Volume up at Japan's crisis-hit parcel handlers
Industry delivers 8% more packages -- despite serious labor shortage
TOKYO -- The number of parcels handled by Japan's top three delivery companies in the fiscal year ended March 31 surged 8% to a record high of about 3.718 billion.
It was the second consecutive annual increase for the three -- Yamato Transport, Sagawa Express and Japan Post. The pace of growth in fiscal 2016 doubled from the previous fiscal year's 4%.
The faster pace of growth comes amid a labor crunch, which is becoming increasingly acute, especially now that so many consumers are shopping online. Moves to review same-day delivery and other services are likely to spread across the industry.
Yamato Transport, Sagawa Express and Japan Post together account for 90% of Japan's parcel delivery market. Including smaller peers, the total number of parcels handled in the country may have topped the 4 billion mark for the first time in fiscal 2016.
Yamato Transport is the industry leader, followed by Sagawa Express and Japan Post. Japan Post released its fiscal 2016 results on Friday, becoming the last of the top three players to do so.
Japan Post handled a record 632.42 million parcels through its Yu-Pack service in fiscal 2016, up 9.1% and marking the fourth straight annual increase.
The sharp rise was due to Japan Post's Yu-Packet service for small articles. In October, the company began to add small articles handled under that service to its total number of parcels handled.
Japan Post delivers Yu-Packet parcels to recipients across the country at fees ranging from 250 yen ($2.20) to 350 yen. Yu-Packet fees are lower than those for ordinary parcels because they can be slipped into recipients' mailboxes.
The Yu-Packet service was limited to online retailers and other corporate customers until October 2016, when it also became available to individuals. Now the service is used to deliver products traded between individuals over flea market apps and online auction sites.
Japan Post expects to handle 767 million parcels in fiscal 2017, up 20% from fiscal 2016, as Yu-Packet parcels are added to the total number throughout the year.
On Friday, Japan Post also said it handled 17.73 billion postcards, letters and other pieces of mail in fiscal 2016, down 1.7% and marking the 15th successive annual decline.
People are sending fewer postcards and letters as email and other forms of digital communication take hold.
Japan Post intends to foster and make parcel deliveries a major revenue source.
Yamato Transport dominates Japan's parcel delivery market with a share of about 50%. The number of parcels handled by the company rose 7.9% in fiscal 2016 to 1.867 billion.
Yamato Transport saw parcel delivery delays in some areas in December, when it had to cope with a flood of Christmas presents and year-end gifts.
It also emerged that Yamato Transport workers were putting in excessively long hours and that their overtime wages were going unpaid. The company's labor and management representatives in March agreed to push ahead with work-style reforms, saying efforts to maintain services have reached their limit.
Yamato Transport will curb the total volume of parcels it handles. The company specifically plans to reduce the number of parcels it handles in fiscal 2017 by 4% to 1.785 billion.
Yamato Transport has already informally decided to scale back same-day deliveries for major online retailer Amazon Japan and Askul, an office supplies mail-order company.
The industry leader's recent moves have highlighted what is dubbed by some the "parcel delivery crisis," one marked by a serious shortage of drivers and other workers.
At Sagawa Express, the number of parcels handled rose at a much slower pace than at its two rivals. The second-ranked player handled 1.218 billion parcels in fiscal 2016, up 1.7% from the previous fiscal year.
Sagawa Express stopped accepting packages from Amazon in fiscal 2013, shifting its strategic focus from volume to profitability. This fiscal year, the carrier plans to increase the volume of packages it hauls only by 1%.