Japan Post delivers limited progress
Competition between Japan Post and private door-to-door delivery firms in the parcel delivery market has intensified in the three months since the new public corporation took over the former state-run postal services in April.
However, according to analysts, little progress has been made in the debate over the privatization of the corporation's postal savings and life insurance services, despite calls from the financial industry for reforms in these areas.
The new public corporation has launched a series of new services after having introduced private sector management practices.
The liberalization of the industry in April also has boosted competition over delivery services. Two motorcycle courier companies, including industry leader Sokuhai Co. based in Shinagawa Ward, Tokyo, started in early June special delivery services, such as three-hour delivery for parcels costing 1,000 yen or more per delivery. Four additional companies began the service Tuesday, and five more are expected to join the competition by September. However, most companies have failed to see a significant increase in orders besides their conventional motorcycle courier service.
Meanwhile, none of the private delivery companies have started delivering letters nationwide, a service that was opened to competition in April after previously being the sole domain of the state-run postal services.
Instead, competition between the public corporation and the private sector is intensifying in other areas.
In late May, the corporation announced an action plan to revive its loss-making postal business. Yet despite the move, the volume of mail delivered by Japan Post dropped by 2.5 percent in April compared with the previous year.
Yamato Transport Co., a leading delivery company, successfully increased its orders by 3.4 percent in May compared with the prior year after aggressively targeting sales catalog companies.
Japan Post responded by lowering its corporate mail rate for publications by 9.2 percent Monday in an attempt to secure more orders.
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Privatization on back burner
However, the government has made little progress in reforming the corporation's postal savings and life insurance businesses. Private companies have criticized the corporation's involvement in such sectors, accusing it of having an unfair competitive advantage.
In September, a private study group chaired by Naoki Tanaka reporting to Prime Minister Junichiro Koizumi presented three possible scenarios concerning the reform of the state-run entity: transforming the entity into a special corporation; maintaining the postal savings and insurance businesses under a fully privatized entity; or abolishing its postal savings and kampo insurance services and fully privatizing the public corporation.
Yet the report failed to clearly outline the fate of the public entity's postal savings and insurance businesses, which are seen as the major issues in terms of its privatization.
Japan Post President Masaharu Ikuta has expressed his reluctance to reform the corporation's postal savings business, saying: "We're busy enough with improving management efficiency. There's no room to think about privatization."
Yet the corporation's new focus on boosting profits has led some employees to propose diversification into new business areas.
The corporation has considered introducing whole life insurance with a term rider, one of the best-selling products of private insurers. It also has urged the government to amend the law to allow post offices to sell investment trusts, with the aim of boosting the amount of individual assets invested in the stock market.
But private insurers and banks have argued that both changes would increase the competitive threat posed by the corporation's postal savings and life insurance businesses.
Discussions on reforming the postal savings and kampo insurance are not expected to take place in the Council on Economic and Fiscal Policy.
Koizumi reportedly hoped that the new corporation would initiate moves toward privatization once it realized the difficulty of improving efficiencies under the restrictions imposed on a public entity.
Yet to achieve his goal, the prime minister must solve the difficult question of how the corporation's postal savings and insurance businesses should be reformed.
Copyright (c) 2003 The Yomiuri Shimbun. All rights reserved.
