Parcel firms expand direct mail services

A potentially profitable regulatory change has landed on the doorstep of parcel delivery companies. And Yamato Transport Co. is wasting no time in getting the wrapping off its new business plans.

The nation’s largest private parcel delivery service and some of its rivals plan to expand their home delivery of unsolicited direct mail, magazines and catalogs.

These moves are a response to the government’s recent decision to relax regulations governing the sort of mail the private sector is permitted to handle.

Posts minister Toranosuke Katayama opened the door for private delivery companies to snare a bigger share of the fast-growing market on July 4, when he told a Diet committee that certain kinds of direct mail will no longer be regarded as “personal letters.” Previously, such letters, which include direct mail and items like credit cards, could only be delivered by the state-operated postal system.

Yamato Transport began offering limited mail delivery in 1996. During the business year that ended in March 2002, the company delivered 570 million items of direct mail, magazines and catalogs, racking up 58.4 billion yen in sales.

To ensure that it will be able to handle the large volume of mail it anticipates in the greater Tokyo area, Yamato will add a new automated postal code reader at one of its sorting plants in the city in November. It will be the fourth the company has installed since acquiring its first in 1999.

Sagawa Express Co., a rival that began delivering those forms of mail in 2000, hopes to nearly triple sales generated by its mail delivery services to 15 billion yen for the current business year that ends next March.

Nippon Express Co., meanwhile, entered the market just last year. The company handled 73 million items in fiscal 2001.

Price cuts are key to Yamato’s strategy. The company, which currently charges 160 yen for nationwide delivery of all pieces of mail weighing 300 grams or less, plans to revise its rate structure to ensure that it is competitive with the state-run postal system.

Currently, Yamato undercuts the state system when it comes to items weighing more than 100 grams and 300 grams or less.

But Yamato officials concede that the company’s prices are sometimes higher for many pieces of direct mail weighing 100 grams or less.