(Bloomberg) -- Japan’s trucking industry is facing stricter rules from next spring that risk triggering a nationwide wave of delivery delays affecting everything from factory component supplies to fresh food on supermarket shelves.

For decades the country’s freight sector has relied on low-paid workers slogging through long hours of overtime to transport goods via truck. That will change in April when a law passed in 2018 to limit overtime is finally applied to truckers. The ceiling will be 960 hours a year.

While the move is meant to improve work-life balance and health, it’s also likely to worsen an existing shortage of drivers, prompting the government to earmark about ¥16 billion ($109 million) for alleviation measures in an extra budget expected to be approved by parliament as soon as Wednesday. 

Japan’s graying population is already causing a chronic shortfall of workers across industries from tourism to construction. The coming clampdown — which also applies to the construction industry — is likely to push up prices that are already hurting household budgets and undermining support for Prime Minister Fumio Kishida. The ¥13.2 trillion extra budget is largely aimed at trying to ease the pain of the strongest inflation in decades.

Almost 30% of firms surveyed by the Japan Trucking Association in 2022 said they had drivers who worked more than 960 hours of overtime a year. Without that labor, demand for deliveries could outstrip supply by as much as 35% in 2030, according to Nomura Research Institute. 

“The biggest effect will be on our partner companies, the small transportation firms,” said Yukari Shimomura, who runs Hanna, a freight company in the western city of Nara that has more than 100 vehicles of its own, but also relies on subcontractors. “They won’t be able to function.”

The government is pushing for a range of changes to try to ease the shortage, including shifting to rail and ship transportation. Currently, more than 90% of domestic freight is carried by road. 

Masaru Hojo of the Japan Institute of Logistics Systems Research Center said he doesn’t think a significant “modal shift” is possible, given passenger trains’ dominance of Japan’s railroad network, and the problem of aging crews that’s affecting the shipping industry as well. 

Another proposal is digitalizing the industry to cut back on waiting times for drivers and increase efficiency. With only four months until the law kicks in, the norm for small companies is still to use paper slips, Shimomura said, warning that many of them don’t have the staff to manage a high-tech solution. 

Among other ideas, an advisory panel to the National Police Agency has been considering raising highway speed limits for large trucks from the current 80 km (50 miles) per hour, a proposal that’s met with criticism because of safety risks. 

The government’s planning a reward system to discourage consumers from requesting re-deliveries at home in a bid to free up more drivers. It’s also looking to encourage recruitment of more female and foreign workers to boost the number of drivers. 

Read More: Support For Japan’s Kishida Falls Even After He Orders Tax Cut

For the moment, with trucking firms beginning to raise their fees, it may be other industries that are worst hit, according to a survey carried out by Tokyo Shoko Research Ltd in October. More than 80% of firms in fields like food and drink manufacturing and wholesale said they expect a negative impact from the new rules, with most fearing an increase in freight costs.  

Yet at least some of the plethora of small firms among more than 60,000 companies in the industry may feel forced to keep fees low to retain customers, according to Hojo. 

“Some smaller companies will probably go bankrupt if they can’t raise prices,” he said. While fees are rising as a whole, it’s unclear how far the trend will go and whether the money will reach the mom and pop firms operating on wafer-thin margins, he added.

Ultimately, customers will probably be forced to decide whether to accept a slower and lower-quality delivery service, or pay more to get the service they have taken for granted in the past, said Shimomura. 

“It’s not that it won’t be possible to transport goods,” she said. “It just that it will no longer be possible to transport goods cheaply.”

--With assistance from Erica Yokoyama.

©2023 Bloomberg L.P.