April 13, 2014 2:00 am JST

Japan Post to build 20 huge logistics bases for faster delivery

TOKYO -- Japan Post, a unit of Japan Post Group, aims to build 20 massive logistics centers nationwide to speed up delivery times for mail and parcel deliveries. Each facility will be about as large as the Tokyo Dome baseball stadium. 

     The plan, which the company estimates will cost 180 billion yen ($1.77 billion), calls for having the facilities built by fiscal 2018 and using them as central sorting hubs. It will be the first major restructuring of the company's distribution system since Japan Post was privatized in 2007.

     The company is looking to reduce the gap with market leaders Yamato Transport and Sagawa Express by shifting its business focus from mail delivery to logistics services, which are expected to grow due to the rapid expansion in online sales.

     Japan Post is an affiliate of Japan Post Holdings, which aims to go public next year. The earnings of the group's mail-delivery arm pale in comparison to those of other group companies. A planned merger with the package-delivery arm of Nippon Express fell through, and Japan Post has been struggling to produce a clear growth scenario.

     Japan Post Holdings is required by law to eventually sell off some of its shares in group cash cows Japan Post Bank and Japan Post Insurance. Japan Post, however, does not have to; it is the only unit that the holding company can have 100% ownership of. However, the unit's weak earnings may cause investors to shy away from buying shares in the holding company.

     Japan Post currently has about 70 large post offices throughout the country. Many are located near former freight stations or in city centers, because they were built when mail and packages were transported over long distances mainly by rail. Their space is often limited and not conducive to efficiency.

     The new bases will be built near highway ramps to maximize efficiency and will be far larger than the existing regional post offices, with ground-floor areas of 30,000 to 50,000 sq. meters.