In early December, a YouTube video of a Sagawa Express Co. delivery man throwing and kicking parcels went viral. The scene was recorded outside a Tokyo apartment building to which, apparently, the man had failed to deliver some packages because the recipients were not at home. This caused him to lose his temper, since it meant he would have to return later, and he took out his frustration on the parcels. To make matters worse, the day was quite windy, forcing the man to chase after several boxes.
Sagawa apologized to the public and said the delivery man “regretted” what happened, but by that point the video had already been viewed thousands of times and TV stations had covered it extensively. Public reaction was split between condemnation and sympathy.
According to the transport ministry, the three main takuhai (home delivery) services — Yamato, Sagawa and Japan Post, which together account for 91 percent of all parcel deliveries in Japan — handled 3.4 million items in 2015. Given that the ministry estimates 23.5 percent of packages are not delivered on the first attempt, that’s a lot of potential tantrums.
This situation has only become worse with the rise of online retailers, whose business in the past 10 years has grown from ¥900 billion a year to ¥11 trillion, a greater than tenfold increase. The Nihon Net Keizai Shimbun estimates that revenues will reach ¥20 trillion by 2020, and will eventually go as high as ¥60 trillion, which would represent 20 percent of all retail revenues in Japan. Needless to say, delivery services are essential to online sales, and the higher the volume, the greater the pressure that online retailers exert on delivery companies to cut their fees.
By far the biggest online retailer is Amazon.jp, with ¥700 billion in annual sales. Amazon is followed by Bell Maison, Yodobashi Camera, Nissen and Dell Computer, which together account for ¥10 billion in sales, according to research by Gekkan Net Hanbai. Amazon thus has a great deal of power behind its demand for services, and apparently that demand became too much for Sagawa, which in 2013 did not renew its contract with Amazon, saying it was no longer basing its business on volume and would instead focus on “quality of service.” The Nihon Net Keizai Shimbun reported that Sagawa’s revenues dropped by ¥60 million the next year while Yamato’s increased by about 10 percent or ¥150 billion.
Obviously, Yamato benefited from Sagawa’s withdrawal, but you have to wonder at what cost. The newspaper says that Yamato has continued to cut its delivery fees for Amazon. In his 2015 book “Takuhai Jingi Naki” (“Inhumane Home Delivery”), journalist Masuo Yokota says that contracted Yamato delivery personnel have to pay for these discounts over time, either in pay or just plain stress.
One contract driver who works on commission told him that Yamato only charges ¥150 for an Amazon delivery. The usual charge for home delivery starts at ¥600. Many contract drivers supply their own vehicles and pay all their own expenses. The driver told Yokota that in order to break even he has to make 150 deliveries a day. Gekkan Net Hanbai says that in the past several years the number of items that delivery companies handle has increased while their revenues have remained about the same, which would seem to indicate that online retailers are always pressuring delivery companies to reduce fees.
This would make sense, since 85 percent of online retailers offer free delivery in certain circumstances. Amazon in particular has a very liberal free delivery policy, and customers can return any item without having to explain why, with the return delivery being free as well. According to the Marketing Research Camp website, price is still the main criterion consumers use when selecting an online retailer, but free delivery comes a close second. In its survey of users, 90 percent of respondents said that free delivery “influenced” or “heavily influenced” their purchasing decisions.
Due to price pressure on commissions for contract workers and quotas for staff wage earners, drivers have to make as many deliveries as possible in a short period of time, which explains the Sagawa meltdown. Obviously, having multiple deliveries in one building is more efficient, but if no one is home it can be multiply maddening.
The ideal situation for a driver is to work an area of higher population density, since it requires less stops and time spent going from door to door to make deliveries. Also, higher-density areas mean more difficulty finding places to park your vehicle for free. Most end up parking illegally. Consequently, the vehicles get cited by traffic police, and the drivers are responsible for paying the fines.
Last year a number of Sagawa drivers were arrested for sending acquaintances to pay their fines. Parking violations count the same as moving violations on a driver’s record. Citations are only given to vehicles, so the person who shows up to settle the ticket is the one who takes the penalty, though it’s supposed to be the person who was driving on the day of the citation. Delivery workers can’t afford to accumulate penalties because they might lose their driver’s licenses.
Package delivery is a high-stress, low-pay job, which explains the industry-wide 13 percent turnover rate. All a person needs to get a job with a package delivery service is a driver’s license, so there will likely always be drivers available for such work, but labor shortages are endemic throughout the industry. Around the time the video went viral, Sagawa announced that customers should expect delays during the busy holiday season due to a lack of drivers, thus adding more stress.
To help remove this pressure, some delivery companies ask people who order items online to designate the best time to make a delivery in order to avoid return trips. Some deliver to convenience stores where customers can pick them up at their leisure, an option that’s popular among women who live alone and don’t like opening their doors to strangers. Japan Post equips its drivers with automatic fuzaishahyō writing devices that save them the time of having to write out “unable to deliver” notices by hand, which is still the norm for other delivery companies.
Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month.
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