Japan Post is looking at acquiring Nippon Express Co.’s Pelican parcel delivery service because an existing plan to run their combined services as a joint venture is unviable, industry sources said Thursday.

Japan Post Service Co., the branch of the group responsible for handling mail service, intends to make a decision on turning the joint venture, JP Express Co., into a wholly owned subsidiary by the end of the year, they said.

Japan Post agreed with Nippon Express in October 2007 to set up a joint venture that would simultaneously run both Pelican and Japan Post’s Yu-Pack service to cut costs and increase efficiency. But the plan was frozen because the Internal Affairs and Communications Ministry refused to sign off on it, saying preparations were insufficient.

JP Express was thus unable to handle the Yu-Pack service and plunged into an operating loss that reduced the consolidated 2009 first-half profit of its holding firm, Japan Post Holdings Co.

Since JP Express cannot be expected to improve profitability, Japan Post plans to take the lead in the parcel service integration deal and reduce capacity smoothly to improve efficiency and coordinate with the ministry in this direction, according to the sources.

The change comes after the Democratic Party of Japan took control of the government from the long-ruling Liberal Democratic Party in September.

The DPJ has called for revising the Japan Post privatization plan, which began under the LDP-led government in October 2007.

Yoshifumi Nishikawa, who was effectively forced to resign as president of Japan Post Holdings in October in part as a result of the change in policy, had taken the initiative in promoting the parcel integration deal.