Yamato Transport Co, Japan’s largest home delivery firm, is considering withdrawing from its same-day delivery service for Amazon.com in order to reduce its drivers’ heavy workloads, according to local media reports.
The company will gradually reduce accepting parcels for the service and eventually withdraw from the service completely, a move that could force online retail firms to review their overall services, said Japan Today, quoting sources close to the matter.
Last month, Yamato said it would review contracts with major corporate clients, including online retailers, in its effort to reduce the amount of parcels it handles, the online news portal added.
Internet retailers like Amazon have taken advantage of the highly developed networks created by Japanese package shippers by providing same-day deliveries and other services rarely found in any other country. But a crippling labour shortage in the land transport industry is making such swift service unsustainable, according to the Nikkei Asian Review.
Having decided that the labour shortage is stretching its delivery network towards breaking point, the main unit of Yamato Holdings has asked Amazon to reduce the assignment of same-day deliveries. Amazon has shown some understanding, and the e-commerce giant is beginning to contract more same-day deliveries to Japan Post Holdings in some areas. Yamato plans to gradually shrink the number of same-day deliveries to zero, it said.
Japan Post is seen as having more available capacity at the home delivery end than Yamato. But its overall capacity is only about a third of its rival's so Amazon's same-day delivery service may shrink in terms of regions and package volume.
By joining Amazon Prime, a membership service that costs 3,900 yen ($35.23) a year, Amazon customers can get same-day deliveries repeatedly at no extra charge. Japan's annual fee is less than half the one charged in the U.S. When a customer in Japan places an order by noon, the package is shipped out in the next few hours. That service covers 80% of the nation's population, including those in the greater Tokyo, Osaka and Nagoya areas.
Yamato handles the bulk of those parcels. The packages arrive at depots around 6 to 7 p.m., then delivery personnel make their rounds until 9 p.m. Since so many customers opt for same-day deliveries, night time work has escalated, adding to the long working hours for those employees.
The company announced earlier this month that package volume climbed 8% during fiscal 2016 to about 1.87 billion pieces, marking the second record year in the row. Amazon packages are believed to make up 10-20% of the sum.
Because Amazon qualifies for shipping discounts offered to large-volume clients, Yamato's business with the online marketplace has thin profit margins. The average unit price of deliveries amounted to 578 yen in fiscal 2015, but analogous figures for Amazon are said to be about half of that.
Yamato also asked Amazon to pay more for shipping. It is prepared to stop accepting Amazon deliveries if there are no concessions on that front, so Amazon may have to shift strategies in the Japanese market, the report concluded.
On a separate topic, the Nikkei Asian Review reports that from 2018 Yamato Holdings will start a refrigerated parcel delivery service between Japan and France, the first of its kind for Europe.
With Japan and the European Union aiming to sign an economic partnership agreement by the end of the year, Yamato plans to prepare for increased transactions between the two countries, it said.
Yamato's domestic operations have deteriorated due to rising labour costs resulting from a labour shortage and burgeoning parcels boosted by online shopping, for which bulk-quantity discounts are in place. The company wants to expand overseas operations that have growth potential, it said.
Yamato is partnering with Chronopost, France's largest courier, to deliver parcels from Japan to Paris with next-day delivery service at the earliest. Deliveries will be made by Yamato in Japan and by Chronopost in France. Chilled products will be handled using a special container that keeps goods cool to maintain temperatures between 0 C and 10 C. Orders for single packages will be accepted.
The service is expected to handle shipments of Japanese sake, fruit, fish and French origin cheese and white asparagus. The two companies will sign a contract for exchanging expertise to maintain the quality of refrigerated transport.
