Major Risk Factors

The market environment surrounding the Yamato Group is changing with the advancement of e-commerce, the formation of global political, economic and supply chain blocs, and the growing need for sustainable logistics in light of 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 platforms 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 revenues and missed growth opportunities, which could affect the Yamato Group’s business results. In addition, if we do not work on corporate activities for the development of a sustainable society, 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 order to strengthen the TA-Q-BIN network and expand the value it provides, we are working to make our TA-Q-BIN network social infrastructure more efficient and sustainable by consolidating and enlarging our last-mile facilities, which had been small and multi-store operations, redefining terminal functions, and transforming our way of “sorting,” “transporting,” and “working” using digital technologies. We are working to expand value provided to customers through broadening the line-up of transportation service, improving customer experience value through “Kuroneko Members,” and “Carbon Neutral Delivery” for TA-Q-BIN/TA-Q-BIN Compact/EAZY.
In addition, in terms of expanding its corporate business domain, the Yamato Group is positioning the solutions business as a new growth area, aiming to solve customers’ management issues that extend throughout the entire supply chain, amid increasing risk factors such as global political and economic supply blockages in the supply chain and environmental issues, and will focus to expand Contract Logistics business and Global business.
Furthermore, we promote commercialization of new business models that addresses diverse needs of customers and society with a diverse range of partners, while utilizing existing management resources, to realize a sustainable future.
We are also working to strengthen our HR strategy, digital strategy, sustainable management, and corporate governance as a Group management foundation to support these structural reforms to our business.

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, 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. Furthermore, we are consolidating and enlarging our last-mile facilities, which had been small and multi-store operations, redefining terminal functions, and improving overall network productivity by transforming our way of “sorting,” “transporting,” and “working” using digital technologies. We are also standardizing the administrative operations and back-office work of front-line employees and promoting BPR (business process reform) through digitalization.

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 its Group management foundations for achieving ongoing enhancement of corporate value, and is working to promote DX as an integral part of its business. We are also striving to quickly detect technologies and business models that could become a threat to the Yamato Group through direct investment and CVC funds in the digital field, 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, in order to strengthen our TA-Q-BIN network social infrastructure in a more efficient and sustainable manner, we are working to consolidate and enlarge our last-mile facilities, mainly in urban areas, redefine terminal functions, and transform our way of “sorting,” “transporting,” and “working” using digital technologies. Furthermore, in addition to sending and receiving packages, we will carry out initiatives that contribute to the sustainability of local communities by collaborating and co-creating with our partners, such as by deploying “Neko Support Station” with an aim to provide new services, and expanding sales of the “Kuroneko monitoring service: Hello Light Visit Plan” that uses “HelloLight” IoT light bulbs.

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 revenues 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 will also work to ascertain net emissions in the supply chain (Scope 3) and set reduction targets. Furthermore, in the fiscal year ended March 31, 2024, 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 in the fiscal year ended March 31, 2023 (April 2022 - March 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.

Amid increasing risk factors such as global political and economic blockages in the supply chain and environmental issues, the Yamato Group has positioned its solutions business, which aims to solve customers’ management issues that extend throughout the entire supply chain, as a growth area. In order to accelerate its expansion, the Yamato Group is promoting M&A and strategic business 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, our division responsible for revenue and our dedicated M&A team will work together in an integrated way 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 light of these risks, in order to improve the soundness of our Group management, the Yamato Group is striving to enhance our Group governance by operating our product management process appropriately based on our product management regulations, providing our employees with training on our corporate philosophy, establishing our whistle blower system, including a consultation desk for our transaction partners, to quickly discover and respond appropriately to inappropriate incidents, consulting with our business partners regularly, and establishing appropriate systems, processes and mechanisms.

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.
Also, in the event of an unforeseen outbreak of an infectious disease, the business results of the Yamato Group may be affected due to a lack of human resources because of employee illness, costs involved in providing hygienic supplies, and increased difficulty in continuing business.
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 business continuity plan (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 activities 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 occupational safety 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 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.

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 to vehicle driving operations has begun since April 2024, 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, the Yamato Group is working to promote the development of a working environment and HR system that appropriately complies with laws and regulations. Concurrently, in order to respond more flexibly to business volume fluctuations, improve efficiency in inter-base transportation and reduce the waiting time for cargo, we will consolidate and enlarge last-mile facilities, which had been small and multi-store operations, redefine terminal functions, and transform our way of “sorting,” “transporting” and “working” using digital technologies. 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 toward building a sustainable logistics network, in addition to trucks, railroad, ferries, and cargo space under passenger aircraft floors, which have been responsible for long-distance transportation until now, we have begun to operate dedicated cargo aircraft (freighters) as a new mode of transportation since April 2024.

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 disruptions in the supply chain or the like, as well as employee evacuations or other similar reasons. 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 promoting initiatives to expand the value it provides by combining a variety of transportation methods by land, sea, and air for the globally extending supply chains of its customers. Additionally, we are promoting measures to improve energy efficiency, such as streamlining transportation and delivery through structural reform of our network operations, 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 utilizing Group funds as well as borrowing from financial institutions and issuing bonds, in principle, 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 maintain and strengthen our financial soundness in terms of cash generation, cash and deposits held, equity ratio levels, and the like, as well as strive to appropriately diversify our funding sources and timing.