The ‘2024 Problem’ is Here: Overtime Caps to Bring Real Changes to Japan’s Delivery Landscape

April 05 2024

It’s spring in Japan, the cherry blossoms are in bloom, and the Workplace Reform Law has come into force at the start of April. As we wrote about before, the legislation behind this so-called ‘2024 Problem’ will see an unprecedented impact on Japan’s transportation and logistics industries, given the introduction of new overtime limits.

Affecting businesses like SVL, the overtime cap placed on truck drivers limits them to 960 hours a year—or 80 hours a month. This creates the potential for major disruption within Japan’s domestic delivery network, given the subsequent need to hire more drivers to fulfil delivery demand, at a time when it is acutely challenging to do so. Such a time cap impacts longer-distance deliveries, so cargo being sent further will either take longer to reach its destination or rely on more personnel to get it there. The result is inevitable cost increases that, even if passed on to consumers, may also see a consequential service impact too.

SVL and the Workplace Reform Law

We actually think the legislation is welcome given the positive effects it will bring to workforces in Japan. Allowing drivers to prioritise their wellbeing and familial relationships are vital for motivated, loyal and productive drivers—and we know happy drivers lead to better interactions with customers, which is vital for our business reputation and growth.

As Nikkei Asia reports, truck driver Toshiya Kajiyama outlines how the reform may also bring a silver lining to help stop existing drivers quitting an industry traditionally known for its long hours and low pay. Truck drivers in this industry typically love the work they do (especially when driving a great truck like our Scania series), but should be able to work without fear of burnout or risking road safety.

We’re also excited by the economic challenge of this reform too, since we confidently expect to resist price rises to a much greater ability than our competitors—perhaps by as much as half. At the same time, we remain on track with our carbon offset pledges and overall environmental impact (more on that soon!) at a time when other market players are struggling to do so.

Nonetheless, Japan is a country with declining birth rates so it cannot magically hire more drivers overnight. Raising pay and making the industry more attractive to female employees can surely help, but the government also hopes foreign workers will be another solution.

Reported by Kyodo News, they have finally added the road transportation industry to their foreign skilled worker visa program. It’s an attempt to double the estimated number admitted through this program and will potentially see skilled foreign workers able to drive buses, taxis and trucks by companies certified by the MLIT (Ministry of Land, Infrastructure, Transport and Tourism). Drivers will also require a minimum N3 level in Japanese proficiency given the demands of communication with passengers and customers alike. 

Nonetheless, we would argue it remains to be seen if such a worker from overseas—who holds a degree, truck driver license (valid in Japan) and Japanese proficiency—actually exists in practice. Considering, the need to fulfill a 240,000 driver shortage by 2027, we believe a much different approach is likely needed.

Photo: Aleksandar Malivuk / Shutterstock

If raising supply is one way to solve the ‘2024 Problem’, demand can also be better managed through efficiency increases. Prime Minister Kishida states the need to better automate placing cargo in and out of trucks and warehouses, and earlier this year raised the potential of self-driving vehicles (using reserved highway lines and higher speed limits) or alternative options like trains and ships. 

JR already has trialled cargo transportation via their bullet trains, but they are not alone. In tests conducted by the trucking association in Akita Prefecture, they found daily ~3 hour savings on average from measures like fully switching to pallets for carrying products and separating the collection and transportation of vegetables/fruits (otherwise performed by a single driver) and using collection hubs.

Efficiency savings from top-to-bottom will surely be essential to an industry also heavily reliant on stable gas prices. With driver pay already expected to rise, the twin effect of any further energy price rises may put further pressure on the industry.

The logistics industry, together with the e-commerce giants like Amazon, also needs to work better to reduced redeliveries. It may become inevitable for consumers to accept less convenient conditions over time and, as a society, perhaps it will be time to review our need for, and approach to, on-demand delivery services as whole.