Yamato Transport’s 2.3% y-o-y drop in Q3 revenue to JP¥500.2bn (€3.12bn) and a 21.4% fall in operating profit to ¥38.0bn was caused by a variety of factors including a softer than expected peak season. These figures were offset somewhat by a revised parcel pricing structure.
Cumulative volumes dropped in ranges from 2.3% for their largest product TA-Q-BIN to -9.4% for their smallest product, Kuroneko DM-BIN. These were offset by a new pricing structure that ranged from +9% for private customers (who account for 10% of the company’s business) to +2% for corporate customers that account for 90% of Yamato Transport’s business.
The volume drops were caused by a softer than expected November to December peak e-commerce delivery season. This was led by consumer confidence, as shown by falls in delivery rates outside of discounting periods and increased volumes during those discounting periods. Yamato Transport’s leadership has also pointed toward a move away from e-commerce back to bricks and mortar shopping, continuing the post pandemic trend.
Operating costs and profit was hit by inflation and increased employee costs. A rise in hourly wages and peak season operating costs impacted the bottom line, while inflation impacted international parcel export volumes. The company also said that domestic last mile productivity was impacted by lower than expected volumes, that were below their weakest forecasts, suggesting overcapacity in the peak season.
These factors have informed the short term strategy of the company. With the coming ‘2024 problem’ where driver overtime will be vastly restricted in Japan from April 2024, Yamato Transport has been looking into driver education and other soft means of retaining employees. At the same time, it has been consolidating regional trunk routes to manage volumes.
The company forecasts lower volumes, revenues and profits for the full year due to all of the factors raised above. It seems that the macroeconomic issues affecting North America and Europe also have had wider impacts too.
Author: Richard Shrubb
Source: Ti Insights
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