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Business

Japan's delivery network feeling the strain

Rising parcel volume, severe labor shortage making logistics systems difficult to maintain

At this distribution center of Yamato Transport in Fujisawa, Kanagawa Prefecture, southwest of Tokyo, parcels of other logistics companies are delivered collectively.

TOKYO -- A swelling volume of parcels and an acute labor shortage are making Japan's delivery services increasingly difficult to operate.

In mid-December last year, customer service representatives at a major online mail order company were busy answering inquiries from customers after the company posted a note on its website that their deliveries could be delayed due to a surge of orders for Christmas and year-end gifts.

The number of parcels handled is rising, due to the spread of online mail orders, such as Amazon.com and Rakuten Ichiba. In December last year, Yamato Transport, the largest logistics provider in Japan, alone handled a record 230 million parcels.

Although parcel deliveries have jumped 40% from a decade ago, logistics companies are finding it difficult to secure the necessary personnel.

In October last year, a manager of Yamato Transport's Yokohama branch, was stunned by parcel delivery projections for December. His branch, which handles the Yokohama and Shonan areas, is one of the company's largest, with some 3,800 staff. It was expected that an additional 2,400 staff would be needed for delivering and sorting the soaring volume of parcels.

The branch manager immediately directed his subordinates to find recruits at any cost. He asked all employees at the branch to introduce their acquaintances and raised the hourly wage for part-timers by 20%.

He even arranged for a complimentary shuttle service from the city of Yokosuka, about 20km from his logistics facility in Yokohama's Isogo Ward, to make it easier for employees to commute. He managed to secure enough manpower in late November, immediately before the peak period.

The industry is close to capacity.

In mid-January, a 46-year-old driver, who delivers parcels in Chiba Prefecture at another logistics company, apologized to a customer. He was holding in his hand a parcel he was supposed to deliver by the end of last year. He usually handles about 140 parcels a day, but the number jumped to 180 as the year was winding down and he could not deliver it by the deadline.

The man, who works on a service agreement, arrives at the distribution center in Tokyo every morning at 6:30 to help with the sorting. Due to a severe staff shortage, he has to do the extra work or else he cannot leave to make his deliveries.

He wants to leave the distribution center by 8:30 a.m., but sometimes sorting can take until after 11 a.m. He cannot afford to have a lunch break, he said.

He has seen some full-time employees quit, unable to put up with the hard work and long hours.

"The system won't work for long, for sure," he said. "Something has to be done."

Japan's logistics industry is facing a serious labor shortage. The ratio of truck driver jobs to applicants is more than two, meaning there are more than twice as many driver jobs as applicants seeking them.

Fulfillment Holdings, a Tokyo-based company that dispatches drivers and contracts for logistics operations, is like a rescue organization for logistics providers facing a driver shortage. President and CEO Shinichiro Nakamura said logistics companies often ask him the impossible, such as to quickly find 1,000 drivers.

Nakamura said he used to earn a good living as a driver, but it is becoming increasingly difficult for logistics companies to secure drivers, due to the long hours and low wages.

Cutting down on redeliveries

Logistics companies are joining hands to maintain the infrastructure.

One 26-year-old driver of Yamato Transport was recently delivering a package in Fujisawa, Kanagawa Prefecture. But the parcel was not one of his company's.

Last November, Yamato launched a service that delivers for seven rival logistics companies, such as Seino Transportation and Fukuyama Transporting, to houses within a smart community developed by electronics maker Panasonic. The service is aimed at consolidating deliveries within the area to solve the labor shortage.

Redeliveries, in which the driver is unable to deliver the package and has to return later, are aggravating the problem. The Ministry of Land, Infrastructure, Transport and Tourism estimates that redelivering affects some 20% of total parcels, and takes the time of 90,000 drivers per year.

Pickup lockers could be a solution to the problem. After 11 p.m. at Eifukucho Station on the Keio Inokashira Line in Tokyo, a 22-year-old man exited the ticket gate to pick up a package from the locker with the logo of "Hako Post."

He was picking up a product he had purchased via mail order. The locker was set up by Japan Post so that customers can pick up their products at their convenience.

Japan Post only delivers parcels until 9 p.m. The man said he was pleased with the service, because he can pick up his package even when he returns home late after working overtime.

Yamato Transport is also setting up pickup lockers. The government subsidizes setup costs, on condition that other logistics companies can also use the lockers.

Nevertheless, logistics companies have been unable to catch up with rising volume of deliveries. "If companies and consumers do not pay enough for drivers' labor, Japan's logistics system will be difficult to maintain," Nakamura said.

(Nikkei)

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