TOKYO -- Japan Post and courier service Sagawa Express will partner in package deliveries, the companies announced Friday, dividing collection and delivery duties and sharing logistics networks to better compete with industry leader Yamato Transport.

Sagawa, a unit of SG Holdings, and Japan Post currently rank second and third in Japan in package delivery. They already partner on certain services, but will now create joint transport and delivery networks for small parcels, international packages and refrigerated deliveries.

"The growth in e-commerce is accelerating an increase in package deliveries," Japan Post President and CEO Kazuhide Kinugawa said in news conference.

"The logistics sector is a critical component of social infrastructure," Kinugawa added. "But it faces a shrinking work force, and maintaining delivery networks has become a challenge."

"We will continue competing with Sagawa in some areas in order to provide necessary services to the Japanese public, while also complementing each other to ensure stable distribution," he said.

Japan Post President Kazuhide Kinugawa, right, and Sagawa Express President Masahide Motomura speak to reporters on Sept. 10. (Photo by Kento Awashima)

"We consider this partnership to be an extremely important step toward resolving challenges at both companies," said Sagawa President Masahide Motomura. "We hope to address issues by tapping Japan Post's delivery network and SG Holding's 100,000-strong workforce."

Kinugawa was bullish on the tie-up's effect on earnings, projecting that the two companies together could rake in hundreds of millions of yen in profit. "We want to expand that figure through a win-win relationship," he said.

The companies said they are not considering entering a capital partnership at this time.