Structural Reform of Network Operations

September 30, 2022
Yamato Holdings Co., Ltd.

1． Background of Structural Reforms of Network Operations
・ Growth of EC, and changes in customer needs and distribution structure since 2010
→Issues in the existing (TA-Q-BIN) network have become apparent（Billions of Yen）
3,000

Operating revenue(Thousands of parcels)

Parcel delivery (Total of 4 items)
2,000,000
2,000

1,000,000

1,000

00
2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3（Billions of Yen）

150

2024/3（Profit margin）

8.0%

Operating profit
Profit margin

6.0%

100

4.0%
50

2.0%

00.0%
2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/3Work style reform

2021/32022/32023/32024/3Structural Reforms
Cool-designated Terminals
EC logistics network・Middle-mile network

1976/1～
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved

TA-Q-BIN Network

2021/1（45 years）

1

2．Aim of “Structural Reforms of Network Operations”
Fundamentally reforming our network and operational structure inorder to respond to the expansion of e-commerce and changes incustomer needs and distribution structure

・Capture growing demand, mainly driven by EC, through a designatednetwork that is more efficient and optimized for its characteristics
・ For the existing TA-Q-BIN network, productivity will be improved bymeasures such as consolidating and enlarging facilities

Connecting growing demand
to our stable profit growth
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved2

3．Structure of Existing (TA-Q-BIN) Network (Characteristics and Overview)【Characteristics】
・Nationwide deployment of sorting and transportation Terminals and Sales offices through a“Hub & Spoke” structure
・Operating under a standard daily timeline in order to provide a unified (high quality) level ofservice
・Allocating employees (multi-function Sales Drivers) to numerous small TA-Q-BIN Sales offices【Overview】
Arrival process

Dispatch process
Primarysorting

Pick-up

Sortingupon
arrivalTransport
ation

DeliverySalesDrivers

End users

Nighttime～Early morning

Deliverysorting

TA-Q-BIN Sales offices

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Trunk-routetransportation

Arrival Terminal

Large
corporates～PM / Evening

Dispatchsorting

Dispatch Terminal

TA-QBIN Salesoffices

Individuals/ Smallcorporates

Sales
Drivers

Transportation

AM～34．Background of Structural Reform（Changes in Demand ➀）Growth in volume from large corporate clients→Mismatch with existing (TA-Q-BIN) network, which focuses on collecting small-lot parcels【Breakdown of TA-Q-BIN volume growth over the past 10 years】
FY March 2012

（No. of parcels）

FY March 2022

Difference

Total

1.42bn2.27bn+850mmIndividuals /small corporates

900mm

1.05bn+150mmLarge
corporates

520mm

1.22bn+700mmCopyright 2022 Yamato Holdings Co., Ltd. All rights Reserved45． Background of Structural Reform（Changes in Demand ②）
Growth in EC parcels, which require a different timeline and operation→Mismatch with the existing (TA-Q-BIN) network, which is standardized based on“Next-day delivery”＜ Traditional ＞

Transportation

Production＜ EC ＞
Timelineis thereverse

Production
Transportation

・Costs incurred unnecessarily, in order to accommodate EC parcels into traditional timeline（facilities, transportation）
・Decline in operational efficiency, due to “distortions” caused in traditional timeline due to EC parcels
・Less time for SD (Sales Drivers) to pick-up and engage in sales activities, because of having to deliver EC parcels in the afternoon
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved

56． Background of Structural Reform (Changes in the work schedule interminals)
The time schedule of dispatch and arrival sorting operations, which wereconducted during the nighttime - late night - early morning - morning hours
at existing terminals, has been changed【Daily work schedule in terminals (basic pattern)】hours

12 13 14 15 16 17 18 19 20 21 22 23 24 1

operationsorting
operation(dispatch)

23456789 10 11
sorting
operation(arrival)sorting operation(arrival)

【Now】
hours

12 13 14 15 16 17 18 19 20 21 22 23 24 1

operationsortingoperation(arrival)

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2

sorting operation(arrival)

3456

789 10 11
sortingoperation(arrival)sorting operation(dispatch)
6

7． Background of Structural Reform (Aim and Overview)【Aim】
・ Securely capture growing EC demand (Flexible capacity)
・ Simplifying operation process (Reduction of operating costs)
・ Collaboration with partners (Asset Light)【Overview】
Arrival process

Dispatch process
Clients

Pick-upLargeEC
clientDispatchsortingEC
sortingcenter

Trunkroute

Sorting
upon arrival

Deliverysorting

Arriving
Terminal

TA-QBIN
Sales
offices

EC
DeliveryCenterRecipient

Sales
Drivers

EAZY
CREW
EAZY
CREW

End users

EC
DeliveryCenterDeliveryEAZY
CREW
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved

78． Comparison Between Existing Network and EC Logistics Network・Development of EC logistics network in urban areas for specific EC platformers→Flexible networking according to EC characteristics and demand(collaboration with external partners)
Existing network

EC logistics network

Clients

Numerous

Certain EC operators

RegionNationwide

Urban areas

By whom

Yamato’s own employees

External partners

Cost

Personnel expenses, Commission
expenses, Vehicle hiring expenses, etc.

Commission expenses

FacilityTerminals (Bases)

EC Sorting Centers

Function

Sorting and transportation for bothdispatch and arrivals

Sorting and transportation of parcels
to be dispatched

Equipment

Numerous equipment needed toaccommodate all sorts of parcels(material handling, temperaturecontrolled equipment, etc.)

Simple equipment only, since parcels
are mainly within a certain standard

Facility

TA-Q-BIN Sales offices

EC Delivery Centers

By whom

Sales Drivers

EAZY CREW

Role

Pick-up, delivery, sales

Delivery only

Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved89．Progress and Development of Building EC Logistics Network・EC Sorting Centers now in place ～Can adapt flexibly to changes in volume
・EC Delivery Centers to be established in accordance with the consolidation ofexisting last-mile facilities (TA-Q-BIN Sales offices)
EC Sorting Centers
Annual volume and no. of facilities（Opened 4 facilities during Q2-4 of FY 2022/3（Completed））

EC Delivery Centers
Annual volume and no. of facilities（5 facilities opened during Q3 of FY 2022/3 ～ Q1 of FY 2023/3）(300mm units)8％※(180mm units)
FY2022/3

15％※20％※(300mm units)
FY2023/3

No. of ECdelivery centers

1FY2024/3

FY2022/3(100mm units)

20～40
FY2023/3

50～70

FY2024/3※Ratio of EC logistics network out of total volume
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved

910．Anticipated Effects of the EC Logistics Network24 billion yen of operating expense reduction expected（FY 2024/3）
・With the deployment of EC Delivery Centers, EC parcel capacity can be increased through asimplified and End-to-End process** EC logistics network, that does not require the existing (TA-Q-BIN) Terminals and Sales offices on thearriving (destination) side

→Expect handling volume of 300 million parcels with EC logistics network（FY 2024/3）
・Optimize operating costs→Expecting a cost reduction of 80 yen per parcel compared to the existing (TA-Q-BIN)
network
・In accordance with the deployment of EC Delivery Centers, consolidate TA-Q-BIN Sales
offices in locations/regions where parcels will shift to the new network→Optimize transportation & delivery, operations, admin and management cost

Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved1011． Consolidation and Enlargement of Existing (TA-Q-BIN) Sales offices(Aim and Overview)【Aim】
・Consolidating and enlarging the numerous small TA-Q-BIN Sales offices in urban areas→To optimize transport, operations, admin and management costs of each facility, while
improving safety, quality and the work environment
・Redefine functions of the existing Terminals, and optimize transportation and operation
costs by integrating the Terminals with TA-Q-BIN Sales offices, as well as separating
dispatch and arrival operations【Overview】

Sorting upon arrival

Arrival process
Transportation

Traditional facility

Delivery sorting(image)

Past
Terminal where arriving
parcels are sorted

Large facility (image)

FutureConsolidate(share samebuilding)Terminal where arriving
parcels are sorted
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Around 10 times the average size of
traditional facility

Consolidate (enlarge)
11

12．Consolidation and Enlargement of Existing (TA-Q-BIN) Sales offices(Progress)
・Have been reducing the number of last-mile facilities according to plan fromaround 4,000 in FY 2019/3, to around 3,500 facilities in FY 2022/3→Expect to reduce to around 3,000 locations by the final year of the current
Medium-term Management Plan
No. of Sales offices
3,501(170)Compared tothe end ofFY2021

Approx. 3,350(150)Compared to theend of FY2022

Approx. 3,000(350)Compared to theend of FY2023
Large-scale facilities

8FY2022/3
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FY2023/3

FY2024/3

1213． Anticipated Effect of the Consolidation and Enlargement of
TA-Q-BIN Sales offices
8 billion yen reduction in operating expense expected (FY 2024/3)

・Consolidate last-mile facilities (TA-Q-BIN Sales offices), and start operation of
8 large facilities with functions of sorting terminal (from FY 2024/3)→Optimize transport, operations, admin and management costs which werebeing incurred separately in each facility
・Will continue consolidation in FY 2025/3 onwards（during the next Mid-termManagement Plan period）, and achieve further positive effects

Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved1314．Setting up facilities that serve “Cool-designated Terminals”(and “Last-mile Integration Facilities”)

Demand growth for temperature-controlled deliveries,
triggered by the COVID-19 pandemic～Mismatch with capacity

Change inconsumption behavior
triggered by COVID-19【Trend of Cool TA-Q-BIN volume】

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/3

YoY growth
YoY growth ＋5.0%＋20.8%

2020/32021/32022/3・By setting up facilities that serve as both “Cool-designated Terminals” and “Last-mileIntegration Facilities” in the urban areas with strong demand, we aim to capture the growing
demand, together with improving efficiency of sorting and transportation operations
Copyright 2022 Yamato Holdings Co., Ltd. All rights Reserved14

Disclaimer
This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial
instruments. Ultimately it is the responsibility of investors to select and buy securities and the Company assumes no responsibility
for investors who act on the basis of this material.