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Yamato reaps bigger profits while raising driver pay

Expanded workforce allowed courier to take on more parcels

Yamato responded to a shortage of inhouse drivers by increasing their pay, thereby cutting outsourcing costs. (Photo by Wataru Ito)

TOKYO -- Yamato Holdings looks to have doubled its operating profit on the year to around 65 billion yen ($600 million) for the nine-month period through December in part by raising wages to deal with a shortage of drivers.

The Japanese delivery company increased its staff, mainly drivers, by around 5% as of the end of 2018. This greater capacity is expected to let the company cut outsourcing costs by more than 20 billion yen a year, lifting overall profitability.

The company intends to expand the number of drivers dedicated to night deliveries to 10,000 by March 2020.

The rise in online shopping has been increasing the volume of deliveries, but Yamato was faced with the problem of overworked drivers. Consequently, it started to handle fewer packages from October 2017 when it asked retailers like Amazon Japan to reduce certain orders.

But a year later, Yamato has shifted gears to accept more packages. Volume rose 2% to 525 million packages in the October-December quarter.

Package delivery demand continues to rise as retailers boost online sales and more individuals buy and sell goods via flea market apps.

The boom in package deliveries helps Yamato in price negotiations. The company's profit boost from an October 2017 blanket price hike has run its course, but prices are still rising at a moderate pace, mainly for business customers. The average price per package for the April-December period rose more than 10%, nearing the 662-yen target set for the end of the fiscal year in March.

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