Rising costs threaten Japan's book distribution system

Japan's book distribution system is facing severe strain due to rising costs, which could potentially lead to the closure of even more bookstores. Rising labor and fuel costs, along with new trucking industry reform legislation, are expected to significantly increase delivery expenses. If distributors can no longer afford the transportation, the number of bookstores in the country, which had already fallen below 10,000, could decline further.

Industry giant Tohan Corp.'s chairman, Toshitaka Kondo, stated that it is not sustainable to continue transporting books at a loss for the sake of the publishing culture. The upcoming trucking legislation will prohibit contracts below government-calculated minimum freight rates, which could increase delivery costs by up to double. The Japan Publication Wholesalers Association estimates that this could lead to a significant loss in the distribution business for major players like Tohan and Nippan Group Holdings.

Both major players have announced losses in their distribution businesses, with Tohan reporting a 4 billion yen loss in fiscal 2025 and Nippan Group Holdings Inc. reporting a 3.6 billion yen loss. Despite previously offsetting these losses through other operations, they have now slipped into net losses. The structural problems in the distribution system are also contributing to the rising costs, with magazines being a significant factor.

Magazines, along with books, are collected from printing plants at distributors' warehouses and repacked for delivery to bookstores. However, the lack of a dedicated distribution system for books has prevented the development of a specialized distribution process. As a result, books are often shipped alongside large volumes of magazines, which could explain the disproportionate impact of declining magazine sales on the overall distribution costs.

With magazine sales declining rapidly, the distribution business may only remain profitable if a series of best-selling titles emerge. If the number of magazines transported on the same trucks decreases, overall sales will fall, and the cost of delivering each book will rise. The relationships among publishers, distributors, and bookstores are under strain, and there are concerns that the number of bookstores could continue to decline.

Ahead of the new trucking legislation's implementation, the Japan Publication Wholesalers Association is urging industry parties to raise publication prices. However, book prices in Japan are already relatively low compared to Europe and the United States, and distributors' margins are fixed as percentages, making it difficult to adjust prices.

The consequences of the declining distribution system could ultimately fall on readers, as bookstores may only stock popular new releases and bestsellers, limiting their selection and availability.