EDITORIAL: Japan Post's blunder

Yu-Pack, the parcel delivery service operated by the Japan Post Service Co., is struggling with acute delays in its delivery schedule. Last week's integration of delivery operations under Japan Post and Nippon Express Co., Ltd., viewed as the first step in rebuilding the group's mainstay business arm, got off to a rocky start.

The slip-up was mainly due to management methods that are sorely lacking in consideration for either customers or Japan Post's own employees. One can assume that current moves to reverse the privatization process of the company has something to do with the latest trouble as well as with the stubbornly entrenched bureaucratic mind-set.

Or the Japan Post management team, anxious to expand financial services, might have neglected the mail and delivery arms that comprise the enterprise's mainstay business.

Just as cuts were made in employees accompanying the integration, the overlapping of the summer gift-giving season with the run-up to Sunday's Upper House election prompted a sharp uptick in the volume of parcels handled. Distribution centers in key urban districts and other locations were unable to process the influx. A vicious circle has ensued in which delays beget further delays.

The response of Japan Post's management team to this predicament is dumbfounding. The delays were downplayed. Likewise, it appeared to be in no rush to bring in reinforcements.

Given the soaring popularity of Internet shopping, survival in the parcel-shipping field boils down to the precision of deliveries. This mess occurred just as Yu-Pack used the merger with Nippon Express Pelican delivery operations to launch a service that supposedly could designate meticulous delivery times. The damage to its reputation is clearly severe with customers switching to other handlers.

We wonder whether Japan Post gave much thought from the outset to the potential for confusion and other problems stemming from the integration. The time-consuming and costly work of interfacing computer systems and hardware was deferred. There was also a lack of training, testing and other crucial steps to prepare frontline workers for the shift.

For a member of the service industry, where cutthroat competition makes customer trust the most prized asset, the sense of crisis beggars belief. This smacks of ignorance with workaday world realities, attempts to scrape by with a top-down chain of command of so-called government enterprises. At this rate, the aspiration of bolstering market competitiveness will remain a distant pipe dream.

The idea of merging the parcel delivery operations of Japan Post and Nippon Express was spelled out in October 2007, during the tenure of Yoshifumi Nishikawa as Japan Post president. The plan, however, has strayed off-course.

Japan Post Holdings Co. established the merger company JPExpress Co. with Nippon Express in 2008, with the Pelican services transferred to the new enterprise. But the Ministry of Internal Affairs and Communications refused to approve the transfer of Yu-Pack operations to JPEX. This forced Japan Post to carry on that business in a half-baked fashion, running up cumulative losses of nearly 100 billion yen ($1.37 billion).

When former Finance Ministry bureaucrat Jiro Saito took over as the new president of Japan Post Holdings last fall, he appointed ex-postal and telecommunications bureaucrat Shinichi Nabekura as president of Japan Post Service. In the end, Japan Post absorbed the parcel delivery business of the joint venture. Desperate to halt the flood of red ink and turning a deaf ear to internal dissent, the merger was pushed through at the height of the hectic mid-summer delivery season.

The postal services reform bill scrapped at the previous Diet session claimed that expanded banking, insurance and other financial services are key to shoring up Japan Post's sluggish mail and parcel delivery operations.

This delivery debacle underscores the need to review the importance of financial services, as well as the mood bent on making the enterprise a government entity again. Clearly, Japan Post should get back to the guiding principle of concentrating on its mainstay strengths and privatizing its business.

--The Asahi Shimbun, July 7