Fundamental failure rocks faith in Japan Post

Takashi Shimomiya / Yomiuri Shimbun Staff Writer

A recent disruption in the delivery operations of Japan Post Service Co. that saw about 260,000 Yu-Pack parcels delayed has damaged the firm's credibility, and regaining customers' trust will not be easy.

Japan Post Holdings Co. established JPExpress Co. (JPEX) jointly with Nippon Express Co. in June 2008.

JPEX took over Pelican parcel delivery services from Nippon Express and was scheduled to take over Japan Post Service's Yu-Pack parcel delivery service last October.

The Internal Affairs and Communications Ministry, however, blocked the transfer of Yu-Pack operations from Japan Post Service to JPEX, fearing the move would hurt the overall earnings of the Japan Post group.

On Thursday, Japan Post Service finally integrated the Pelican and Yu-Pack parcel delivery operations under JPEX.

The timing of the integration, however, is unfortunate for Japan Post Service, as it allows insufficient time for preintegration employee training needed to cope with the high-volume summer gift-giving season.

"Preliminary practice and training has not been properly conducted for about 300,000 employees," said Japan Post Service President Shinichi Nabekura.

Japan Post Holdings had wanted to integrate the two services as soon as possible because JPEX has regularly incurred monthly operating losses of around 5 billion yen to 6 billion yen.

Japan Post Holdings judged that the integration would see the number of parcels handled annually increase by 170 million to about 400 million, putting its inefficient parcel delivery business into the black.

In 2008, Japan Post Service was found to have left about 120,000 pieces of mail undelivered at a JR cargo station for about two months.

The latest large-scale delivery failure has resulted in bulk customers such as department stores ending their relationship with Japan Post Service.

Daimaru Tokyo store in Chiyoda Ward, Tokyo, decided to use alternative services rather than have Yu-Pack handle delivery of about 2,000 items with designated delivery dates this summer.

According to the Land, Infrastructure, Transport and Tourism Ministry, which oversees parcel delivery business, Yu-Pack items have been delayed at three Japan Post Service branches--Chiba-Nishi in Narashino, Chiba Prefecture, Komaki in Aichi Prefecture and Osaka-Nanko in Osaka.

Following the integration of Pelican and Yu-Pack on Thursday, the volume of parcels handled by Japan Post Service has increased sharply, causing about 7 percent of its deliveries since Friday to be delayed by up to two days, the firm said.

The firm said it expects operations to return to normal in a few days, and Nabekura described the delays as "temporary."

Unless Japan Post Service shows a greater sense of responsibility, it will see leading rivals Yamato Transport Co. and Sagawa Express Co. pull further ahead.