Amazon Leverages Yamato Contract Termination as Opportunity to Build Independent Distribution Network

Satoshi Fujita, a consultant for SMEs. Based on my experience in providing broad-ranging management support, from large companies to SMEs, I will delve into the "unknown aspects of well-known companies."

The 2024 problem has triggered a major transformation in the logistics industry. Japan Post, the largest logistics company in Japan, has agreed to collaborate with Seino Holdings, the fourth-largest, on long-distance transportation. Yamato Holdings has entrusted some of its operations to Japan Post and terminated contracts with a large number of individual businesses. Amazon Japan is gradually proceeding with its contracts with individual businesses. Amazon Japan is independently building a vast logistics network.

Japan's unique situation of "lower loading efficiency" compared to Europe

The 2024 problem in the logistics industry simply means a reduction in truck drivers' working hours. From April 1st, overtime work has been capped at 960 hours annually. This was introduced to large companies as part of the "Work Style Reform" initiative, starting on April 1, 2019. However, due to the prevalence of long working hours and severe labor shortages in certain industries such as logistics, construction, and healthcare, a grace period was granted. That grace period has now ended.

According to the Japanese "Study Group on Realizing Sustainable Logistics," the reduction in transport capacity due to the overtime work cap is estimated to reach 14.2% in 2024 and 34.1% in 2030. This assumes no measures are taken to address the transport system. Japan has a complex terrain, including islands and difficult-to-access areas, and a unique characteristic of various companies, including SMEs, operating their own logistics networks.

According to the Ministry of Economy, Trade and Industry, Japan's truck loading efficiency is 39%. Europe's is 57% (Survey on the Competitive Environment and Labor Environment in the Logistics Market). Japan's logistics are complex and inefficient. The partnership between Japan Post and Seino stemmed from this background. It is an effort to improve the efficiency of long-distance transportation.

Japan Post utilizes its logistics infrastructure to the maximum, but...

Japan Post and Seino utilize nearby hubs to consolidate and exchange cargo. This is expected to improve efficiency, particularly during weekends when loading rates tend to be low. Pilot operations have achieved some success, such as reducing the number of trucks without extending delivery times.

Japan Post Group reached a basic agreement with Yamato Holdings in June 2023. This involves gradually phasing out Yamato's "Nekopos" (Cat Postal) service and entrusting the operations to Japan Post. The newly created "Nekopos Mail Packet" entails Yamato accepting packages from customers and delivering them to designated handover locations, where Japan Post takes over the delivery.

Japan Post faces the major challenge of being unable to easily reduce the number of post offices nationwide. Former president Hiroya Masuda sparked considerable debate by mentioning the consolidation of post offices. Reducing the number of post offices, which serve as logistics and financial infrastructure for local residents, has faced opposition and concerns from local assembly members and municipalities since before its listing. Therefore, Japan Post must strive to make the most of its established network. Through its collaboration with Yamato, Japan Post's Mail Packet handling volume in FY2023 reached 1 billion units, a 3.0% increase year-on-year. Although handling volume had been declining, it recovered to the level of FY2021, which benefited from the online shopping boom.

Japan Post is hoping to enhance the efficiency of long-distance transport by leveraging its extensive last-mile delivery network through its collaboration with Seino. Japan Post's efforts to optimize efficiency while maximizing its delivery network present a more complex challenge compared to other companies.