In Japan, the Work style reform laws will limit the maximum annual overtime hours for automobile driving work to 960 hours from April 1, 2024. The enforcement of this law will bring the Japanese logistics industry to a crossroads, where long working hours for truck drivers have become the norm due to the increase in the number of parcel deliveries handled by the rapid growth of the e-commerce market, amid labor shortages caused by the shortage of young and aging workers.
This is often referred to as the “Year 2024 problem of Japan’s logistics industry” as a general term for the various issues that will arise as a result of the implementation of this law.
Intent of the Work style reform laws Enforcement
The Work style reform laws is a law that will be enforced to promote improvements not only in the logistics industry, but also in Japanese society as a whole, to address various problems such as the declining workforce due to the falling birthrate and aging population, chronic long working hours, and the wage gap between regular and non-regular workers.
As part of this effort, for the logistics industry, the goal is to improve the working environment by setting a cap on annual overtime hours for truck drivers (car driving operations).
Impact of the Year 2024 Problem
#1 Decrease in trucking resources
The Year 2024 problem in Japan’s logistics industry will limit the total number of hours that drivers can work, which means that transportation resources will simply be reduced by that amount. While transportation resources are already in short supply due to labor shortages caused by a shortage of young and aging workers and an increase in the number of parcels handled due to the rapid growth of the e-commerce market, the enforcement of this law will cause an even greater shortage of transportation resources.
#2 Cannot carry things, cannot manufacture products
The resulting disruption to the domestic supply chain due to a lack of transportation resources would be a major blow to domestic industry as a whole if transportation of goods such as parts and raw materials were to be delayed.
#3 Rising logistics-related costs
Logistics-related costs will increase for society as a whole as carriers are expected to try to compensate for the decrease in sales due to the lack of trucking resources by increasing freight rates. This could ultimately lead to an increase in the consumer burden and a decline in the international competitiveness of Japanese companies.
Possible measures to be taken for the Year 2024 Problem
The following measures are often proposed in response to the Year 2024 Problem. However, since none of these measures will solve the fundamental problem or have an immediate effect, it is inevitable that society as a whole will be affected by the Work style reform laws enforcement for the foreseeable future.
- Improve operational efficiency through the use of IT
- Improve productivity through M&A
- Coping with the introduction of automated driving technology
- Improve productivity through strict standardization of cargo
Examples of countermeasures
Conclusion
Although it is hoped that the revised law will improve the long working hours that have become chronic in Japanese society, there is no doubt that, at least as far as the logistics industry is concerned, it will place a heavy burden on the industry for the foreseeable future. On the other hand, such pressure from the government is an opportunity for change for the industry as a whole, and may well provide a good opportunity for new entrants and existing companies seeking to restructure.