Can JAL deliver the iced goods for Japan Post?

Japan Post has begun delivering refrigerated parcels overseas through an exclusive deal with Japan Airlines, but the future of the tie-up remains murky due to JAL’s limited cargo services and intensifying competition with rival delivery firms.

Japan Post Co., the postal service arm of government-owned Japan Post Holdings Co., started shipping refrigerated parcels to Taiwan and Singapore in April and to Hong Kong in October on a trial basis. The service started from shipping centers in Tokyo, Hokkaido and Kanagawa Prefecture, and will start next month from Osaka Prefecture and Kyushu.

But Masatsugu Hisada, senior manager of Japan Post’s international business division, is concerned about the delivery times.

“Refrigerated parcels are delivered the day after they leave Tokyo, but it takes two days to deliver from Osaka and Kyushu,” he said.

Through Japan Post’s partnership with JAL, refrigerated parcels are loaded on direct flights to Asian destinations out of Haneda and Narita airports. Next-day deliveries will become difficult if parcel collection points are expanded to western Japan.

The partnership has been a boon for JAL. Toshihiro Shimizu, in charge of JAL’s international freight and mail route marketing, boasted, “Our company has exclusive rights to engage in the refrigerated parcels business.”

This, however, doesn’t mean Japan Post is fully satisfied with JAL’s services.

“We use the best flights available. We started using (the All Nippon Airways) Okinawa cargo hub (in Naha) for our Express Mail Service before a rival company started using it. JAL doesn’t fly there, so we have no choice (but to use ANA),” Hisada said.

By “the rival company,” Hisada meant Yamato Transport Co. Yamato began full delivery service of refrigerated parcels to Hong Kong in late October — by shifting the hub from Narita to Naha last fall, and started sending parcels to Shanghai and Taiwan as well. The Okinawa cargo hub covers major cities in Japan and East Asia within four hours.

“Okinawa is located at the center of Asia. We can deliver parcels to countries we have services in on the next day. That’s very important,” said Motoki Tanaka, manager of Yamato’s global business development division. Next-day deliveries are a selling point for Yamato’s international strategy.

Regarding international refrigerated delivery, the company will start the service to Taiwan and Singapore in the first half of next year and Shanghai and Malaysia in the second half. It will also connect those countries with each other next year.

ANA, along with Nippon Cargo Airlines Co., connects Naha with these 10 airports: Haneda, Narita, Chubu and Kansai in Japan as well as Incheon near Seoul, Shanghai, Hong Kong, Qindao in China, Taiwan Taoyuan near Taipei and Bangkok.

ANA can offer next-day delivery by using the domestic airport network during daytime and collecting parcels at Naha airport, which is open 24 hours, late at night. The company plans to expand the delivery business to Vietnam and Indonesia.

The Japan Business Federation, better known as Keidanren, also favors the idea of an Okinawa cargo hub and hopes a company other than ANA will move in as well.

“We don’t want it to be a single company’s exclusive network,” said Katsunori Nemoto, director of Keidanren’s Industrial Policy Bureau.

JAL’s Shimizu says, however, his carrier has no intention of establishing an Okinawa cargo hub.

“Reloading parcels from an aircraft to another has a risk of damaging parcels, and thus we are not thinking of using Okinawa. Typhoon damage is another concern.”

There may be other reasons the company is not keen on using Okinawa. JAL has been loading parcels into the cargo space of passenger airplanes since it withdrew from cargo-only flights in 2010. This has resulted in a situation where JAL can’t deliver anything late at night. Also, JAL’s international flights are from only Haneda, Narita, Shin-Chitose near Sapporo, Chubu, Kansai and Fukuoka — not Naha.

Since ANA’s Okinawa cargo hub operation is still in the red, it would help if Japan Post also uses the carrier’s Okinawa cargo hub. If that happens, how would JAL react?

“JAL’s recovery (from bankruptcy in 2010) is making steady progress. I presume the completion of the second runway at Naha airport will trigger JAL to resume” operating cargo-only flights (from Naha), said Hiroshi Ikegami, a deputy director of the Institute of Developing Economies at the Japan External Trade Organization who is familiar with air logistics in Asia.

This section, appearing every second and fourth Monday, features translated stories on hot national topics from the monthly magazine Wedge. This week’s story appears Tuesday because there was no paper Monday due to the press holiday Sunday. The original article was published in the December issue. To see Wedge’s website, go to wedge.ismedia.jp .