A move by leading door-to-door parcel delivery firm Yamato Transport Co. to review its customer services and seek its first sweeping rate hike in more than 25 years should lead consumers and firms alike to think about the ways in which the service industry does business in an economy with a growing manpower shortage. The problem confronting the company that enjoys a dominant share of the market reminds us that business competition based on increased convenience and low prices for customers at the expense of a greater burden for workers isn’t sustainable.
Behind Yamato’s move is a rapid surge in the volume of deliveries due to a boom in online shopping and a growing manpower shortage, which is forcing delivery drivers to work excessively long hours to cope with the workload. The company plans to limit designated-hour delivery service to ease the burden on its drivers. The hike in delivery rates, to be effective by fall, is expected to reduce the overall volume of parcels that workers must handle.
According to the transport ministry, the number of parcels delivered door-to-door nationwide reached 3.75 billion in fiscal 2015 — an increase of roughly 50 percent since 2000, when online shopping first took off in Japan. The volume increase has been fueled by competition among major online shopping companies to win customers by offering more convenient and rapid services, including free shipping for volume purchases and premium-service customers.
Meanwhile, efforts by the delivery service industry to secure sufficient manpower lag behind the increasing work volume. Chronically long and often irregular work hours, plus relatively low wages, turn potential workers away from the delivery business. The ratio of job openings to job seekers in the professional driver category, including truck drivers, is 2.68 — nearly double the average across industries and testifies to the acute labor shortage in the sector. It is estimated that the industry will be short over 100,000 drivers in fiscal 2020.
Exacerbating the rising work volume and manpower shortage is the re-delivery of parcels because no one is home when the first attempt is made. Such deliveries are growing due to lifestyle changes and reportedly account for roughly 20 percent of the total work volume.
The situation at Yamato, which holds nearly 50 percent share of the door-to-door parcel delivery market, has been forcing its drivers to work longer hours. The company has also been commissioning other firms to deliver parcels that it doesn’t have the capacity to handle. This cost has been eating into its profits even as sales increased. In annual wage talks this spring, the firm’s labor union made an unusual demand to management, asking it to trim the volume of parcels it accepts for delivery. The company agreed to hike its delivery rates and also promised to pay its roughly 70,000 employees for unpaid overtime work — whose total cost may hit tens of billions of yen.
The greater convenience of online shopping and quick delivery is welcomed by consumers. But consumers should also be aware that better services come at a cost — and think of who’s shouldering the cost. Steps should be taken to ensure that the burden is not unduly borne by workers at delivery service firms. It is hoped that the move by industry leader Yamato to review its services and fees will influence other delivery service firms to improve their workers’ conditions, and consumers should be ready to accept reduced convenience or higher costs for services if that’s the result of improving conditions for workers.
This is not a problem unique to the parcel delivery sector. Any business model that relies on the efforts of overstretched workers to maintain a level of services that customers expect is not going to be sustainable, particularly as the nation faces an increasing manpower supply shortage due to its rapidly graying and shrinking population. Companies that depend on such a business model will find it increasingly hard to secure enough workers. Consumers should also be cognizant of the cost of the convenience that they enjoy.