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Business

Understaffed Japan shippers driving harder bargain

Driver shortage strengthens delivery companies' negotiating position

TOKYO -- One silver lining to the labor shortage plaguing the Japanese trucking industry is that it provides delivery companies a golden opportunity to press large-volume clients to pay sustainable shipping rates.

In February, a home delivery firm told a Tokyo trading company it wanted to raise shipping fees by more than 50%.

"It would be impossible to accept a price increase that big," said the logistics contact at the trading house. "Maybe if they raised rates on major mail-order retailers first, they wouldn't have to hike our contract prices."

Ground transporters are not just pushing for more money. One shipper suggested to a Tokyo food wholesaler that commercial-use rice could be packaged in cardboard boxes, which are easier to carry, rather than in paper sacks.

Making that switch "would be troublesome," said the wholesaler. Because of the extra costs associated with the idea, the client eventually stopped doing business with the deliverer.

Yamato Transport, whose clients include Amazon.com, plans to raise its basic shipping rates by the end of September. The Yamato Holdings unit is also negotiating higher prices with corporate customers, as is rival Sagawa Express.   

Yamato and other large peers charge individuals 1,280 yen to 1,404 yen ($11.50 to $12.60) to ship a package whose dimensions add up to no more than 100cm from Tokyo to Osaka. But many large-volume clients get cut-rate pricing at around 400 yen to 650 yen.

Even shippers with smaller market shares are moving to raise fees. Starting this year, Seino Transportation, part of Seino Holdings, has requested higher rates from a number of corporate clients that had enjoyed noticeably light bills.

Fukuyama Transporting is enforcing a no-discount policy on basic rates. "Although our handling volume may decrease, there is a constant level of demand," said a person at the company. "We need to secure a level of profitability that matches our operational burdens and as well as redelivery and other costs."

While such moves are unwelcome for many shipping clients, there is growing acceptance for the industry's change of stance in the face of a lack of drivers. Toyo Rice, headquartered in Tokyo, is looking at instructing customers who order rice online to make sure they are available to receive their shipments at the specified times.

"The lack of drivers is a problem that needs to be thought out together by the transport companies and the package consigners," said Tetsuo Sakamoto, vice president at Toyo Rice. "Reducing redeliveries also helps cut carbon dioxide emissions," he added.

"In order to maintain services, some degree of price hikes is inevitable," said a shipping client in the Osaka area.

Transporters are also acting on their own to cope with growing package volumes. Yamato Holdings established a large depot in the city of Toyota, near Nagoya, that can process twice the number of parcels as other facilities. The goal is to offer same-day delivery between the regions surrounding Tokyo and Nagoya. Such service improvements are necessary to justify the rate hikes.

(Nikkei)

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