The physical distribution needs of industry and consumers in Japan have evolved since the last half of the 1980s. Just-in-time (JIT) and just-on-lot (matching capacity and handling technology to goods being moved) systems constitute two of the more advanced distribution systems which have been established to meet changing consumer and industrial needs more effectively. However, at the same time, these new systems have led to lower transportation efficiency, traffic congestion and degradation of the environment. Although these advanced physical distribution systems produce negative social and economic impacts, they are still pursued as manufacturers and consumers are service oriented. Industries have been unable to realize the full benefits of the systems because of congestion. Therefore, government and industries should work to reduce the negative effects and institute measures to further promote advanced physical distribution systems.