE. The word "logistics" encompasses transport, storage, loading, packaging, retail processing, and other functions. In a way, it can be considered the lifeblood which supports economic activities. It is an important social infrastructure that supports people's lives and business activities. In order to promote economic growth, making improvements to logistics functions becomes an urgent issue.

One of the solutions to this issue is advanced utilization of "data." As the flow of logistics data grows faster, it grows more important to learn how to synchronize it with the flow of actual things.

In addition, in order to enrich the lives of people and revitalize industry, it is essential to improve efficiency and quality of the overall logistics process beyond distribution functions, such as planning, implementation and management of the flow of things from production to consumption, and of the storage, services, and related information.

NEC offers a Logistics Platform that enables seamless collaboration between the real world logistics network and the virtual logistics network.

Logistics Platform based on all of NEC's knowledge

The function required for logistics is the combination of production, sales and logistics. It detects changes in the demand and the market, and applies them to production and sales responsively. At the same time, an accurate logistics system is also necessary to deliver the right amount of products at the right time to the right location. To achieve this, it is essential to optimize overall logistics to promote supply chain transformation through labor-saving, efficiency improvement, and automation.

NEC's Logistics Platform includes cutting-edge technologies such as AI, IoT, and image recognition, as well as NEC's supply chain related innovation know-how, which has been cultivated over many years. With our abundance of implementation experience as a base, we realize safe, secure, and labor-friendly operation environments, while also creating a logistics network that connects the departments of production, sales, and logistics through innovation of the logistics workplace.

NEC improves logistics operation efficiency, protects people's lives, and supports the revitalization of regional economies through the Logistics Platform.

Aiming to support people's lives through transportation and logistics infrastructure transformation

Co-creation converging mobility and logistics

The environment surrounding transportation and logistics businesses is changing drastically. Technologies such as autonomous driving and drones are evolving rapidly, and if we place our focus wholly on extending the life of the current infrastructure, we will end up left behind by the new era of innovation. We must have a deeper understanding of challenges faced by people in their everyday lives and companies, and seek new solutions.

In order to solve the increasing issues of mobility limitation and the decline of regional economies, co-creation between numerous businesses and users in both the public and private sectors is essential. To this end, NEC is evolving the Logistics Platform to incorporate mobility services and working on convergence of mobility and logistics. In the real world, the flow of things and people is collected as data via IoT and sensing, that data is visualized and analyzed in a virtual space, and the results are then fed back to the real world. Utilizing this feedback enables optimal resource configuration, and the construction of optimal routes and supply chains. In addition, the entire supply chain can be visualized and optimized so that data from each organization and company in a partnership can be integrated and utilized.

In order to improve transportation and logistics and to realize a sustainable society, NEC collaborates with numerous businesses and users in both the public and private sectors, and to promote discussion for new value creation.

Creating future industry by the power of digital technologies

The strengths of NEC lie in our experience supporting various companies, government offices, municipalities, and others, as well as technologies such as NEC the WISE for analysis, IoT for visualization, and network technologies essential for autonomous driving and car sharing.

We will create future industries through collaboration with various businesses and users, and through combination of cutting-edge technologies. We also contribute to social prosperity by transforming and optimizing the transportation infrastructure, allowing all people to move about freely, and the logistics infrastructure that supports regional economy.

NEC hopes to design new social value that leverages ICT together with customers and to work toward the realization of a "Brighter World," while placing importance on the pursuit of intrinsic value for society and for customers. We welcome your comments and questions concerning the content of this report and initiatives by NEC.

(February 28, 2020)

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