In a move prompted by a serious staff shortage and a boom in online shopping, Yamato Holdings Co. has announced it will raise its basic shipping fee for door-to-door parcel deliveries by ¥140 to ¥180, depending on size.
The rate hikes — Yamato’s first in 27 years — are expected to take place by September.
Yamato President Masaki Yamauchi told a news conference that the extra revenue will be used to improve working conditions at the nation’s leading delivery firm.
Yamato is responding to pressure from revelations last year that many of its delivery drivers were forced to work overtime without pay, prompting it to retroactively pay ¥19 billion in unpaid wages to drivers and other workers by July.
The company’s problems reflect Japan’s demographic woes, including a chronic manpower shortage caused by a birth rate that’s been low for decades, and by a rapidly graying population.
Restaurants, supermarkets and other firms in the service sector have been forced to change their business cultures and shorten operating hours.
Yamato needs to raise prices to keep remain viable as part of Japan’s “social infrastructure,” Yamauchi said in announcing the reform plans.
Base shipping rates vary by parcel size, place of dispatch and destination. For example, it costs ¥756 to send a package weighing up to 2 kg and measuring a combined 60 cm in length, width and height within one region.
Yamato Transport Co., the holding company’s primary unit, said the hike will raise delivery prices by 6 percent on average in fiscal 2017, which began this month, from ¥559 per parcel last year.
That could improve profitability. On Friday, Yamato Holdings posted a consolidated net profit of ¥18 billion for the past year through March, down 54.2 percent from a year earlier, due partly to payment of the unpaid wages.
Revenue rise 3.6 percent to ¥1.47 trillion on rising deliveries driven by the boom in online shopping.
Yamato Transport plans to begin offering a ¥50 per parcel discount to customers who collect them at its sales locations rather than at home. The change is an attempt to reduce the number of redeliveries slowing down its delivery drivers.
It will also ask major corporate clients like Amazon.com to cooperate in adjusting shipping orders during busy periods. Large customers account for 90 percent of its deliveries.
The company handled a record 1.87 billion packages over the past year through March. Yamato expects to reduce that volume by 80 million items in the current business year.
Yamato Holdings will cut salaries for Yamauchi and five other executives for six months as a result of the unpaid overtime problem.