UPS to buy out remaining stake of its Japanese joint venture partner

UPS’s plan to buy Yamato Transport out of their Japanese joint venture will help the US firm secure a leading position in Japan’s express sector. It will offer the company a competitive advantage over its global rivals in a market that has been traditionally difficult for foreign express carriers to penetrate. Full details of UPS’s agreement to buy out Yamato from its Japanese joint venture have not yet been disclosed. The US carrier will acquire the remaining 49 percent stake in UPS Yamato Express, as the joint venture is known, by the end of March or beginning of April. The operation will then become a wholly owned UPS subsidiary. Under the new agreement, UPS will utilize Yamato’s domestic network, while Yamato Transport will take advantage of UPS’s comprehensive global network for its international express deliveries. The buy-out is intended to increase UPS’s presence in a market where many foreign delivery companies have struggled to build a profitable business. Indeed, the Japanese parcel delivery market has been historically characterized by a high concentration of domestic players and by the lack of internationalization, with Japan Post and a handful of companies from the private sector accounting for more than half of the domestic parcels business.

Japan Post has a monopoly on specific delivery services and it does not pay taxes. Although deregulation of the post office is opening the sector to competition, so far the conditions placed on foreign entrants have made it extremely difficult to enter the Japanese distribution market. Japan Post itself recently announced it would soon begin international express delivery services to compete with companies such as FedEx and UPS. UPS’s move highlights the importance of the Japanese distribution market for the company. This is not surprising given the country is the second biggest economy in the world and the leading one in Asia. Express volumes are growing vigorously across the Asia Pacific region as a whole, and control over Yamato will give UPS a head start over arch rivals FedEx, DHL and TNT in the Japanese express market.