How Japan is creating a sustainable and resilient future for the logistics industry

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Naoko Tochibayashi, Communications Lead, Japan, World Economic Forum, Naoko Kutty, Writer, Forum Agenda


  • New overtime regulations for truck drivers come into force this year in Japan.
  • The so-called 2024 problem is forcing the logistics industry to reassess its practices.
  • Public-private efforts can foster sustainable growth in the logistics industry.

As the economy continues its recovery from the COVID-19 pandemic, various challenges are coming to light. Among them, the “2024 problem” looming over Japan’s logistics industry stands out as an issue requiring urgent attention.

In Japan’s logistics industry, overtime regulations have historically been exempted on an exceptional basis due to labour shortages. However, starting this April, annual overtime work limits for truck drivers will be capped at 960 hours. This change stems from the Work Style Reform related laws, enacted in 2018 with the aim of creating a society where workers can choose diverse workstyles. These laws have been gradually implemented since 2019, focusing on correcting long working hours, expanding flextime systems, and ensuring fair treatment regardless of employment status, all contributing to improving Japan’s overall labour environment and productivity.

While the standard annual overtime work limit is typically set at 360 hours, the logistics and transportation sector faces a higher limit of 960 hours due to the unique nature of its operations.

While these regulations are expected to improve the working conditions for drivers, the labour shortage, especially among long-haul truck drivers, is accelerating, with an estimated shortfall of approximately 14% by 2024 and 34% by 2030 if measures are not taken. This impact raises concerns ranging from decreased revenue for logistics companies, reduced income for drivers due to shortened work hours, to increased logistics costs for shippers due to fare hikes.

Ahead of the impending logistics “2024 problem”, the Japanese government formulated a “Policy package for logistics innovation” and “Guidelines for shipper and logistics operator initiatives for logistics rationalization and productivity improvement” in June 2023. These guidelines require logistics operators, shippers, and consignees to reassess industry practices and make efforts to improve the efficiency of logistics processes. Building on these guidelines, efforts by both public and private sectors to foster sustainable growth in the logistics industry are gaining momentum.

Paving the way for solutions with the ‘physical internet’

Efforts to realize the “physical internet,” which applies the packet exchange mechanism of the internet to logistics to streamline logistics systems, are gaining momentum. The concept aims to improve the utilization rate of logistics resources by sharing transportation means and warehouses among companies. This involves transporting goods through warehouses along the route to the destination using fewer trucks, reducing environmental impact and constructing a sustainable logistics system. In pursuit of achieving this by 2040, the Japanese government has formulated a “Physical internet roadmap.” It outlines concrete steps that various industries should take by 2040, such as sharing and optimizing information on goods and transportation assets using IoT and AI, and standardizing logistics materials like pallets and container containers.

One notable initiative is the “NeLOSS” system, developed by Next Logistics Japan, a subsidiary of Hino Motors. It is the world’s first automatic dispatch and loading system using quantum computers. This system aims to maximize the loading rate and productivity of logistics trucks, which are said to fall below 40%. By automating the allocation and loading of cargo using quantum algorithms, NeLOSS reduces the time-consuming manual task, which typically takes about two hours, to just 40 seconds. It instantly calculates the optimal combination for loading cargo of different shapes, weights, and temperature ranges, and transports mixed cargo from various industries using the company’s developed double coupling trucks, which are equivalent to 2.5 large trucks.

With investments from 19 companies, including Asahi Group Japan, Nissin Foods Holdings, Bridgestone, and MUFJ Bank, Next Logistics Japan strengthens collaboration beyond industries, essential for realizing the ecosystem of the physical internet. Together with 42 other companies from different sectors, they are advancing the development of transport sharing mechanisms.

DISCOVER

How is the World Economic Forum contributing to build resilient supply chains?

Collaboration among consignees

The food retail industry is gaining momentum as they swiftly embark on logistics reforms. In regions like Kyushu, the Greater Tokyo Area, and Hokkaido, food supermarket operators have joined forces to establish study groups aimed at improving logistics. Recognizing the challenges of efficiently servicing numerous stores within the retail industry’s logistics network, these study groups prioritize cooperation over competition. Major supermarkets are collaborating to revise supply chain practicesextending order and delivery lead times and relaxing traditional rules that restrict procurement to the first third of a product’s shelf life, now eased to half. Additionally, they are exploring initiatives such as shared transportation trucks. With synchronized efforts from food retail industry players addressing both logistics efficiency and food loss reduction, these initiatives are expected to expand further in the future.

Modal shift: Increasing load efficiency while reducing emissions

Efforts to enhance transportation efficiency through modal shift, transitioning long-distance transportation from trucks to ships or railways, are gaining traction. Last September, Takeda Pharmaceutical collaborated with Mitsubishi Logistics and JR Freight to shift a portion of pharmaceutical transportation from trucks to rail. Using temperature-controlled railway containers, Takeda ensured compliant transportation with proper pharmaceutical distribution guidelines, expecting to reduce emissions by approximately 60% along transportation routes.

Moreover, Nippon Paper and Daio Paper initiated joint marine transportation using roll-on roll-off (RORO) ships in August last year. After Daio Paper ships products from its factory in Ehime Prefecture to the Tokyo metropolitan area, Japan Paper loads cargo from Chiba Prefecture onto the return trip of the same ship, bound for the Kansai region. This collaborative effort achieves both emission reduction and increased load efficiency.

Revolutionizing the logistics industry

According to the World Economic Forum’s report The Future of the Last-Mile Ecosystem, it is projected that the number of delivery vehicles operating on the roads of the top 100 cities worldwide will increase by 36% from 2019 to 2030. Seen as a crisis, the “2024 problem” presents an unparalleled opportunity to improve the working conditions for drivers, reduce environmental impact, and achieve digital transformation while responding to the rising demand in logistics.

Collaboration between the public and private sectors, innovative thinking unconstrained by traditional practices, and the adoption of cutting-edge technology will be the keys to forging a sustainable and resilient future for the logistics industry.


Discover more from The European Sting - Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology - europeansting.com

Subscribe to get the latest posts sent to your email.

Interesting reads

This article is published in association with United Nations.

Guterres warns of ‘wider war’ as Middle East conflict enters second month

The Middle East crisis has lurched into its second month, prompting UN Secretary-General António Guterres to issue a stark warning on Thursday morning that the world is “on the edge of a wider war” with catastrophic global implications. Speaking to the press outside the Security Council in New York, the UN chief painted a grim picture of the rapidly […]
This article is published in association with United Nations.

Middle East war: Energy crunch hits vulnerable nations

The war in the Middle East and the near halt to shipping in the Strait of Hormuz has amplified the energy crunch facing developing nations in Africa and South Asia that rely heavily on imported liquid gas, food and fertilizers.  And with Brent Crude still trading at more than $100 per barrel, many workers and households have reverted to […]
© WHO UN officials in Cyprus oversee the loading of emergency humanitarian supplies for Gaza.

Breaking the Gaza aid bottleneck: 106-tonne delivery arrives via new sea route

This article is published in association with United Nations. The World Health Organization (WHO) has facilitated the delivery of some 106 metric tonnes of lifesaving nutrition supplies to the Gaza Strip – the first shipment via a mechanism to deliver aid by sea, in line with a UN Security Council resolution and amid the ongoing war […]
© IMO Crew members take a break on a ship. (file)

‘No precedent’ for seafarers caught in war zone in post-WW2 era

This article is published in association with United Nations. Some 20,000 seafarers remain stranded on ships in the Strait of Hormuz as the war in the Middle East continues, a situation which has been described as unprecedented in the post-Second World War era. The seafarers are working on some 2,000 ships including oil and gas tankers, […]
© UNIFIL UNIFIL peacekeepers on patrol along the Blue Line in southern Lebanon.

UN condemns killing of two more peacekeepers in Lebanon

This article is published in association with United Nations. The United Nations has condemned two consecutive days of deadly attacks on peacekeepers serving with the UN Interim Force in Lebanon (UNIFIL), amid rising hostilities between Israeli forces and Hezbollah militants.  Two Indonesian peacekeepers were killed on Monday, and two more were injured, in an explosion that hit a UNIFIL logistics convoy, destroying […]
© WFP/Arete/Ali Yunes A building in Beirut lies in ruins after airstrikes in Lebanon.

Middle East war: Attacks on vital healthcare, evacuation strike fears

This article is published in association with United Nations. Almost one month since Israeli and US airstrikes on Iran began, sparking a wider regional war, UN agencies and partners on Friday highlighted the terror among civilians fleeing bombardment, with “no safe space” to go. In a rare piece of good news, though, the UN World Health […]
UN News/Daniel Dickinson The closure of the Hormuz strait is impacting trade on a global scale.

Persian Gulf crisis impacting food security, FAO warns

This article is published in association with United Nations. The intensifying conflict in the Persian Gulf “has triggered one of the most rapid and severe disruptions to global commodity flows in recent times,” the Chief Economist with the UN Food and Agriculture Organization (FAO) said on Thursday.  The crisis is affecting agricultural production and food security worldwide, with impacts […]

Gulf war ‘out of control’, Guterres warns, as UN appoints envoy to push for peace

This article is published in association with United Nations. UN Secretary-General António Guterres has warned that the escalating Gulf war is “out of control”, urging all sides to step back from the brink and allow diplomacy to prevail, as he announced the appointment of a senior envoy to spearhead peace efforts. Speaking outside the UN Security Council in New York […]
This article is published in association with United Nations.

Gaza: Commitment to US-backed plan crucial to recovery, Security Council hears

This article is published in association with United Nations. As tensions escalate in the Middle East, the international community must not lose sight of the situation in Gaza, an official with US President Donald Trump’s Board of Peace across the shattered enclave said on Tuesday in his first appearance in the UN Security Council.  High Representative […]
© IMF/Stephen Jaffe The UN is warning of surging food and fuel prices driven by the escalation of the conflict in the Middle East.

Dire fertiliser shortage a lurking threat due to Hormuz crisis

This article is published in association with United Nations. Since the start of the Middle East conflict with Israeli and US strikes on Iran on 28 February, concerns have been growing over rising oil and commodity prices. At the centre of it lies the Strait of Hormuz – one of the world’s most critical maritime chokepoints […]
© WFP/Arete/Ali Yunes A building in Beirut lies in ruins after airstrikes in Lebanon.

War in the Middle East: Iran nuclear facility hit as equivalent of ‘one classroom of children’ killed, wounded daily in Lebanon

This article is published in association with United Nations. More than 1,000 people have been killed and 2,584 injured in Lebanon since the start of the US-Israel war on Iran, UN officials said Saturday. Key points “Recent escalation has killed or wounded the equivalent of one classroom of children every day,” said Ted Chaiban, deputy chief […]
This article is published in association with United Nations.

Middle East war shockwaves ripple through Asia-Pacific fuel and supply chains

This article is published in association with United Nations. The fallout from the war in the Middle East is rippling far beyond the Gulf, disrupting fuel supplies, shipping routes and supply chains across Asia and the Pacific, with some of the region’s most vulnerable economies already feeling the strain through rising prices, rationing and threats to […]
© WFP/Jaber Badwan A woman carries food rations distributed by the World Food Programme in Almaghazi, Gaza.

Humanitarian needs in Gaza deepen as aid access remains constrained

This article is published in association with United Nations. Humanitarian needs are continuing to grow again across Gaza, the UN agency assisting Palestine refugees (UNRWA) said on Wednesday, amid mounting pressures on aid delivery and the ongoing conflict in the Middle East.  “Families face ongoing hardship” as access to essential aid remains limited and many continue […]
© WFP/Khadija Dia Food is distributed to displaced families sheltering in a school in Tariq Jdide, Beirut.

Middle East war risks pushing 45 million more people into acute hunger

This article is published in association with United Nations. The Middle East war could cause the worst disruption to lifesaving humanitarian work since COVID, the UN World Food Programme (WFP) warned on Tuesday, as the UN chief again demanded an end to the widening conflict. “The Secretary-General asserts once more that the war in the Middle […]
© World Vision Smoke rises in Beit Mery, close to the Lebanese capital, Beirut, following an airstrike.

Middle East war’s ‘spiral of conflict’ drives mounting civilian toll

This article is published in association with United Nations. The widening war in the Middle East and its growing impact on civilians came under scrutiny at the UN in Geneva on Monday, as independent experts briefing the Human Rights Council warned of escalating violence following the onset of Israeli and US strikes on Iran and counterstrikes […]
© Mousawat A mother and child displaced by the conflict in Lebanon receiving care at a clinic.

Middle East war: Women in Lebanon forced to give birth on roadside

This article is published in association with United Nations. As the UN Secretary-General touched down in Beirut on Friday in solidarity with the people of Lebanon, UN agencies highlighted the dangers for civilians and particularly pregnant women and migrant workers, amid ongoing airstrikes and rocket fire between Hezbollah fighters and Israel.  “There’s 11,600 pregnant women who […]
© WFP/Arete/Ali Yunes Some residents of Beirut who have been displaced by the conflict are now living on the streets of the Lebanese capital.

‘Perfect storm’: Lebanon crisis deepens as civilians bear the brunt

This article is published in association with United Nations. Lebanon is facing a “perfect storm of unpredictable challenges” as conflict, mass displacement and dwindling humanitarian resources converge, the UN’s Resident and Humanitarian Coordinator in Lebanon, Imran Riza, has warned. The current escalation began on 2 March, when outgoing fire by Hezbollah drew a strong retaliation from […]
© WFP/Maxime Le Lijour People living in Gaza have received humanitarian aid from the UN throughout the conflict with Israel.

UN relief chief condemns ‘$1 billion-a-day’ cost of war in Middle East

This article is published in association with United Nations. The UN’s emergency relief chief on Wednesday condemned the “$1 billion-a-day” cost of the war in the Middle East, at a time when humanitarian needs are soaring and aid funding is falling dangerously short. “We’re seeing the consequences spread faster than we can respond”, warned the UN emergency […]
© UNICEF/Azizullah Karimi Afghan returnees from Iran gather at the Islam-Border, near Herat in western Afghanistan (file).

‘Toxic rain’ warning from oil depot strikes amid ongoing Middle East war

This article is published in association with United Nations. Toxic “black rain” linked to strikes on oil depots, mass displacement and continuing disruption to aid supply chains are upending lives across the Middle East and beyond after 10 days of war in the region, UN humanitarians said on Tuesday.  Speaking to reporters in Geneva, UN Human […]

Why don't you drop your comment here?

Go back up

Discover more from The European Sting - Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology - europeansting.com

Subscribe now to keep reading and get access to the full archive.

Continue reading

Discover more from The European Sting - Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology - europeansting.com

Subscribe now to keep reading and get access to the full archive.

Continue reading

The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology – europeansting.com