What is the 2024 problem in the logistics and transportation industry?
This problem refers to the various issues caused by the work style reform law 2024, which limits overtime hours for car driving jobs to 960 hours per year. From April 1, 2024, the annual overtime work limit will be implemented.
Logistics and transportation industry restrictions on working hours
First of all, the Labor Standards Act was revised in 2019 as part of a work style reform, and it has been applied by general companies since 2020. As a result of the characteristics of the transportation and logistics sector, a five-year grace period was set before the law would be implemented because of issues such as long working hours.
In addition to the need for more young human resources and the aging workforce of truck drivers, the labor shortage is responsible for the chronic work hours of truck drivers. A significant factor is the rapid growth of the e-commerce market, which has increased the number of home deliveries significantly compared to before.
Hours of work-specific changes
Following is a table summarizing the specific changes to working hours due to the revision of the Labor Standards Act. In the following table, you can see how detention time and rest time will change before and after the revision. If two or more truck drivers are on board or if you are on duty while boarding a ferry, exceptional cases may apply.
| Revisions before March 2024 | Revisions after April 2024 | |
|---|---|---|
| Time limit | One Day 13 hours (maximum 16 hours, over 15 hours up to twice a week) One month 293 hours One Year 3,516 hours | One Day 13 hours (maximum 15 hours, over 14 hours up to twice a week) One month 284 hours One Year 3,300 hours |
| Time for rest | Continuation 8 hours | Continuation 11 hours (lower limit 9 hours) |
| Time guidelines for continuous operation | within 4 hours | within 4 hours |
| Overtime and holiday restrictions | Every two weeks, holiday work must not exceed one day. | Annual maximum 960 hours Work on holidays should not exceed once every two weeks |
| Premium wages increase | 25% extra for over 60 hours per month | 50% increase for over 60 hours per month |
The annual upper limit for overtime work will be set at 960 hours from April 2024, one of the abovementioned changes. Consequently, truck drivers can work fewer hours, and the driver shortage issue will worsen.
Companies must pay a 50% premium for overtime work exceeding 60 hours per month due to soaring labor costs.
Violation penalties
As a violation of the Labor Standards Act, violating overtime regulations can result in a penalty of up to 6 months in prison or a fine of up to 300,000 yen. You may not be sentenced to imprisonment or fines if you respond promptly to Labor Standards Inspection Office recommendations and guidance.
As mentioned above, there are issues such as the 50% premium pay for overtime work of more than 60 hours per month, so promoting work style reform and reducing overtime hours is vital.
Transport and logistics companies are affected by the 2024 problem
Workers are supposed to be protected by limiting overtime hours, but this limit is allegedly causing various issues. Logistics/transport companies and drivers in this section to introduce the problems that can be considered.
There are three main issues to consider:
- As a result, less cargo can be carried
- There may be a severe shortage of drivers
- Logistics, transportation, and driver income may decrease.
Additionally, the 2024 problem may result in a shortage of drivers, a decrease in income, and a drop in sales for logistics and transportation firms.
As a result, less cargo can be carried
Due to shorter working hours for drivers, the amount of cargo that logistics and transportation companies can transport will decrease due to the 2024 problem. Specifically, as shown in the diagram above, transportation capacity is expected to be 14.2% short in 2024, 34.1% short in 2030, and transport cargo is expected to be 400 million tons short in 2024 and 940 million tons short in 2030. The result is.
Due to the growth of e-commerce, the amount of luggage has continued to increase in recent years. Shippers and consumers will have a more challenging time meeting their needs if transportation capacity declines under these circumstances.
There may be a severe shortage of drivers
Logistics and transportation companies are experiencing an increased driver shortage due to the 2024 problem. Truck drivers have a higher effective job opening ratio than the average for all occupations, and the gap is expected to widen further until 2030. Additionally, the logistics and transportation industry’s population is aging faster than the average for all sectors, resulting in future labor shortages.
Regulations on working hours may exacerbate a shortage of drivers.
Logistics, transportation, and driver income may decrease
The logistics and transportation problem will also affect sales and income in 2024. Logistics and transportation companies lose business opportunities due to a driver shortage, resulting in reduced sales. Many drivers will also lose income due to overtime regulations, resulting in a reduction in overtime pay.
A reduction in the annual upper limit on overtime hours is a positive change from the perspective of improving drivers’ work-life balance. Additionally, drivers who previously relied on overtime pay will face new income issues.
How does the Trucking Association work to reform work styles?
The All Trucking Association has formulated the following initiatives to achieve work style reform.
- · Productivity improvement
- · Managing transportation companies better
- · Transaction promotion
- · Diversifying human resources
The Trucking Association is working on the abovementioned points to realize work style reform.
Productivity improvement
The Trucking Association seeks to improve labor productivity as part of its work style reform efforts. To improve labor productivity, we promote the following initiatives.
- Waiting and cargo handling times can be reduced
- Expressways used effectively
- In urban areas, reducing delivery times
- Long-distance transportation reform
- Innovations in vehicle technology
We are working on palletizing cargo handling, using labor-saving, and assisting equipment to reduce waiting times and cargo handling times. When pallets are utilized throughout the distribution process, loading and unloading time is shortened, and the workload is reduced, so women and older people can be employed. A countermeasure to the driver shortage can also be achieved by effectively using expressways, which reduces driving time and improves operational efficiency.
Managing transportation companies better
To improve the management of transportation companies, the Trucking Association promotes initiatives from two perspectives.
- Enhancing the management base
- Using IT to improve operation management efficiency
To strengthen the management base, we perform cost calculations that incorporate the growth of the business and wage increases, set freight and charges, and set and manage labor hour reduction targets. Other measures include reforming the work styles of administrative staff (office workers) and using trucking association seminars and management diagnostics.
Operations management and working hours management using digital tachygraphy are examples of ways to improve operation management using IT. A digital tachometer records speed, distance, and time and automatically create reports such as daily driving reports and operation results, making driver labor management easier.
Transaction promotion
To promote fair trade, we work from the following perspectives.
- Documentation and recording should be promoted
- Fees are collected appropriately
- Multi layering improved
- Enhancing compliance management
Documentation and recording measures include, for example, writing contracts and recording waiting times. Documenting and optimizing all transactions, including transportation conditions and freight charges, is essential since they are closely related to driving hours, restraint hours, etc.
Furthermore, reproducible fares can be set to collect appropriate fares and fees. To maintain and develop the business, it is essential to set reproducible freight by adding operating profit to cost freight (personnel costs, vehicle costs, general and administrative expenses, etc.). It is necessary to go forward.
Diversifying human resources
We are promoting initiatives from the following perspectives to secure and develop diverse human resources.
- Treatment of drivers should be improved
- Enhance the attractiveness of your workplace/company
- Young worker initiatives
By reviewing the pay system, introducing and fully implementing a two-day work week, and encouraging employees to take annual paid leave, we are improving the working environment for drivers.
Furthermore, we aim to create workplaces and companies that are rewarding and easy for women and older people to work in to increase the attractiveness of our workplaces and companies. Diverse human resources such as women, older people, and recent graduates are crucial to resolving the driver shortage and expanding the base of drivers.
Summary
As a result of the cap on annual overtime hours for car driving jobs being capped at 960 hours from April 2024, a variety of issues will arise. Several logistics and transportation companies are concerned that the number of cargoes that can be transported will decrease, the driver shortage will worsen, and drivers’ incomes will decrease due to the 2024 problem.
It is essential to improve labor productivity, secure and develop diverse human resources, and improve the management of transportation companies to address the issues in 2024. The Trucking Association’s efforts to reform work styles are essential. Currently, the work is being done.
