Yamato Transport's price hikes to sting consumers, not Amazon?
Yamato Transport Co., Ltd., is set to start price hike negotiations with its major clients, but Amazon Japan G.K., which is believed to be Yamato's largest customer, reportedly has no intention to enter such talks.
Yamato persistently prodded Amazon, which had contracted Sagawa Express Co., Ltd., to deliver goods sold online until the spring of 2013, to switch to Japan's largest door-to-door delivery company, according to an Amazon insider. "It is very arrogant" for Yamato to suddenly demand price hikes or threaten to stop doing business with Amazon, he said.
"Because unit prices we charge were very tight, we were negotiating for price increases with Amazon," a Sagawa source familiar with the 2013 talks said, adding that even a Sagawa vice president and other executives went to Amazon Japan to ask it to accept the proposed price increases. Negotiations between Sagawa and Amazon were reportedly close to a conclusion when Yamato muscled in.
According to informed sources, Yamato is well aware that price negotiations will be thorny. The contract Yamato sealed with Amazon spelled out unit prices and details related to Yamato's pricing, making it difficult for Yamato to raise its delivery prices, they said.
"Yamato only needs to make it known that it's struggling to make its operation profitable due to a labor shortage and that it is negotiating with major clients for price hikes," an industry insider said. "That will be used as an excuse to raise delivery prices for small and medium-sized clients and individuals."
Ordinary customers and small businesses will likely bear higher costs resulting from Yamato's labor shortage sparked by the drastic surge in Japan's parcel delivery volume in recent years, industry observers say.
This is a translation of an article from the April 2017 issue of Sentaku.