Trucking's "Appropriate Cost" — Can a Legal Floor Stop Rates Thinning Toward the Bottom of Multi-Tier Subcontracting?
On July 17, 2026, Japan's transport ministry opened an expert panel on an "appropriate cost" for trucking. Under two 2025 laws, the advisory standard rate is abolished and replaced by a legally binding floor that must not be undercut, with a duty placed on shippers who order transport. Behind it lie a 2024 reform that cut hours but not pay, and a multi-tier subcontracting structure where over 70% re-subcontract and each tier skims a 5–10% fee. This reads it as a system moving three forces at once: visible shipper responsibility, the culling of small operators, and price pass-through.
TL;DR
- Japan's ministry began, in July 2026, to set a legally binding "appropriate cost," abolishing the advisory standard rate and placing a duty on shippers to keep to the floor
- The 2024 reform cut working hours, but truck drivers' annual income stays below the all-industry average, at 4.38 million yen, 13.6% lower, for medium and small trucks
- Behind the failure to pass rates through lies multi-tier subcontracting, where over 70% re-subcontract and each tier skims 5–10%, so the actual carrier at the bottom bears below-cost pressure
In an MLIT field survey, over 70% of operators had re-subcontracted, and about 30% ordered work at under 90% of the price they received. Each tier skims 5–10% of the rate as a fee, so the rate thins out by the time it reaches the bottom, and the operator who actually hauls the load bears the below-cost risk. The appropriate cost is an attempt to set, by law, a floor that must not be undercut at the bottom. The four tiers shown are the structure the two laws aim for; a new best-effort duty limits subcontracting to two tiers down to the actual carrier, and the present chain can run deeper.
What Is Happening
The ministry began setting an appropriate cost, abolishing the standard rate and placing a duty on shippers to keep to the floor
On July 17, 2026, Japan's Ministry of Land, Infrastructure, Transport and Tourism opened the first meeting of an expert panel on setting an "appropriate cost" for trucking. The ministry has also asked operators to take part in a field survey toward calculating that cost. The appropriate cost is a figure built up from the minimum cost of transport, a floor below which work should not be made to run. It rests on two 2025 laws promulgated on June 11, 2025. They abolish the standard rate, until now only an advisory benchmark, and replace it with a legally binding appropriate cost. The weight of the duty varies. Prime contractors and forwarding operators who subcontract transport to others bear a duty not to order it at a rate below the appropriate cost. And a shipper who pays only below that cost becomes subject to corrective guidance. A five-year license renewal presses operators who fail to keep to the duty toward exit. The figure is to be issued within three years of promulgation, by June 2028.
Behind it is a projection that, left alone, transport capacity will fall short by 34% by 2030. Before the people who haul disappear, the state is trying to set the floor of a rate on which they can live.
Background & Context
The 2024 reform cut hours but not pay; truck drivers earn less and work longer than the all-industry average
Why a floor, and why now? Truck drivers' work came under a cap on overtime in 2024. Under what is called the 2024 problem, overtime was capped, in principle, at 360 hours a year, and at 960 hours even with special circumstances, with standards set for on-duty hours and more. Yet hours fell while pay did not follow. By the ministry's tallies, truck drivers' annual income stays below the all-industry average, at 4.38 million yen for medium and small trucks, 13.6% lower. Annual hours run, for large trucks, 2,544 hours, 19.1% longer than the all-industry figure. Hands are short, too: the job-opening ratio for truck drivers is 2.18, far above the 1.17 for all jobs.
Behind hours falling while pay lags is a failure to pass rates through. The standard rate was advisory, and its reach into actual rates was limited. A benchmark alone did not reach the bottom.
Reading the Structure
Multi-tier subcontracting thins rates toward the bottom; the floor moves shipper responsibility, culling, and pass-through at once
At the root of that failure lies multi-tier subcontracting. By the ministry's field survey, over 70% of truck operators had re-subcontracted, and when they did, about 30% ordered work at under 90% of the price they received. As a rate descends from shipper to prime, first tier, and second, each tier skims 5–10% as a fee. The ministry's report calls this a margin taken on the information gap, and notes that the operator who actually hauls the load, at the bottom, bears the below-cost pressure. From the field come voices: contract directly with the prime and you break an industry rule; you cannot even tell what tier you are on.
The appropriate cost sets a floor at this bottom. But setting a floor moves three forces at once. One is that the shipper's responsibility becomes visible. Place a duty on the ordering side too, and orders too cheap to match the cost grow harder to make. Next, culling may advance. Small operators who scraped by on below-cost rates face pressure to exit under the renewal system. Bankruptcies in road freight already stand at 321 in FY2025, the fourth-highest on record; a floor could speed that culling. And price pass-through follows. If the appropriate cost rides on the rate, that share is borne in the end by shippers and consumers. From the shipper side comes concern that, depending on the level, the impact would be considerable.
The appropriate cost can become a floor that protects labor at the bottom. But it also brings the pain of small operators' exit and of rising prices. It is not the simple story that tightening a rule makes working conditions better. We examined the year after the 2024 problem, when only the cap on hours moved first, in a separate column. How will society as a whole, shippers and consumers included, bear a rate on which the people who haul can live? To keep enjoying only cheap rates and fast delivery, while the labor at the bottom stays pushed deep into an unseen chain of subcontracts, is no longer tenable. Where to set the floor of the cost is a question of who bears logistics, and how, among us all.
Further Reading
- 物流危機は終わらない 暮らしを支える労働のゆくえ (The Logistics Crisis Will Not End: The Future of the Labor That Supports Our Lives) (Wakana Shuto, Iwanami Shinsho, 2018) — a study, from statistics and the field, showing that the root of the logistics crisis lies in the labor problems of truck drivers. (In Japanese.)
References
Overview of the Two Trucking-Fairness Laws (Amendment to the Motor Truck Transportation Business Act, etc.) — Ministry of Land, Infrastructure, Transport and Tourism. Ministry of Land, Infrastructure, Transport and Tourism
Report of the Study Group on Multi-Tier Subcontracting in Trucking — MLIT Study Group on Multi-Tier Subcontracting in Trucking. Ministry of Land, Infrastructure, Transport and Tourism
Improvement Standards Notice for Truck Drivers (Standards for Improving Working Hours of Motor Vehicle Drivers) — Ministry of Health, Labour and Welfare and MLIT. Ministry of Health, Labour and Welfare and MLIT
Bankruptcy Trends in Road Freight Transport (FY2025) — Teikoku Databank, Ltd.. Teikoku Databank
