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Aeon Overhauls Logistics to Comply with New Japanese Driver Overtime Laws

Aeon to Enhance Efficiency and Reduce Truck Use by 10% in Response to Legal Cap on Driver Overtime
a 8267.TSE Blue Chip 150
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Japanese retail giant Aeon is embarking on a major overhaul of its logistics operations across approximately 3,300 domestic stores, starting next spring. This initiative is in response to the upcoming legal cap on truck driver overtime, set to take effect in April next year.

Termed the “2024 problem,” this new legislation limits truck driver overtime to a maximum of 960 hours per year. The change is anticipated to significantly impact various industries dependent on timely goods transportation, with potential delivery capacity reductions of up to 34% by 2030 if no proactive measures are taken.

To combat these challenges, Aeon aims to improve truck load rates and employ artificial intelligence for better route planning. This strategy is expected to result in a 5% to 10% reduction in total truck usage, as informed by a company spokesperson to Nikkei Asia. Currently, Aeon’s trucks, particularly those delivering refrigerated items, operate at varying load capacities throughout the day. By eliminating time-based deliveries, Aeon hopes to reduce the number of trips made.

In addition to optimizing routes using AI, Aeon is also exploring ways to alleviate driver workloads. For instance, about a third of Aeon’s logistics contractors are involved in both delivery and in-store product handling. Plans are underway to delegate the in-store handling to other workers, potentially decreasing unloading time. Typically, drivers handle deliveries to three to four stores daily.

Furthermore, Aeon is considering diversifying its delivery methods, including a greater reliance on rail transport. Since 2013, trains have been a part of Aeon’s logistics network, accounting for about 20% of its long-haul transport.

These changes stem from the insights gained from pilot projects Aeon has conducted, including a collaborative initiative launched last August in Kyushu with industry competitors. Such efforts have now extended to other regions, including Tokyo.

Aeon’s proactive approach is mirrored by other companies anticipating the upcoming regulatory changes. Major convenience store chains like Lawson, Seven-Eleven Japan, and FamilyMart have experimented with joint delivery systems in Hokkaido, while logistics specialist Nippon Express plans to establish facilities for cargo handoffs, allowing for longer-distance transport within the new legal constraints. These collective efforts signal a significant shift in Japan’s logistics landscape, as companies adapt to ensure continued efficiency and compliance with the new regulations.

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