What is MLIT’s Approach to the “2024 Problem in the Logistics Industry”? An easy-to-understand explanation of the background of the problem and its impact

Many people still do not understand the 2024 problems in the logistics industry caused by the Workplace Reform Act.

This article will explain the details of the legal revision, its expected impact, and what the government and MLIT are doing about it. It is important to understand the trends of the government and the industry, and then apply them to your own operations.

What is the 2024 problem for the logistics industry?

The 2024 problem in the logistics industry is the general term for the problems that will arise after April 1, 2024, when the annual overtime work limit will be limited to 960 hours under the Workplace Reform Law. Due to this problem, transportation and logistics providers may face declining sales and profits.

In addition, a decrease in working hours could also reduce driver income. Furthermore, the problem of labor shortages could become more serious, posing a major challenge to the logistics industry.

The impact of the 2024 issue and measures to address it have been the focus of much attention since the law went into effect. The logistics industry will be required to review working hours and improve efficiency.

For example, optimization of delivery routes and introduction of a labor time management system are being considered. In addition, to address labor shortages, it is necessary not only to promote reforms in work styles, but also to focus on improving the ease of work and compensation of drivers.

The following chapters will provide more information on working hours and the Workplace Reform Bill.

Limits on working hours due to reforms in the way we work

The 2024 problem in the logistics industry is related to the maximum working hour limit regulation under the Workplace Workplace Reform: from April 1, 2024, the “Maximum Overtime Work Hours for Vehicle Driving Operations” will apply. This regulation will limit annual overtime hours for drivers in the logistics industry to 960 hours.

Long working hours are the norm in the logistics industry, and there is a need to improve the working environment. The goal is to improve workers’ health and the quality of their work. It is considered important to reduce the excessive and burdensome working hours and to develop a more comfortable working environment.

On the other hand, these regulations may exacerbate the problem of labor shortages. It is important for the logistics industry to not only promote reforms in work styles, but also to focus on improving the treatment and working conditions of drivers, thereby proactively working to secure workers and improve their compensation.

Overview of the Workplace Reform Bill

The Working Conditions Reform Bill was enacted to improve the working environment against the backdrop of social challenges such as the declining birthrate, aging population, and shrinking workforce. The logistics industry is also required to review working hours and improve working conditions.

The law is being phased in starting in April 2019. For example, overtime work in excess of 720 hours per year will be prohibited and a cap of 960 hours per year will be introduced. Violations of this may result in penalties.

Also important in the bill is the principle of equal pay for equal work. As a result, overtime work in excess of 60 hours will be subject to premium wages. In the logistics industry, dealing with this extra pay is also an important issue. It is necessary to work toward the sustainable development of the logistics industry by appropriately managing working hours and improving the treatment of workers.

Impact of the 2024 Problem on the Logistics Industry

The impact of the 2024 problem on the logistics industry varies depending on your position. The following is an explanation from the standpoint of three parties: transportation and logistics companies, drivers, and shippers.

1. Impact on transportation and logistics companies

As for the impact on transportation and logistics providers, the amount of cargo that can be carried per day may decrease, resulting in lower sales and profits.

In addition, while a reduction in labor costs can be expected as drivers work fewer hours, the total negative impact is likely to be higher because fixed costs such as rent and depreciation will remain the same. Logistics providers will need to take measures to address declining sales and improve efficiency.

2. Impact on drivers

The impact on drivers is that many drivers’ incomes may decrease due to overtime restrictions. The decrease in pay may cause more drivers to consider changing jobs. As a result, labor shortages in the logistics industry may become even more severe.

The logistics industry needs to work on improving the treatment and working conditions of its drivers. Measures to secure and retain workers are important.

3. Impact on shippers

As for the impact on shippers, logistics companies may consider increasing freight rates to cope with declining sales and profits. This would result in increased logistics costs for shippers, which would be a management burden.

Increased costs could be passed on to product prices or lead to profit compression. It is important for shippers to review logistics costs and improve efficiency. Cooperation with logistics partners and effective risk management are required.

MLIT's Efforts Toward the 2024 Issue

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is working to address the 2024 problem. In cooperation with related ministries and agencies, we are holding study groups to realize sustainable logistics. As a specific example, the “Law Concerning Comprehensive Improvement and Promotion of Efficiency in Distribution Operations (Law for Comprehensive Improvement of Efficiency in Distribution Operations)” supports the efficiency improvement of distribution operations.

Businesses wishing to receive assistance consult with the Transportation Bureau, prepare a business plan that will lead to efficiency improvements, and submit an application. If the application is approved, the business can receive “Comprehensive Efficiency Improvement Plan Certification. If the certification is obtained, the business can receive subsidies and special tax exemptions.

Labor savings can also be achieved by increasing efficiency through consolidation of transportation networks and joint transportation and delivery. Logistics providers should actively utilize MLIT’s initiatives to build a sustainable logistics system.

Inauguration of the Logistics and Motor Vehicles Bureau

In October 2023, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) established the Logistics and Motor Vehicles Bureau to accelerate its response to the “2024 problem. With this move, the Logistics Policy Division of the Policy Bureau and the Automobile Bureau, which has jurisdiction over the trucking industry, were merged to create a structure to promote the development of laws and secure budgets.

In addition to improving driver wages and working longer hours, this initiative also emphasizes the promotion of electrification and automation of trucks. The goal is to build a sustainable logistics system, which should reduce the burden on the environment and improve efficiency.

We will contribute to the sustainable development of the logistics industry by strengthening cooperation with the transportation industry and promoting improvements in the working environment and technological innovation.

summary

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is working to solve the 2024 problem in the logistics industry. Through the “Law Concerning the Promotion of Comprehensive Improvement and Efficiency of Distribution Operations (Comprehensive Logistics Efficiency Improvement Law)” and the “Logistics and Automobile Bureau” established in October 2023, the Ministry aims to improve the working environment and promote technological innovation to build a sustainable logistics system.

Transportation and logistics companies should make good use of government programs and also work to improve their own operations. In addition, there are cases where a review of operations and facilities that are not directly related to the company’s business can be effective. For example, a review of warehouse operations is one important measure.

In recent years, an increasing number of companies have chosen to build “tent warehouses” as a means of more efficient warehouse operations. A tent warehouse is a building constructed with a steel frame assembled and lined with a sheet membrane. The main advantages are as follows

• low cost
• short-term construction
• Sufficient durability and weather resistance

Tent warehouses are weather-resistant and can keep the inside of a warehouse so bright during the day that lighting is unnecessary. Many advanced manufacturers and logistics companies have introduced this system, and it is expected to be deployed for more efficient warehouse operations and logistics business.

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