Aug 28, 2013

Nittsu targeting 500,000 TEUs in NVOCC cargo handlings worldwide

Hideo Hanaoka (Photo), executive officer and director of Nippon Express (Nittsu) who is also in charge of the Marine Transport Business Division and Fine Arts Business Division, held a press briefing at the company's headquarters in Tokyo on August 26, where he talked about such matters as the key policies and measures in the future of the Marine Transport Business Division. "We will further boost the business of import/export forwarding, which is our core competence," he said, indicating that Nittsu is targeting more than 500,000 TEUs worth of NVOCC throughput worldwide. The company will also strive to capture the export demand related to production equipment and imports of apparel/lifestyle goods, as well as advance its cold chain business. In the marine transport segment, Nittsu will not only boost the volume of cargoes hauled to/from Japan, but also reinforce handlings of marine cargoes at its overseas subsidiaries and nationwide land transport branches.

The Marine Transport Business Division raked in sales totaling approximately Y116.9 billion in fiscal 2012. The commercial export/import segment, which is engaged in the forwarding of automotive parts and electronic/electric-related commercial cargoes, accounted for about 61% of the total sales at Y71.2 billion. Nittsu also engages in the business of port transport, coastal transport, fresh produce and overseas relocation services, but it is not expecting significant growths in these segments owing to the fate of the domestic economy and the nature of such businesses. The company is projecting growth in the handling of commercial exports and imports, so it will mount activities toward the reinforcement of its core businesses. As for ex-Japan exports, Nittsu will focus on production equipment and production parts/materials that are swelling in volume thanks to the accelerated transfer of production bases to overseas sites. Meanwhile, in the import field, it will exert utmost effort into the handling of office equipment and apparel/lifestyle goods.

"We are not only a port-to-port NVOCC, as we also offer forwarding services that include transport to inland destinations and customs clearance services," claimed Hanaoka, who added that they intend to continue expanding their value-added businesses in the marine transport segment. Capitalizing on its own network of bases all over the world, Nittsu aims to further promote its multimodal transport services that are offered in conjunction with its independent customs clearance/delivery services at both the origin and destination sides. "We will compete with the European and American forwarders," said Hanaoka.

Nittsu aims to expand its total annual handlings of NVOCC cargoes worldwide to 500,000 TEUs in the future from the current level of above 400,000 TEUs, intending to further boost the volume of marine cargoes handled at its overseas subsidiaries. Hanaoka explained that, "Air and marine businesses in Europe and the U.S. have come to reach a counterbalanced state, but in Asia, airfreight is still the main thrust. We have to realize a balanced business system in order to survive in this industry," revealing that the company will guide and provide support to its overseas subsidiaries toward the expansion of its marine transport business. It also plans to beef up connections with domestic multimodal branches that focus on land transport services in a bid to boost sales in the marine cargo division. The domestic multimodal branches currently rake in Y30-40 billion in sales per annum, while the overseas subsidiaries post tens of billions of yen in sales.

In its staple merchandise segment, Nittsu banks on cargoes related to apparels and lifestyle goods. Japanese-affiliated apparel manufacturers, who are promoting the review of their domestic/overseas storage/distribution system following the expansion of their production outputs and sales overseas, are growing in number, so the company will reinforce its marketing strategies in a bid to grab this business opportunity. In particular, the trend at the overseas markets is tilting toward warehouses for production support and warehouses for sales. Demand is also climbing for warehouses that will be used as distribution centers as a result of the swelling demand for mail-order goods in Japan. Nittsu will offer optimum distribution centers to mail-order business-affiliated companies, including those centers that are located overseas such as the ones in Shanghai and Pusan.

In a bid to beef up its cold chain business, Nittsu partnered with Daisei Every 24 Co., a dedicated refrigerated/frozen food logistics provider, in March this year to offer high-quality temperature-controlled logistics services mainly in Japan and Shanghai, but also in Thailand, Indonesia and other emerging economies. "The handling of temperature-controlled cargoes (by local traders) in Asia is still in a rather poor state, so the demand will surely grow," explained Hanaoka. Even in marine transport, the company hopes to boost the throughput of frozen/refrigerated cargoes centering on import cargoes to Japan from such countries as China.

As for the ASEAN region where economic integration is advancing, discussions are currently underway toward the establishment of a RORO ship network linking the countries in the region through such venues as the Transportation Ministerial Meeting, with the Japanese government and the Japan International Cooperation Agency (JICA) also assisting in the surveys and extending support to the proposed project. Nittsu is studying the feasibility of a RORO ship business in the ASEAN within the above framework.

The company's envisioned route is the Singapore-Jakarta route. However, Tanjung Priok, the gateway to Jakarta and Indonesia's largest container port, is struggling with severe congestion, so Hanaoka said that, "If we think about the standby time and customs clearance of ships when they arrive a day earlier, there are no merits to be reaped from high-speed ships at this point in time." With this, Nittsu wants to deploy a ship to this trade lane by 2015 while monitoring such factors as the progress in the development of a new port at North Kalibaru. Eyeing coastal transport, the company projects that it will commission a ship that can load 240 TEUs worth of cargoes and sail at a navigation speed of 20 knots.

Moreover, Nittsu acquired a 10% stake in the Singaporean port operator Portek International last year, with Hanaoka saying that, "It is difficult to compete with (Hutchison and other) leading foreign operators in the area of overseas port operation. With our participation in Portek, however, we have come to get hold of information on overseas ports and harbors." Nittsu is also displaying interest in making a foray into the terminal business overseas while partnering with Mitsui & Co., a major shareholder of Portek.

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