Logistics Transformation through Cross-Industry Collaboration

Tokio Marine Group was founded as a marine insurance company in 1879. We provided insurance for logistics, transporting goods across the seas. In 1914, the company also began offering Japan's first automobile insurance. We have a long history and experience in the fields of logistics and mobility, thanks to which we have developed a broad client network. Some of these clients are logistics operators, and through continued dialogue, we heard firsthand of the major challenges they faced, which were difficult to address by any single company.

Our current focus is on solving the logistics demand-supply gap. The number of items to be transported is increasing exponentially due to the expansion of the EC market. Conversely, the number of drivers is decreasing due to labor shortages accentuated by other factors such as labor conditions. If this gap is not closed, cancelled or delayed deliveries will become the norm. This impacts not only logistics companies, but also consignors—such as producers, retailers, and end-users—and by extension, the entire Japanese economy.

Up to now, certain logistics companies have worked to increase productivity by measures like improving load factors. However, through our dialogue with clients, we realized the limits to what any single entity can accomplish. We felt we could contribute by leveraging Tokio Marine Holdings' unique strengths, such as our risk management know-how and the networks we have cultivated through our insurance business. We decided to establish a consortium to address the supply-demand gap collaboratively across traditional company boundaries.

Caps on overtime work became applicable to the logistics industry following the enactment of the Act on the Arrangement of Related Acts to Promote Work Style Reform. As an example, long-haul transport from the Kanto to the Kansai region was possible in the past, when drivers utilized overtime. Under the new regulations, conventional lead times for deliveries will not be sufficient. If it no longer becomes feasible to transport goods at the same scale as before, we will see greater economic pressure on logistics companies, which will lead to lower salaries for drivers, causing a shortage of logistics workers. The end result is a negative spiral. We are also hearing that some small and medium-sized transport companies are withdrawing from long-haul transport, or even being forced to close their businesses entirely.

Inter-company relay transport is gaining attention as a potential solution, since it raises truck utilization rates and enables drivers to complete trips within a day. That said, the availability of relay hubs and partner companies is a bottleneck. Creating a consortium offers a potential solution to this issue.

Through dialogue, we learned that one of the key challenges to achieving inter-company relay transport is the timing of risk transfer and responsibility sharing. For example, since cargo is not unloaded or unpacked en route when there is a change of drivers, if cargo is found to be damaged upon arrival at the destination, it is difficult to determine whether the damage occurred while it was being transported by Company A or by Company B.

Some areas can be resolved through contracts if the alliance is a single company or two. However, the transfer of risk and the scope of responsibility sharing becomes complex when multiple companies collaborate. As risk professionals, we can provide support for the formulation of insurance products, solutions, and guidelines that utilize accident data and risk management know-how. This is how Tokio Marine Group can bring value to the Consortium.

In addition to large corporations, Tokio Marine has relationships with many small and medium-sized logistics companies and consignors. We can play a role in connecting companies by leveraging this network. Additionally, by having a non-logistics company take the lead, we can provide a neutral, fair, and open platform for discussing inter-company relay transport for the benefit of all members.

First of all, we would like to create working groups around the four key elements of inter-company relay transport (Transportation, Connection, Well-being, and Preparation) centered on the initial founding members. We aim to reach an agreement on specific initiatives during 2025.

Four key elements of inter-company relay transport

Transportation: Create a framework that efficiently matches relay operators with the operating plans of individual companies

Connection: Design relay hubs, rules for sharing costs, and use of idle land as potential sites.

Well-being: Truck driver management, including labor environment, health management, and conditioning.

Preparation: Risk management, including support for formulating guidelines on risk transfer and responsibility sharing, as well as developing operational rules.

The Consortium is a forum for gathering issues and creating the strategy and policies needed to address them. From there, services and solutions should emerge as a result of the discussions in each working group. Potentially in the future, working groups could include participants from a diverse range of industries outside of logistics collaborating to solve problems related to the four key elements. For example, we could involve matching services in transportation, developers or real estate firms in connection, healthcare providers or health tech firms in well-being, and so on.

In addition to the Consortium members, which include logistics companies and three Tokio Marine Group companies, we will also invite members of industry organizations (Japan Trucking Association and Japan Institute of Logistics Systems) and professors who are researching logistics issues to serve as advisors. We believe input from a variety of perspectives will lead to the success of this Consortium.

Logistics is built on both the people who transport goods and the goods being transported. We need the consignors to be fully on board if we hope to entrench this new approach to logistics. In addition, more than 90% of the logistics industry in Japan is underpinned by small and medium-sized enterprises. To solve the issues facing the logistics industry, we would like to work together with not only major corporations, but also get buy-in from small and medium-sized transport companies.

Above all, I want to create an environment where the drivers can continue to work with peace of mind and improve their well-being, thereby making the logistics industry more attractive as a whole.

As new modes of transport such as relay transport become more widespread, there is also the potential for unprecedented risks to emerge. Tokio Marine Group should be there to respond by providing insurance and risk management expertise. Consortium member Tokio Marine & Nichido Fire Insurance has already started selling an automobile insurance rider that covers the risks associated with relay transport using a driver-changeover system, while Tokio Marine Smart Mobility is also preparing for this new paradigm, for instance by developing solutions to support driver health management. What we cannot achieve on our own, we aim to address by engaging with other companies. Doing so will allow us to create a Consortium that offers new value.