Major Risk Factors

The market environment surrounding the Yamato Group is changing with the advancement of e-commerce, the division of the world into political and economic blocs, reshaping of global supply chains, and the worsening of climate change and a declining working population. The progress in the shift to e-commerce is also changing the competitive environment, not only intensifying competition with logistics providers, but also making it more important to have strategic relationships with EC operators that are converting to in-house logistics, as well as the need to be aware of start-ups that have the potential to change business practices through digital means. Under such circumstances, failure to respond to the changing and diversifying needs of consumers and the logistics needs of corporate customers who are restructuring their existing distribution structures could result in a decline in operating revenue and missed growth opportunities, which could affect the Yamato Group’s business results. In addition, if we are unable to respond appropriately to important issues related to sustainability for the Yamato Group, we may face a decline in customer support, deterioration in relationships with the regional society, difficulty in securing talented human resources, and higher financing costs. This may affect the business results of the Yamato Group in the mid- to long-term.
In light of these risks, the Yamato Group has set its vision for 2030 as “a value-creating company that contributes to the realization of a sustainable future,” and is promoting initiatives to enhance its corporate value.
In the reinforcement of the TA-Q-BIN network and expanding the value it provides, we will work to reform our revenue structure in order to transform our basic domain TA-Q-BIN business into a business structure that can ensure stable profits. In addition, in terms of expanding our corporate business domain, we are working to grow profits by viewing changes as an opportunity amid increasing risk factors such as division of the world into political and economic blocs, reshaping of global supply chains, and global environmental problems, and by providing corporate customers with high-value-added solutions that utilize the Group’s management resources, such as our transportation and delivery network, including domestic and international warehouses and dedicated cargo aircraft (freighters), as well as know-how of logistics, customs clearance, and real estate. Additionally, we are working with a diverse range of partners to promote initiatives that generate economic value by creating business models that solve environmental and social issues.
We are also promoting our HR strategy, digital strategy, and environmental/social strategy, and are working on the reinforcement of sustainable management and corporate governance, etc., as a Group management foundation to support these initiatives.

Many of the businesses operated by the Yamato Group are labor-intensive, and it is essential for us to secure high-quality human resources as our workforce and to assign them to their positions appropriately. If the supply-and-demand for labor becomes even tighter due to a decline in Japan’s working population and it is not possible to secure sufficient human resources including transportation and delivery partners, or if costs significantly increase due to more intense competition over human resources, the Yamato Group’s business results may be affected.
In light of these risks, in addition to appropriately implementing human capital investment, including our partners, based on the Yamato Group Human Resources Management Policy, the Yamato Group is promoting to build an environment in which employees are motivated to work and can advance through an attractive personnel and evaluation system that contributes to the acquisition and retention of human resources. It is also developing a workplace environment in which human rights and diversity are respected and employees can work with greater peace of mind, and working to strengthen cooperation with our transportation and delivery partners, including in terms of safety and quality. In addition, in the transportation domain, to increase transportation and load efficiencies as well as restrain fixed costs and control variable costs according to workload while making our TA-Q-BIN network social infrastructure more efficient and sustainable and meeting the needs of our customers, we are making efforts to station workers taking on sorting properly by reviewing the way of carrying between terminals and between terminals and collection and delivery bases in conformity with changes in the fluid volume of loads.

The logistics industry in which the Yamato Group operates is undergoing various changes due to the evolution of technology, such as resource optimization through the utilization of AI, IoT, big data, and more, the automation of warehouse operations through the utilization of robotics, and reformation of trunk route transportation and last-mile delivery through the utilization of drones and automated driving. If the Yamato Group is unable to respond appropriately to the emergence of new business models expected in the short to mid-term, or if there is a misunderstanding of technological trends or inadequacies in the implementation method of cutting-edge technologies, the investment effect may not be achieved as expected, which may affect the Yamato Group’s business results.
In light of these risks, the Yamato Group has positioned its digital strategy as one of the Group’s management foundations for achieving sustainable improvement in corporate value, promoting data-driven management with the principal axis of product development that utilizes big data accumulated through its TA-Q-BIN business, and price optimization and cost control through modeled and elaborated future prediction. Moreover, strengthening our DX promotion framework and accelerating change of “operations” and our way of “working” and business process reengineering of back-office operation, we are promoting DX in tandem with our business, eyeing the possibility of new business creation. We are also striving to quickly detect technologies and business models that could become a threat to the Yamato Group through collaboration with CVC and VC funds, as well as to create new growth models through open innovation.

In addition to confidential business information, the Yamato Group also holds a great deal of personal and customer information through its logistics operations and commissioned information processing. If information were to be leaked externally or data were to be lost due to causes such as cyber-attacks or inadequate management, the business results of the Yamato Group may be affected due to damaged public trust, claims for damage compensation, and doubts about the digital strategy we are promoting. In addition, if the TA-Q-BIN system were to go down due to a cyber-attack, etc., and TA-Q-BIN deliveries were to be suspended nationwide, the Yamato Group’s business results could be affected by lost revenue opportunities, etc.
In light of these risks, the Yamato Group is engaged in organizational and personnel-based measures as well as multi-layered technical measures, etc. in Japan and overseas assuming more advanced and more sophisticated cyber-attacks. Other security measures include 24 hours a day and 365 days a year monitoring against unauthorized access to the network and unauthorized entry into the facility.
In addition, as a countermeasure against system outages due to broad-based disasters, we have decentralized data centers for critical systems and operate mutual backups. As a countermeasure against system breakdowns, we have maintenance contracts with manufacturers to deal with hardware degradation over time and potential bugs in their products, and we are constantly coordinating information on problems or defects.

Japan, which is the Yamato Group’s main market, is experiencing a decline in the total population as well as a variety of issues in regional lifestyles and regional economies. In depopulated and aging regions, declining delivery efficiency and a shortage of human resources for pickup and delivery have become apparent. In the future, the business results of the Yamato Group may be affected if problems such as the decline of the regional social infrastructure due to a shrinkage of the local economy become more serious, or if it becomes more difficult to maintain a logistics network that covers the entire country in fine detail from a mid- to long-term perspective due to the decreasing profitability in such regions.
In light of these risks, to make our TA-Q-BIN network social infrastructure more efficient and sustainable, we are making efforts to station workers taking on sorting properly by reviewing the way of carrying between terminals and between terminals and collection and delivery bases in conformity with changes in the fluid volume of loads in the transportation domain. In addition, in order to respond to various needs of regional society, we are promoting the deployment of “Neko Support,” a community-based store that aims to provide new services beyond just package sending and receiving by relocating distribution centers in consideration of local market conditions and operational efficiency, as well as promoting expanded sales of the “Kuroneko Monitoring Service HelloLight Visit Plan” that uses “HelloLight” IoT light bulbs. We are also collaborating with partners to promote the distribution of local products and tourism.

The Yamato Group uses a large number of vehicles to carry out its business. If global environmental issues, including climate change, become more serious, and if greenhouse gas (GHG) emission regulations or reduction obligations are tightened, or if carbon taxes are raised, the Yamato Group’s business results may be affected due to increased costs for the introduction of low-carbon vehicles and facility renovations, etc. Also, with consumers becoming increasingly conscious of environmentally friendly consumption and with corporate customers’ demands to reduce GHG emissions throughout their supply chains, if we are unable to meet the expected low-carbon transportation, operating revenue may decrease due to a decline in customer support, which may affect the Yamato Group’s operating results among others. In addition, if the transition to a low-carbon society does not progress, the long-term effects could include frequent suspension of business activities due to damage to employees and facilities, road cutoffs, or power and fuel supply outages caused by more severe or more frequent natural disasters, which could affect the Yamato Group’s operating results.
In light of these risks, the Yamato Group has set a medium-term target of reducing GHG emissions by 48% by 2030 compared to the fiscal year ended March 31, 2021, and is promoting initiatives such as “introduction of 23,500 EVs,” “introduction of 810 solar power generation units,” and “increase in the use of electricity derived from renewable energy sources,” in order to achieve the long-term target of effectively zero GHG emissions (in-house emissions) by 2050. We are also working to ascertain net emissions in the supply chain (Scope 3) and set reduction targets. We made a carbon neutral claim for TA-Q-BIN, TA-Q-BIN Compact, and EAZY (the three parcel delivery services). This claim consists of achievement of carbon neutrality pursuant to the international standard ISO 14068-1:2023 for our services in the fiscal year ended March 31, 2024 (April 2023 - March 2024), following the fiscal year ended March 31, 2023, and commitment to achieving carbon neutrality for the three parcel delivery services by 2050 through continuous efforts to reduce in-house GHG emissions from our business activities. Through the provision of such climate-friendly transportation services, the Yamato Group will further promote the use of these services by individual and corporate customers.
In addition, the entire Group is working to improve its resilience by strengthening its crisis management system in anticipation of various emergency situations caused by natural disasters. Specifically, we are conducting drills based on the business continuity plan (BCP), assessing the risk of flood damage to facilities, reallocating bases, and continuously reviewing manuals related to post-disaster response, suspension of pickup and delivery, maintenance work, etc. in preparation for unexpected disasters.

Companies are required to take responses amid increasing risk factors such as division of the world into political and economic blocs, reshaping of global supply chains, and global environmental problems. The Yamato Group views changes as an opportunity, and positions the solutions business aiming to solve customers’ management issues that extend throughout the entire supply chain as a growth area. In order to accelerate its expansion, we are promoting M&As and strategic alliances in addition to autonomous growth measures. However, if we are unable to achieve the expected results due to changes in the business environment or competition, or if unforeseen business problems occur, our business results may be affected.
In light of these risks, the Yamato Group will work with discipline, focusing on compatibility with the growth strategies of Contract Logistics business and Global business as well as establishing quantitative criteria to measure investment effectiveness, among other things. In addition, following M&A implementation, we continue to conduct regular monitoring in accordance with the business feasibility determination rules.

The Yamato Group promotes management that places the utmost priority on compliance. However, it may not be possible to completely avoid compliance risks in products and services, work and safety, and the entire supply chain, and if a situation that infringes on a law or regulation were to occur, the Yamato Group’s social trust and brand image could be damaged, and additional costs could be incurred in response to that occurrence. This may affect the business results of the Yamato Group. In particular, if violations of laws and regulations occur in operation management or transportation, not only is there a possibility of administrative or criminal penalties, but there is also a possibility of impact on human life and the continuation of major businesses. In addition, in light of the “2024 issue,” which raises concerns about the stagnation of logistics, if appropriate measures are not taken in response to the revised “Motor Truck Transportation Business Act” and “Act on Advancement of Integration and Streamlining of Logistics Business” (later renamed the “Act on Advancement of Integration and Streamlining of Distribution Business”) enacted in May 2024, this could have an adverse impact on the operating results of the Yamato Group.
In light of these risks, based on its corporate philosophy, the Yamato Group carries out business activities in accordance with the law and social norms and actively promotes compliance management. As a foundation to improve the soundness of our Group management, we are striving for appropriate operation of our product management process based on our product management regulations, operation management using the system, implementation of philosophy training for employees, quick discovery and appropriate response to inappropriate incidents through our whistle blower system consultation desk for our transaction partners, regular consultations with business partners, and the establishment of appropriate systems, processes and mechanisms. In addition, the Internal Audit Department conducts audits using a risk-based approach in a planned manner. In addition, in response to recent legal reforms in the logistics industry, we are implementing legal reform measures at each Group company, including making sufficient preparations during the period between the enactment and enforcement of the reforms and aligning current business operations and internal regulations with the provisions of the revised laws.

The Yamato Group’s main business is the transportation of parcels by vehicle, and we operate our business assuming the safety and health of our employees, the maintenance of our vehicles and facilities, and the stable supply of fuel and electricity. In the event of an unexpected large-scale natural disaster or power outage, etc., the Yamato Group’s business results could be affected by a shortage of human resources due to employees becoming victims, business stoppages due to damage or submersion of vehicles, information equipment, or facilities, power or water outages or shortages of fuel or supplies, incurring repair or replacement costs for vehicles or facilities, or a decrease in shipment volume due to customers becoming victims, from immediately after the disaster and over the medium to long term.
In light of these risks, the Yamato Group, as a corporate group responsible for social infrastructure, has formulated a business continuity plan (BCP) to ensure that we can continue to provide stable services even in unexpected situations. The entire Group is working to strengthening its crisis management system in anticipation of various emergency situations. We are conducting drills based on the BCP, assessing the risks of facilities and implementing relocations, as well as continuously reviewing manuals related to post-disaster response, suspension of pickup and delivery, maintenance work, and other needs in preparation for unexpected disasters. In the event of an emergency, based on the Yamato Group basic BCP policy, which is centered on “placing the highest priority on human life,” “aiming for early restoration of the business of each Group company,” and “meeting the expectations of the local community as a social infrastructure,” we will establish an internal task force in accordance with our standards, respond in cooperation with the Group companies, and work to provide value to the affected areas and customers in response to their issues.

The Yamato Group conducts its business mainly using vehicles on public roads, and if a serious traffic accident were to arise, the Yamato Group could suffer a drop in social trust, discontinuation of the use of its vehicles due to administrative punishment, discontinuation of business operations at its offices due to the violation point system, revocation of its business license, and other measures. This could result in business being disrupted or suspended. In addition, causing a serious occupational accident that impairs the safety and health of employees and others could affect the business results of the Yamato Group.
In light of these risks, the Yamato Group places the utmost priority on respect for human life, and is working to promote initiatives in line with transportation safety management and occupational safety and health management systems (OSHMS), formulate and comply with rules to ensure safety, maintain facilities and systems, provide safety education and raise awareness among employees, implement periodic checks by the Audit Division and others on the status of compliance with laws and regulations in operations and maintenance management, and ensure a safe and secure working environment in accordance with the Industrial Safety and Health Act. In addition, the importance of heat countermeasures has increased from the perspective of preventing occupational accidents. To prevent employees from suffering from heatstroke or heatstroke complications, we are implementing measures tailored to job types and locations, such as establishing action guidelines based on the heat index (WBGT: Wet Bulb Globe Temperature), and introducing fan-equipped vests and cooling equipment.

Many of the businesses operated by the Yamato Group are labor-intensive, and it is essential for us to secure high-quality human resources as our workforce and to assign them to their positions appropriately. In the event of revisions to laws, regulations, systems related to labor, social insurance, or the like, the Yamato Group’s business results may be affected due to a significant increase in costs to comply with such revisions. In addition, the application of overtime caps in vehicle driving operations, etc., which will reduce capacity for long-distance transportation in the transportation industry and increase the cost of outsourcing to transportation partners, which may affect the Yamato Group’s business results.
In light of these risks, Yamato Group is promoting the development of a working environment and HR system that appropriately complies with laws and regulations. In the transportation domain, to increase transportation and load efficiencies as well as restrain fixed costs and control variable costs according to workload while meeting the needs of our customers, we are making efforts to station workers taking on sorting properly by reviewing the way of carrying between terminals and between terminals and collection and delivery bases in conformity with changes in the fluid volume of loads. In addition, we expand the use of trailers, including the Super Full Trailer SF25, which contributes to more efficient long-distance transportation, and promote modal shifts, and as a method of long-distance transportation toward building a sustainable logistics network, in addition to trucks, railroad, ferries, and cargo space under passenger aircraft floors, we have operated and utilized dedicated cargo aircraft (freighters).

If the regions in which the Yamato Group conducts its business activities or the regions in which its major clients conduct their business activities are affected by terrorism, war, or other international conflicts or trade disputes, the business results of the Yamato Group may be affected by stagnating logistics caused by a reduction in international trade or disruptions in the supply chain or the like. In addition, as the Yamato Group’s main business is the transportation of parcels by vehicle, a constant, stable, and appropriate supply of fuel such as diesel oil is essential in order to carry out the business. If supply were to be restricted or fuel prices, etc. were to skyrocket due to international situations or the like, the business results of the Yamato Group may be affected.
In light of these risks, the Yamato Group is working to meet the needs of its customers by combining a variety of transportation methods by land, sea, and air for the globally extending supply chains of its customers, and by viewing changes as an opportunity, to provide high-value-added solutions that utilize the Group’s management resources, such as our transportation and delivery network, including domestic and international warehouses and dedicated cargo aircraft (freighters), as well as know-how of logistics, customs clearance, and real estate. Additionally, we are promoting measures to improve energy efficiency, such as streamlining transportation and delivery through reviewing the way of carrying between terminals and between terminals and collection and delivery bases in conformity with changes in the fluid volume of loads and stationing workers taking on sorting properly, modal shifts, the introduction of more fuel-efficient vehicles, and the introduction of energy management systems, while also working to optimize pricing for customers in light of rising fuel prices and other factors.

The Yamato Group acquires the necessary funding by effectively utilizing Group funds as well as combining borrowing from financial institutions and issuing bonds, etc., while referring to our investment plans for business continuity and growth. The future economic situations of Japan and abroad may make it difficult to procure funding if the financial markets become dysfunctional or if financial institutions are selective in their lending, and interest expenses may increase due to rising interest rates.
In light of these risks, we will work to strengthen balance sheet management while taking into consideration financial soundness and efficiency, such as cash generation, cash and deposits held, capital ratio, etc. as well as effective utilization of Group funds. We will also consider measures to generate funds through liquidating fixed assets as appropriate. Additionally, when raising funds through borrowings from financial institutions and issuance of corporate bonds as necessary, we will strive to appropriately diversify our funding sources and timing.