DESTINATION OF ONE YAMATODESTINATION OF ONE YAMATO

Part 2

Part 2

Structural Reform of Network Operations
In response to the progressing growth of EC and changes in customer needs and distribution structure, we will achieve the enhancement of overall network quality and efficiency by creating dedicated networks optimized to meet diverse logistic needs at the sametime as reinforcing the existing TA-Q-BIN network.

Reinforcement of Existing Networks

1Background

Consolidation and Enlargement of Sales Offices

We are optimizing transportation, operation, administration, and management costs and enhancing safety, quality, and employee-friendlinessat each location by consolidating and enlarging small, multi-store TA-Q-BIN sales offices, with a focus on urban areas.

The existing TA-Q-BIN network was initially launched to provide CtoC services. Despite meeting the diverse BtoB and BtoC needsof small-scale to large-scale corporate clients, it has become a structure difficult to link to revenue growth with an increase inparcel delivery amount following changes in customer needs and distribution structure.

Existing Networks
 ationwide roll out of a hub and spoke distributionNmodel for sorting and transportation terminals andsales offices
 peration on standardized timelines to provide uniO
form (high-quality) services
 lacement of full-time employees (multi-functionalPsales drivers) at small, multi-store sales officesIncrease in volume of parcels from large-scale corporate clients who ship from specialized warehouses, etc.

Previously: s mall, multi-store sales
officesIncompatibilities with existing network, which mainly
focuses on small-lot parcels and standardizing operations on next-day shipping, have become apparent(Ten thousand units) (People) (Million yen)

250,000

Peak in number ofemployees
Approximately 225,000

1,800*

0Growth domains

2014/32022/3

2023/32024/32027/3* Prediction for beginning of the fiscal year ending
March 31, 2024

Basic Strategies that Support Structural Reforms

Digital Strategy

 romotion of appropriate human resourcePallocation in conjunction with renewal ofworkstyles and structures

150,000

 or an overview of our human resource strategy,Fplease see page 26.

100,000

50,0000
2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3
 arcel delivery amount (ten thousand units)PNumber of employees (people)
Operating profit (million yen)
* Product scope: TA-Q-BIN, TA-Q-BIN Compact, EAZY, and Nekopos(Fiscal Year Ending March 31, 2024, to Fiscal Year Ending March 31, 2027)

Progress in building EC logistics network as a start point

Accomplishment of existing network reinforcement

 ompletion of overall design to gradual launch of initiatives
C
aimed at reinforcing existing networks

 reation and expansion of dedicated networks optimized toC
meet diverse logistic needs
Creation results2Environmental Strategy

 aximization of the initiative’s outcomesM
through utilization of a system for optimal
resource allocation in response toworkload
 or an overview of our digital strategy, please see
Fpage 32.

Review of Terminal Functions

 uplication of timelines for dispatch operations andDarrival operations within the same terminal, lowering
operational efficiency

 or an overview of our environmental strategy, please
Fsee page 34.

Number of terminals

Concurrently with reviewing terminal functions, such as separating dispatch and arrival operations andintegration of large-scale sales offices with terminal in light of changes in volume of parcels and timelines, we will promote maintaining and improving safety, quality, job satisfaction, and employee-friendliness and optimizing transportation and operation costs by revising definitions of duties, standardizing
human resource composition (full time, part time, hourly workers, and temporary staff), and entrusting
part of operations at some terminals to business partners, then reallocating employees.

Previous Operations

 ncouragement to reduce GHG emissions
Eby introducing various environmental
equipment at large-scale sales offices,including a switch to EVs, solar power
generation equipment, and LEDs.

76
Fiscal year ended
March 31, 2023

Approximately

70 *Fiscal year ending
March 31, 2027

* Predictions for beginning of the fiscal year ending
March 31, 2024; total for specialized dispatch andarrival terminals and integrated terminals

Integrated dispatch and arrivalmodel (conventional)
Dispatch
ArrivalCreation of EC logistics network
Creation and expansion of dedicatednetworks optimized to meet
diverse logistic needs

Creation of network dedicated to temperature-­controlled deliveries (BtoC and BtoB)
Expansion of transportation and delivery network
for corporate clients xpansion of value provided inE
response to needs
 eception of appropriate pricing
Rbased on value provided
Optimization of operating costs

Base domain

3,501 3,331 Approx.
2,800*Approx.

1,500

Human Resource StrategyMeasures

3,924

3,000

Future Initiatives(Fiscal Year Ended March 31, 2021, to Fiscal Year Ended March 31, 2023)(Facilities)

Group management structurereforms—begin business structure reform

Overview
Initiatives and Results to DateTrends in number of sales offices4,500

Increase in EC parcels with different timelines andoperations
 hanges in the balance between dispatch and arrival
Cvolumes

In the Future: consolidated andenlarged sales offices

Parcel Delivery Amount*/Number of Employees/
Operating Profit

200,000

Changes in Customer Needs and Distribution Structure

18Base domain

Reinforcement of existing networkat the same time as creating adedicated network

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

Consolidationand enlargement of sales offices
Review of terminal functions

 enewal of workstyles and the operationalRstructureIncrease in job satisfaction
 aintenance and enhancement
Mof safety, quality, andemployee-friendliness

Future Operations
Improvement in flow ofoverall operations throughseparation of dispatch andarrival operations and redesign of operations
 election and implementaStion of optimal methods in
response to characteristics
of each terminal

Integrated dispatch and arrivalmodel (conventional)

Dispatch
ArrivalIntegrated dispatch and arrivaland enlarged sales officecoexistence model

Dispatch
ArrivalEnlarged sales office

Separated dispatch and arrival, and integrated enlarged sales office

DispatchArrival
Enlarged sales office

Began reorganization of terminals in the Fukuoka
area and launched operation of new Sasaguri terminal (new and lease) from November 2022

Basic Strategies that Support
Structural Reforms
Human Resource Strategy
 romotion of optimal human resource allocaPtion and clarification of definitions of duties

Digital Strategy andEnvironmental Strategy
 eduction of GHG emissions by promotingRtransportation efficiency through data analysis

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

19

DESTINATION OF ONE YAMATODESTINATION OF ONE YAMATO

Part 2

Part 2

Structural Reform of Network Operations

3

Reform of Workstyles and Operational Structures (Sales Drivers)

Previously

In the Future

SD (sales driver):Specialized sales and client relations model

Uniform nationwide SD

Major urban areas*1 SD+DD+PD

DD (delivery driver):Specialized delivery model

Creation and Expansion of Dedicated
Networks Growth Domain

We will maintain and enhance quality, employee-friendliness, and job satisfaction, strengthen our response to diversifying customer
needs, and optimize operating costs by enhancing delivery efficiency subdivision and specialization of sales driver duties into sales,delivery, pickup, and other operations in line with regional characteristics based on changes in the balance between pickup anddelivery workloads and the increasing burden of multi-tasking following a rise in shipping ratio for large-scale corporate clients.

 aintenance of structure withM­approximately 60,000 drivers covering
nationwide nhancement of pickup and deliveryEproductivity through specialization andcreation of systems
Sales

DeliveryPickupSD

Sales

DeliveryPD (pickup driver):Specialized pickup model*1 Placement of drivers (employees) specializing in­temperature-controlled delivery only and EAZY CREW
(business partners) in places with specific demand

Estimated Composition in March 2027*2

PickupSD·PDSDDD—PDDevelopmentDD——*2 P rediction for the beginning of the fiscal year
ending March 31, 2024

Basic Strategies that Support Structural Reforms rom February 2023: Commencement of trials in someFareas of Tokyo rom January 2024: Further development in major
Furban areas (Tokyo, Chiba, Kanagawa, Saitama,Nagoya, and Hanshin (Osaka and Kobe) areas)

Human Resource Strategy
 aximization of initiative outcomes through design of workM
styles and pay conditions based on duties

Digital Strategy
 aximization of initiative outcomes by introducing systems
Mthat flexibly rearrange operations in line with daily workload
fluctuations, in conjunction with the consolidation andenlargement of sales offices

Basic Agreement Regarding Collaboration with Japan Post Group Aimed at Promoting
Sustainable Logistics Services
We signed a basic agreement regarding collaboration with Japan Post Group to promote sustainable logistics services. This agreement willcontribute to transportation services that are instrumental in enhancing convenience for customers and business growth through effectiveutilization of the management resources of both companies, to resolving social issues, including the “2024 problem” faced by the logistics
industry, and to environmental issues.

Strengths of Both Groups

Details of Cooperation

Yamato Group (Yamato Transport)

Japan Post Group (Japan Post)

From February 2024: Direct mail service area

Nationwide network of pickup
and delivery trucks
Approximately 35,000 2t and4t trucks*

Nationwide network of pickup anddelivery bikes and mini vehicles
Approximately 82,000 bikes
Approximately 30,000 minivehicles

 nd of Kuroneko DM-Bin on January 31, 2024, and launch
Eof new service, Kuroneko Yu-Mail (tentative)* Installation of temperature-controlled
equipment in 95% of trucks (approximately 33,000)
average refrigeration
capacity for temperature-control of 2t
trucks is 2,000 liters

Utilization ofnetwork
resources

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

1

Gradual Opening and Development of(¥ billion)

2 elivery of packages accepted from customers by Yamato
DTransport on the Japan Post delivery network

From October 2023 in Stages: Small, thin parcels
 nd of Nekopos in stages from October 2023 and launch
Eof new service, Kuroneko Yu-Packet
 elivery of packages accepted from customers by Yamato
D
Transport on the Japan Post delivery network

12,000(%)

4,000

54.16%

13,999.7
610,051.5

6,000

Largescale EC
operatorsEC
sortingcenter

EC
deliverycenterEnd user(personreceivingparcel)

30

2019

2020

2021

2022

0

Size of the BtoC EC market in product sales domain
Rate of shift to EC (right scale)
Source: Ministry of Economy, Trade and Industry, Market
Research on E-commerce

2020

2.89%

2,750.5

1,823.3

R*1 of3 CAG

023//3 to 2

9.2%

%*

R of 5.8IN CAG

TA-Q-B

42321

2019

2020

2021

20220	Size of the EC market for food, beverages, and alcohol (left scale)	Rate of shift to EC (right scale)
Source: Ministry of Economy, Trade and Industry,Market Research on E-commerce3(20 facilities open as of June 2023)

96.76%

Trends in Cool TA-Q-BIN Delivery Amounts(¥ billion)

0(%)

Network Dedicated to Temperature-Controlled Deliveries

Growth of the EC market in food logistics

2,000

9.13%

18,000

By responding to the increase in EC parcels,which differ from conventional TA-Q-BIN in termsof timelines, delivery method, pricing, and otherfactors, and by creating flexible capacity throughcoordination with business partners, we areexpanding sales opportunities for EC operators,
reducing lead times between order by EC users
and arrival, and improving customer experiences
through real-time communication and diversedelivery methods.

3,000

EC Delivery Centers in Urban Areas

Growth of the EC Market

EC Logistics Network

1,000

TOPIC

20

Alongside initiatives reinforcing our existing network, we are promoting dedicated networks optimized to meet diverse logistics needs in areas where demand is concentrated. Accordingly, at the same time as expanding the value we provide in response
to customer transportation needs, which existing networks could not sufficiently meet, we will increase the growth capabilities andprofitability of the Yamato Group through reception of appropriate pricing based on this value.

2020/32021/32022/32023/3*1 CAGR: Compound annual growth rate
*2 TA-Q-BIN (including Cool TA-Q-BIN), TA-Q-BIN
Compact, and EAZY

By expanding capacity
through the establishment of two largescale concentrated
facilities in the Tokyo
metropolitan area in
response to increasing
Low Temperature
demand for BtoC andTransportation and Delivery
Center (South Tokyo Area)
BtoB temperature-­(Commenced operation incontrolled deliveries,June 2023)
we will contribute to
the expansion of sales
opportunities, such as for food manufacturers
and sales business operators, and provide thevalue of reducing overall logistics costs by optimizing the entire supply chain.

Specialized Corporate Transportation and Delivery Network

Based on various risks in customer supply chains, such as changes in consumer trends and industry structures, decreases in workforce, andresponses to the “2024 problem” and environmental issues, we will expand the value we provide through our response to standardization ofoperations to the transportation needs outside the scope of TA-Q-BIN transportation needs by reorganizing group resources and reinforcing
collaboration with business partners.

Service Example: JITBOX Chartered Delivery
 ransportation service, from pickup to delivery, that loads customer packages
Tonto a metal cage on wheels
 lternative service to chartered truck delivery that provides value of timely
Adelivery and high-frequency delivery in the appropriate quantity

JITBOX Chartered Delivery

YAMATO HOLDINGS CO., LTD.
Integrated Report 202321