Japan Post marked its first anniversary with an air of satisfaction Thursday because its biggest management target over the past year — eliminating a deficit in mail delivery operations — has probably been met.
The state-run corporation was created April 1, 2003, to take over the governmental Postal Services Agency’s mail delivery, postal savings and “kampo” life insurance services.
Japan Post President Masaharu Ikuta told a news conference in March the entity was likely to register profits in all three business fields in fiscal 2003.
Of the three, mail delivery operations were likely to have generated some 10 billion yen in profit, said Ikuta, former chairman of shipping company Mitsui O.S.K. Lines Ltd.
The projected profit would mean that postal operations have returned to the black for the first time in two years, turning around from a loss of 22.5 billion yen a year earlier.
But Japan Post officials said the turnaround was due to the entity’s efforts to cut costs, not a rise in revenues. Postal operations have been flagging since the late 1990s in line with the development of Internet use and private-sector courier services in Japan.
Postal savings and kampo insurance operations have meanwhile grown enormous, with some critics calling Japan Post “the world’s largest financial institution.”
As of March 31, 2003, post offices had 233 trillion yen in the outstanding balance of postal savings and 125 trillion yen in life insurance assets.
Japan Post has unified its two separate sections in charge of administering the postal savings and insurance operations into a comprehensive financial services division as part of its organizational reforms that took effect Thursday.
In its first year of operations, Japan Post introduced various cost-cutting and streamlining measures, among them the introduction of public bidding for purchasing supplies and services, which led to a 53 percent drop in the purchasing cost of uniforms.
The corporation also began adopting a highly efficient method for post office operations modeled after Toyota Motor Corp.’s production knowhow.
The method for sorting mail and performing other desk-bound tasks was introduced at 14 of some 24,700 post offices last year and proved successful, boosting productivity at one post office by 20 percent.
Starting this month, Japan Post plans to greatly expand the scope of the method, which manages work flow by seconds or minutes, to cover 1,000 post offices by the end of fiscal 2004. The expansion is expected to enable the corporation to retrench expenditures by between 30 billion yen and 40 billion yen in fiscal 2005, the officials said.
The government plans to privatize the corporation in April 2007, and is set to submit a privatization bill to the Diet in 2005. Prime Minister Junichiro Koizumi views postal privatization, one of his stated goals, as a key pillar of his Cabinet’s structural reform drive.
But it is still an open question whether the public entity will truly be turned into a private company, as some lawmakers in Koizumi’s Liberal Democratic Party staunchly oppose this.
In an attempt to gather momentum toward the planned privatization in 2007, Koizumi appointed former senior agriculture bureaucrat Yoshiaki Watanabe as an adviser on the issue in late March. He also appointed Watanabe head of a preparatory office for the privatization project to be set up in the Cabinet Secretariat this month.