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Amazon, Yamato teetering on brink as delivery drivers flee poor work conditions

Shukan Gendai Mar. 4
Shukan Gendai Mar. 4

Time-designated shipping for free, around the clock and 365 days a year.

These are some of the hallmarks of modern convenience as provided by online retailer in conjunction with logistics firm Yamato Transport. However, the system could all come crashing down if the delivery drivers that toil day and night continue to flee from overwhelming workloads and rock-bottom wages.

Amazon grew into the online retailing giant at miraculous speed. Handling everything from books and everyday goods to food, the company has become an indispensable presence for countless lives including those in Japan –– but it treads on increasingly shaky ground, reports Shukan Gendai (Mar. 4).

Amazon is said to be handling over 200 million products in Japan alone, but the company faces an overwhelming shortage of the people that deliver them.

Nisaku Naoki, president of shipping firm Kichijoji-Sogo-Butsuryu, said he “went to speak with Amazon after they called me three times to request us for delivery, but I remember it being unpleasant because their attitude was like slapping my cheeks with bundles of cash.”

“And those bundles of cash are thin, so it was out of the question,” said Naoki, whose company’s website still lists Amazon as one of its “main” clients. “Frankly speaking, I declined because the conditions were bad.”

“Amazon is claiming it’ll run a service of delivering orders received on the day within an hour, but there’s no way that’s possible,” Naoki said. “Amazon relies on Yamato Transport for its deliveries, but deep down inside, [Yamato Transport] probably doesn’t want to accept the job either.”

“If these bad conditions for shipping companies continue, I think Amazon’s deliveries won’t work anymore. It’s not like they can transport everything just by themselves,” Naoki said. “If Yamato Transport drops out, Amazon will completely fall apart.”

Naoki’s company still lists Amazon as one of its “main clients.”

Hitting their limits

Workers on the front lines are already hitting their limits. One former Yamato Transport delivery driver, 30, said that “all things considered, there’s lots of packages, and things like being able to finish your workload within a certain time frame never happened.”

“There’s a huge amount of Amazon packages, and it was an everyday occurrence to have to deliver to something like 300 houses during peak seasons,” the former driver said. “Plus there were lots of time-designated deliveries, so it always felt like you were being overwhelmed in terms of time.”

“The stress every day wasn’t what I’d call normal. And on top of that, the salary is low,” the former driver said. “Lots of people were quitting, myself included.”

Excessively big boxes

Release dates of popular items like Disney’s “Frozen” alone mean over 100 shipping destinations, according to a Japan Post worker in their 40s.

“The biggest issue is the size of the boxes. When it comes to Amazon, you often see package content that’s small, but the box is excessively big so it doesn’t fit in post boxes,” the Japan Post worker said. “It’s fine if there’s a delivery drop box, but boxes can’t just be left there for single-family homes, so you can’t hand it over unless you have the customer come out in the end.”

“If they’re not home, you have to leave a notice and then come back. I have to make round trips over and over for Amazon alone, which delays delivery of other mail, and there’s overtime every day,” the Japan Post worker said.

Sagawa Express workers’ woes

Major logistics firm Sagawa Express used to fulfill Amazon deliveries at a loss, but severed ties in 2013 after negotiations broke down when it requested the retail giant to raise its low rates.

But dropping Amazon did little to improve the working conditions of Sagawa Express delivery drivers.

Just last year, Sagawa Express was forced to apologize over a widely circulated video showing one of its frustrated male drivers repeatedly slamming parcels and flinging a cart around.

A driver who worked for the firm from 2008 to 2013 said there were “indeed less deliveries, but in turn, the delivery range increased, so the distance traveled and the manpower needed ends up being the same.”

“Regarding the parking violation scapegoat scam last year, I can understand how that came to be like that,” the driver said. “At Sagawa Express, it’s not as simple as paying a fine when you cause an accident or violate traffic laws. You won’t be able to work or there might be penalties, and sometimes you have to take classes at the company.”

Last year, several Sagawa Express employees were arrested for having people turn themselves in to police over traffic violations in their place.

“Things are being run with the bare minimum amount of workers, but if you end up being unable to work, that burden will fall on colleagues,” the driver said. “I feel like I can understand wanting to cheat the system if you can get away with it.”

Logistics firm Yamato Transport delivers packages for online retailer
Logistics firm Yamato Transport delivers packages for online retailer

Truckers earn as much as convenience store clerks

Wages typically rise when labor becomes harsh, but the logistics industry is seeing the opposite despite increasingly longer working hours.

Salaries in the road transportation industry have continued to decline after peaking in 1999, according to a survey by the Ministry of Health, Labor, and Welfare. A small- or mid-size truck driver earned 3.88 million yen a year compared to the average 4.89 million yen across all industries.

These truckers also shouldered longer yearly overtime hours of 2,580 against the average 2,124 across all industries.

A simple calculation indicates that the average truck driver makes about 1,500 yen an hour — no more than the part-time wage for a late-night shift at a convenience store.

Evidence suggests that truck drivers, who are responsible for 90 percent of logistics in Japan, work longer hours and at lower pay compared to that of an average worker.

“The unit price for one Amazon parcel is supposed to be kept at low prices, I’m talking in the tens of yen range,” the Japan Post worker said. “There’s lots of demand with designated time deliveries and on-the-day deliveries, despite low rates. If salaries go up, I’d be happy to deliver. But it’s pretty stupid having to go back and forth throughout the day for tens of yen worth of fees at a low salary.”

“Upper management might be happy that they snatched the job from Sagawa Express and increased sales, but on the front lines, you just end up thinking that all the company cares about is profit,” the Japan Post worker said. “There’s lots of people quitting just from low salaries, but things will stop running if the labor shortage gets any worse.”

(For its part, Yamato Transport revealed on Saturday that it would be retroactively compensating workers for unpaid overtime amid a surge in demand for deliveries, according to Jiji Press)

Firms can’t raise shipping fees

Why aren’t salaries rising in tandem with growing demand? According to Ryoichi Kakui, CEO of e-commerce logistics firm e-LogiT, the answer lies in an inability to raise shipping fees.

“Why don’t shipping firms raise personnel expenses to secure more labor? That’s because they can’t raise shipping fees,” Kakui said. “For example, let’s say a shipper who has a contract with a client wants to raise shipping fees because of labor shortage. That client would just terminate the contract and switch over to another shipping company.”

“Indeed, Sagawa Express cancelled its contract with Amazon after talks broke down over the issue of fees, but Yamato Transport and Japan Post took over and that was that,” Kakui said. “Shipping costs probably somewhat increased for Amazon, but the ones who took over need to arrange a system that can meet Amazon’s needs, so it doesn’t always mean boosted revenue.”

“It takes time and effort for shipment firms to deliver to each building, and not only is the benefit of scale hardly beneficial, but the labor shortage issue worsens even more as the workload increases,” Kakui said. “It’s a viscous cycle –– it becomes harder to secure more workers because salaries stay the same and shipping companies can’t be said to be putting enough effort toward improving work efficiency.”

Drones, automated driving

“There are some efforts to solve the labor shortage issue,” Kakui said. “For example, unmanned delivery by drone and the improvement of automated driving technology. These things are said to eventually make it possible to deliver goods without having to rely on human labor.”

“Experiments are moving forward, but it’ll probably take a long time before they’re actually put into practice,” Kakui said. “The government claims they’ll have automatic, self-driving taxis by 2020, but it will be nothing more than for use on dedicated roads in limited areas.”

“It’s relatively easy to have automated trucks run on highways, but automated driving in urban areas are apparently 100 times harder to accomplish,” Kakui said. “It’ll probably be hard to realize all this within 10 years. The biggest problem until then is whether Japan’s logistics can survive in its current structure.”

Convenience stores also face logistics crisis

Convenience stores face a similar predicament over the logistics crisis.

Stocking every-day foods from bento boxed meals and sandwiches to tooth brushes and other daily necessities, convenience stores led by industry giant 7-Eleven have long been supported by extremely streamlined logistics.

According to Yuji Namiki, a former 7-Eleven employee and professor of the Graduate School of Innovation Management at Hosei University, says convenience stores “can’t run without being able to secure a way to efficiently deliver things.”

Sagawa Express severed ties with online retailer in 2013 after negotiations over rates broke down
Sagawa Express severed ties with online retailer in 2013 after negotiations over rates broke down

“In the ’70s, 70 trucks were delivering goods to just one store every day. Over the next decade, the number of trucks was reduced by combining shipping at distribution centers,” Namiki said. “And then another 10 years after that, there was another huge boost in efficiency after a truck was developed that can deliver goods at varying temperatures all at once.”

“As a result, less than 10 trucks are needed now to complete deliveries in a day, and high profitability has been achieved,” Namiki said.

But times have changed. Amid a shrinking population, the possibility is emerging that profit can’t be achieved no matter how much efficiency is improved in rural areas.

Immigrants not viable solution

Labor shortage is a common problem across numerous industries. Japan intends to fix the problem by taking in immigrants — a nonviable option for the transportation industry’s lack of manpower.

For example, some immigrants are unable to obtain a driver’s license over visa issues.

“The best feature of Japan’s distribution is quality of service, so it’ll probably be difficult to easily use foreigners for things like deliveries,” Namiki said.

Shinichiro Nakamura, who works at Win Corporation, a firm that dispatches drivers and takes on logistics work, believes many of the major logistics firms are ensnared in the same logistical nightmare.

“Shipments are on the rise as more elderly citizens start ordering things online, but on the other hand, there’s a serious situation where more and more drivers are aging and quitting,” Nakamura said. “Big players Yamato Transport, Sagawa Express, and Nippon Express are all chronically short of labor.”

“Yamato Transport probably took on work from Amazon in the sense that it’s protecting logistics, which is a social infrastructure of sorts, but word is that if it doesn’t do the work for Amazon, delivery jobs in certain regions will significantly decrease, and lead to lack of profit in those areas,” Nakamura said.”

Amazon, 7-Eleven, Yamato on brink of collapse

Takashi Kawakita, a professor at Juntendo University, believes that if the logistics situation remains the same, Amazon, Yamato Transport and 7-Eleven will all face a dire situation.

“For many consumers, their consciousness for paying for the cost of logistics is low,” Kawakita said. “Logistics is said to be the ‘lifeline of society,’ and with good reason. When it stops functioning because of a manpower shortage, the likes of Amazon and 7-Eleven will be thrown into a devastating situation.”

“We’re now in an era where information can reach us in a moment, but the economy won’t function unless the objects of reality are manually moved by someone,” Kawakita said.

Until that “someone” is no longer overlooked, says Shukan Gendai, the system that Japanese people take for granted will continue to teeter on the brink.

Source: “’Hakobu shohin’ ha atte mo ‘hakobu hito’ ga inai Amazon to Sebun Irebun to Yamato ga nakunaru!” Shukan Gendai (Mar. 4, pages 48-51)