2023/07/20laborLabor Law
"What is the 2024 logistics problem? " From its specific impact to issues that need to be addressed
1 What is the 2024 logistics problem?
1. The 2024 problem refers to the various problems that will arise as a result of the Law on Workplace Reform regulating the maximum annual overtime hours for automobile driving work to 960 hours from April 2024 onward.
2. Various regulations have already been applied, including a cap on annual overtime hours to 720 hours starting in April 2019 (April 2020 for small and medium-sized enterprises), except in some industries such as the automobile driving and construction industries.
For some industries, such as the automobile driving industry, where long working hours are the norm, the application of the upper limit was deferred as a special exception, but this deferral measure will finally be terminated in April 2024.
2. Various regulations have already been applied, including a cap on annual overtime hours to 720 hours starting in April 2019 (April 2020 for small and medium-sized enterprises), except in some industries such as the automobile driving and construction industries.
For some industries, such as the automobile driving industry, where long working hours are the norm, the application of the upper limit was deferred as a special exception, but this deferral measure will finally be terminated in April 2024.
2 How will the 2024 problem affect the logistics industry?
1. Decrease in sales and profits of transportation companies
Since the overtime cap will reduce the number of drivers' working hours, the unit sales price per driver will decrease, resulting in a decrease in overall company sales and profits.
This may cause many transportation companies to face difficulties in running their businesses.
2. Potential for Decreased Driver Income and Job Turnover
The cap on overtime hours will reduce premium wages for drivers who have been working over the limit, and a decrease in mileage may lead to a decrease in wages, including operating allowances.
In addition, the number of drivers who leave the workforce may increase due to the decrease in income, which may further accelerate the shortage of human resources in the logistics industry.
3. Freight Rate Increases by Shippers
To compensate for declining sales and profits of carriers and reduced income of drivers, carriers may be forced to consider raising freight rates.
Higher freight rates will be passed on to consumers in the form of higher prices for goods, which will inevitably increase the burden on consumers.
In other words, the 2024 problem is not only an issue for the logistics industry, but also for our daily lives, such as food, daily commodities, and infrastructure supported by logistics, where cost increases are a concern.
Since the overtime cap will reduce the number of drivers' working hours, the unit sales price per driver will decrease, resulting in a decrease in overall company sales and profits.
This may cause many transportation companies to face difficulties in running their businesses.
2. Potential for Decreased Driver Income and Job Turnover
The cap on overtime hours will reduce premium wages for drivers who have been working over the limit, and a decrease in mileage may lead to a decrease in wages, including operating allowances.
In addition, the number of drivers who leave the workforce may increase due to the decrease in income, which may further accelerate the shortage of human resources in the logistics industry.
3. Freight Rate Increases by Shippers
To compensate for declining sales and profits of carriers and reduced income of drivers, carriers may be forced to consider raising freight rates.
Higher freight rates will be passed on to consumers in the form of higher prices for goods, which will inevitably increase the burden on consumers.
In other words, the 2024 problem is not only an issue for the logistics industry, but also for our daily lives, such as food, daily commodities, and infrastructure supported by logistics, where cost increases are a concern.
3 Issues to be addressed by the entire logistics industry in preparation for the 2024 problem
1. Securing Human Resources (Creation of a comfortable work environment)
(a) As mentioned above, there is a risk that sales and profits per driver will decline, so securing human resources is important to maintain and improve these figures.
However, the logistics industry has long been known for its labor management problems, such as long working hours and low wages, and the shortage of human resources has become a chronic problem.
In other words, to address the issue of securing human resources, it is important to create a workplace environment in which drivers can work comfortably.
(b) In addition to reviewing the salary structure, such as raising the base salary and providing bonuses, it is also necessary to create a workplace environment that is easy to work in for women and elderly people, who have not been hired as drivers in the past, by introducing a shortened working hour system, providing childcare leave, and establishing a system for human resource development and career advancement.
2. Improvement of Labor Productivity
(a) Until now, long working hours were the norm in Japanese culture, and there was a tendency for them to be glorified, but those days are over.
(b) Drivers' working hours include not only driving but also loading and unloading cargo at loading/unloading locations (cargo handling time) and waiting time (cargo waiting time), which is one of the factors contributing to long working hours.
(c) Therefore, it is necessary for shippers and carriers to work together to increase productivity per hour by reducing waiting time (compliance with operation plans) and improving the efficiency of cargo handling operations (mechanization of cargo handling operations).
(d) In order to shorten transportation time and reduce drivers' driving time, it is also necessary to consider new transportation methods, such as operation plans that make effective use of expressways, relay transportation in cooperation with other carriers for long-distance transportation, and cargo transport by shippers cooperating and combining loads when there is room in the cargo to be loaded, in order to improve operational efficiency. In such cases, it is necessary to consider new transportation methods to improve operational efficiency.
3. Introduction and utilization of IT tools, etc.
(a) In order to reduce working hours and improve efficiency, it is also important to utilize IT systems to increase operational efficiency. For example, truck reservation acceptance can reduce waiting time for cargo, and a fleet management system can improve truck utilization rates. In addition, by using a warehouse management system in cooperation with shipper companies, it is possible to prevent overstocking and shortages, thereby reducing waste in transportation operations. By implementing these various systems, operational efficiency is increased and sales can be secured in a shorter period of time.
(b) In addition, various examples of efforts have recently been reported, such as the use of AI to match shippers from different industries to formulate optimal delivery plans and the standardization of dispatch operations using the cloud (Japan Trucking Association, "Action Plan for Realization of Workplace Reform in the Trucking Industry").
(c) Furthermore, the government is also focusing on DX (digital transformation) of the logistics industry through the introduction of IT (Ministry of Land, Infrastructure, Transport and Tourism, "Recent Logistics Policy"), and it is expected that various operational reforms will be implemented in the future.
4. Promoting understanding among general consumers and other industries
(a) Since the 2024 problem may affect not only the logistics industry but also general consumers and other industries, it is important to ensure that the problem is commonly recognized as a problem for society as a whole. Therefore, it is necessary to disseminate the problem itself and promote understanding of the problem through SNS, websites, pamphlets, and other media.
(b) Once general consumers have a better understanding of the issue, the soil can be prepared for making logistics sustainable by improving and promoting the workplace environment for drivers, improving the efficiency of transportation operations and optimizing freight rates in cooperation with shipper companies, and so on.
(a) As mentioned above, there is a risk that sales and profits per driver will decline, so securing human resources is important to maintain and improve these figures.
However, the logistics industry has long been known for its labor management problems, such as long working hours and low wages, and the shortage of human resources has become a chronic problem.
In other words, to address the issue of securing human resources, it is important to create a workplace environment in which drivers can work comfortably.
(b) In addition to reviewing the salary structure, such as raising the base salary and providing bonuses, it is also necessary to create a workplace environment that is easy to work in for women and elderly people, who have not been hired as drivers in the past, by introducing a shortened working hour system, providing childcare leave, and establishing a system for human resource development and career advancement.
2. Improvement of Labor Productivity
(a) Until now, long working hours were the norm in Japanese culture, and there was a tendency for them to be glorified, but those days are over.
(b) Drivers' working hours include not only driving but also loading and unloading cargo at loading/unloading locations (cargo handling time) and waiting time (cargo waiting time), which is one of the factors contributing to long working hours.
(c) Therefore, it is necessary for shippers and carriers to work together to increase productivity per hour by reducing waiting time (compliance with operation plans) and improving the efficiency of cargo handling operations (mechanization of cargo handling operations).
(d) In order to shorten transportation time and reduce drivers' driving time, it is also necessary to consider new transportation methods, such as operation plans that make effective use of expressways, relay transportation in cooperation with other carriers for long-distance transportation, and cargo transport by shippers cooperating and combining loads when there is room in the cargo to be loaded, in order to improve operational efficiency. In such cases, it is necessary to consider new transportation methods to improve operational efficiency.
3. Introduction and utilization of IT tools, etc.
(a) In order to reduce working hours and improve efficiency, it is also important to utilize IT systems to increase operational efficiency. For example, truck reservation acceptance can reduce waiting time for cargo, and a fleet management system can improve truck utilization rates. In addition, by using a warehouse management system in cooperation with shipper companies, it is possible to prevent overstocking and shortages, thereby reducing waste in transportation operations. By implementing these various systems, operational efficiency is increased and sales can be secured in a shorter period of time.
(b) In addition, various examples of efforts have recently been reported, such as the use of AI to match shippers from different industries to formulate optimal delivery plans and the standardization of dispatch operations using the cloud (Japan Trucking Association, "Action Plan for Realization of Workplace Reform in the Trucking Industry").
(c) Furthermore, the government is also focusing on DX (digital transformation) of the logistics industry through the introduction of IT (Ministry of Land, Infrastructure, Transport and Tourism, "Recent Logistics Policy"), and it is expected that various operational reforms will be implemented in the future.
4. Promoting understanding among general consumers and other industries
(a) Since the 2024 problem may affect not only the logistics industry but also general consumers and other industries, it is important to ensure that the problem is commonly recognized as a problem for society as a whole. Therefore, it is necessary to disseminate the problem itself and promote understanding of the problem through SNS, websites, pamphlets, and other media.
(b) Once general consumers have a better understanding of the issue, the soil can be prepared for making logistics sustainable by improving and promoting the workplace environment for drivers, improving the efficiency of transportation operations and optimizing freight rates in cooperation with shipper companies, and so on.
4 Conclusion
As mentioned above, the 2024 problem is a serious and urgent issue that should be addressed immediately, affecting not only the logistics industry, but also general consumers and other industries.
In order to address this issue, transportation companies need to take measures based on the Labor Standards Law and other labor-related laws, such as correcting drivers' working hours and reviewing the salary structure.
Shippers also need to review their transportation and logistics consignment agreements with carriers, including a review of freight rates and transportation details and conditions.
However, each review requires a thorough understanding of the structure of labor-related laws, including those related to the Workplace Labor Reform Act, so please consult with a lawyer or other expert if you have any questions about your company's policies.
In order to address this issue, transportation companies need to take measures based on the Labor Standards Law and other labor-related laws, such as correcting drivers' working hours and reviewing the salary structure.
Shippers also need to review their transportation and logistics consignment agreements with carriers, including a review of freight rates and transportation details and conditions.
However, each review requires a thorough understanding of the structure of labor-related laws, including those related to the Workplace Labor Reform Act, so please consult with a lawyer or other expert if you have any questions about your company's policies.