The Transformation of Japan Post

1

• The Transformation of Japan Post
• into a Global Player
• Tim Goydke
• Bremen University of Applied Sciences

2
Introduction

• Justification for state intervention in postal
  service sector
• Market failure
• Existence of natural monopoly
• Deregulation measures in several countries since
  the late 1980s
• Reasons
• Continuous losses
• Inferior quality of services
• New Zealand 1986, in Europe Finland 1991
• No full deregulation
• Monopolies in core markets
• Entry barriers

3
Japan Post

• Basic data
• 271,000 employees (Royal Mail 193,000, DPWN
  Mail 134,000)
• 25,000 branches (Royal Mail 14,000, DPWN 12,000)

Mail items per capita
Source Manner-Romberg 2004
4
Japan Post

• Postal Savings Bank (Yûcho)
• Deposits of 227 trillion Yen (approx. 2 bill.
  US)
• Largest financial institution of the world
• 30 of all private savings deposits in Japan
• Postal Life Insurance (Kampo)
• 40 per cent of all assets in life insurances in
  Japan

Comparison of Kampo and Private Life Insurers
Source Aketa 2004, based on different sources
from 2002, 2003, and 2004
5
Japan Post

• Outline of the privatisation process

Ministry of Posts and Telecommuni-cations
Postal Administration
Preparatory Phase I Jan. 2001 - March 2003
Orders
Ministry of Public Management, Home Affairs,
Posts and Tele- communications
Postal Services Agency
Preparatory Phase II Apr. 2003 - Sept. 2007
Supervision
Ministry of Internal Affairs and Communications
Japan Post Public Corporation
Postal Services
Savings
Life Insurance
Regulation
Postal Privatization Commission
6
Japan Post

• Outline of the privatisation process (ctd.)

Transitional Phase Oct. 2007-Sept. 2017
Regulation
PCC
Japan Post Holding Company
100
Government
100
100
100?33
100?33
Postal Services Co.
Post Office Co.
Postal Life Insurance Co.
Post Savings Bank Co.
Final Stage from Oct. 2017
33,3
Japan Post Holding Company
Government
100
100
0
0
Postal Services Co.
Post Office Co.
Postal Life Insurance Co.
Post Savings Bank Co.
Postal Privatization Commission
7
Comparison
8
Internationalisation of Deutsche Post

• Stage 1 (until 1997)
• Investment in infrastructure for mail and
  express delivery
• Stage 2 (until 2002)
• Expansion of geographic scope and capabilities
• Acquisitions
• 2000 Danzas, Nedlloyd ETD, ASG
• 2001 AEI
• 2002 DHL
• 2005 Exel

9
Internationalisation of Deutsche Post

• Stage 3 (2003)
• Integration of logistics and express activities
• under the brand name DHL
• Stage 4
• Expansion and strengthening of the global
  network

10
Japan Posts Move into Foreign Markets

• Expansion into market for cross-border express
  delivery

Top freight markets in 2025

Share of 2025 freight traffic
21.1
7.5
7.1
28.4
11.2
) Freight Tonnes Kilometres
Source Airbus 2005
Source Airbus 2005
11
Japan Posts Move into Foreign Markets
Development of the freight market in China
in Bill. Euro
Source DPWN 2005
12
Japan Posts Move into Foreign Markets

• October 2005 Cooperation with ANA
• Joint cargo airline AJV (ANA JP Express) from
  August 2006
• ANA Cargo 20 of airborne cargo between Japan
  and China in 2005

AJV shareholders (as of Aug. 06)
13
Japan Posts Move into Foreign Markets

• Tasks
• Scheduled international cargo transportation
• Non-scheduled international cargo transportation
  and freighter aircraft operations
• Air cargo agency services

14
Japan Posts Move into Foreign Markets

• Partners motivation
• ANA
• Stagnation in passenger operations
• Growth potential in air cargo
• Nippon Express
• Global delivery services for urgent documents
• Network of 1,087 offices in Japan and 301 offices
  overseas
• MOL
• Port-to-port freight delivery
• Cargo forwarding, warehousing and land
  transportation
• Network of branch offices in Asia

15
Japan Posts Move into Foreign Markets

• Strategic alliance with TNT 2005
• International premium express product for
  Japanese customers
• Link from Asia to the European markets
• TNT
• Network of 25 own and 50 franchised service
  locations in China (as of 2005)
• 2006 acquisition of Hoau Group
• Japan Post
• Access to large Japanese customers
• Large domestic network

16
Comparison

• Competitors
• FedEx shifted freight hub for Asia-Pacific from
  the Philippines to Southern China (new logistics
  center for 150 mil. US)
• UPS similar center in Shanghai in 2007 for 500
  Million US
• DHL new Central Asia Hub in Hong Kong in 2004

The international express market in China (2004)
Source Hsu 2005
17
Comparison

• Internationalisation strategies

18
Conclusion

• Similar expansion strategies of Japan Post and
  Deutsche Post
• Japan Post as late-comer
• Strong competitors
• Concentration on express delivery in Asia-Pacific
• Still access to immense financial assets
• Major takeover expected