According to the Japanes Newspaper “The Yomiuri Shimbun” Japan Post is nearing the final stage of talks on comprehensive tie-ups with several major distribution companies at home and abroad, including TNT Post Group of the Netherlands and Nippon Express Co. TNT only confirms that they are talking with Japan Post. The main purpose of the tie-ups, expected to be concluded by the end of the year, is to set up joint firms to distribute goods for companies, and Japan Post is planning to develop business in this area, mainly in Asia.

Under the law as it stands, Japan Post can only transfer international mail and postal matter it has received in Japan to a postal service operator in another country. But Japan Post feels this is not enough to meet the demands from domestic companies, so it has been negotiating to expand its services.

On Tuesday, the postal privatization bills, which would allow Japan Post to start international distribution of goods from April, passed the House of Representatives. As the bills are likely to be enacted Friday, Japan Post will very likely be able to enter the final stage of negotiations. In its settlement of accounts for fiscal 2004, postal services earned Japan Post a surplus of 26.3 billion yen. However, since hitting a peak in fiscal 2001, the number of pieces of post handled by Japan Post has been declining yearly. The management climate also has grown harsher, which is why Japan Post is trying to diversify its management, for example by becoming involved in the international distribution of goods.

According to sources, Japan Post is planning to tie-up with TPG to establish a distribution company. Other prospective partners include Nippon Express, which has expertise in the distribution of goods such as how to handle customs clearance and stock control; and Sankyu Inc., a major distribution firm for companies and an affiliate of Nippon Steel Corp.

Through this tie-up strategy, Japan Post hopes to compete with major international distribution companies, which are locked in fierce competition with each other in the Asian market, such as DHL International Gmbh, an affiliate of Deutsche Post, as well as FedEx and United Parcels of America, Inc. of the United States. To be more precise, Japan Post apparently is looking to offer a service under which an item being sent by a Japanese company to a plant in China would initially be picked up by an affiliated company under its own brand name through the domestic post office network for example before sending the item to China by air or ship and then entrusting delivery to TPG or Nippon Express, which have distribution networks in China.

Before embarking on the international distribution of goods, Japan Post is hoping to tie-up with TPG in certain areas such as international courier services for postal delivery overseas.

Looking at the market share of international courier services bound from Japan in fiscal 2003, DHL, FedEx and Japan Post topped the table. DHL and FedEx are highly competitive as both of them are international integrators that handle everything from accepting orders to delivery, using their own aircraft. Japan Post hopes to raise its international competitiveness by forming a corporate alliance with TPG and other major distribution companies to offer fine-tuned delivery services abroad.

However, if Japan Post, which has a network of about 24,000 post offices, really makes its way into the international distribution of goods, a major alliance for goods distribution will be born, inevitably affecting the courier industry in Japan.

Source: Yomiuri Shimbun

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