Sept 3, 2013

Senshukai to consolidate stocks at new Pusan warehouse

Senshukai Co. (headquartered in Kita-ku, Osaka), a major Japanese mail-order company that runs Belle Maison, has begun to consolidate late August its overseas inventories to the large-size logistics warehouse that was newly erected at the hinterlands of Pusan New Port. With bonded warehouses in seven locations in China and Southeast Asia, the company used to import products manufactured overseas to its domestic centers and then sell them in the local market. However, it will consolidate the entire inventory management functions of its overseas sites to the new warehouse of Nippon Express (Nittsu) under the first stage of Phase 1 of the recently launched Woongdong logistics park by around the turn of the year. In conjunction with this, it will significantly organize its domestic stocks, too, in order to contract by about half the warehouse area that it uses around the Chubu center, its main base. Senshukai projects that these developments will lead to Y200 million in logistics cost reduction annually both in the domestic and overseas divisions. Following the realignment of its global logistics system, the company envisions that the main unloading port for Japan-bound imports will shift to Tsuruga port from the hitherto Nagoya port.

Senshukai's main thrust is the catalog-based mail-order business for apparels, everyday sundries and other goods that are sold under the Belle Maison brand. All its original commercial goods, for which the company is involved in the planning, are produced overseas and then imported into Japan and sold in the domestic market. It has a total of nine production bases overseas where it has local subsidiaries, comprising five in China (Qingdao, Dalian, Shanghai Waigaoqiao, Taicang and Dongguan) and the bases in Thailand, Vietnam, Indonesia and India. Senshukai had put up bonded warehouses in parallel at its seven production bases, except in Indonesia and India, and at such warehouses, it had undertaken assembly, packing and other distribution processes, as well supplied the goods to the domestic shipping centers from each warehouse. In the future, it will, in principle, shift all overseas inventories to the new warehouse in Pusan New Port Free Trade Zone (FTZ) in a bid to rationalize its international logistics business. With this, the company will close down its overseas warehouses outside of Pusan one after another.

The new warehouse at the Pusan New Port FTZ kicked off operation in August 5 under the management of Nittsu. Senshukai will exclusively lease the two warehouses with a total floor space of approximately 16,000-sqm that was built by Nittsu at the site under the first stage of Phase 1 of the Woongdong logistics park project. It has secured a 20,000-cbm space for handling goods equivalent to 70,000 SKU (Stock Keeping Unit). With regard to the logistics provider, a tender was held for 11 companies and Nittsu was chosen at the turn of this year. In light of this, Nittsu has been shifting certain volumes of its cargoes to the external warehouse that was allocated to it at Pusan New Port on a trial basis since March this year, months ahead of the full-fledged operation of site. "Tests under virtually the same environment as the real thing in terms of equipment and operation were racked up, so the transfer was smoother than we had envisioned," claimed an official from Senshukai's commercial goods development division.

Senshukai will shift its stocks at seven overseas warehouses to the above new warehouse in Pusan by around January next year. It plans to boost the usage ratio of the new Pusan warehouse to about 60% of its total imports in the fall of this year, when the shipments of winter clothing hit their peak. The company initially projected that it would take about 13 months to transfer its products to the warehouse in Pusan, but the above official said that, "We will frontload the plan since we are already generating more-than-expected savings in our logistics costs by shifting our cargoes to the new warehouse." The contraction in logistics costs is generating significant effects in organizing Senshukai's domestic stocks by shifting its overseas inventories and hitherto domestic stocks to its new warehouse at Pusan New Port. Aside from cutting down the domestic storage costs, the move will also considerably contribute to the reduction in domestic land transportation costs through the modification of the import route.

The shift of cargoes to the new warehouse will be advanced in succession starting with the commodities that have big economic effects, according to the above official. First, the items with long retention periods – from the time they are imported to Japan until the time they are sold – and which rack up domestic storage fees were shifted to the via-Pusan route starting the latter half of August. Specifically, it has begun handling strategic goods, such as apparels that see expansion in sales per season, and furniture that have big lots in mass production.

[Tsuruga to become the largest unloading port]

In line with the above shift, Senshukai will also restructure its domestic logistics system. A large volume of its goods for the domestic market are shipped via its main base, the Chubu Goods Center that is located in Kani, Gifu Pref. The company used to commission multiple external warehouses in the outskirts of its Chubu Center that holds a concentration of its cargoes, including prepaid warehouses where final operations are performed prior to shipment. With the integration of the point of shipment of import cargoes to Pusan port, however, it will be able to significantly organize its stocks.

Specifically, Senshukai first transferred the main prepaid warehouse located in Ogaki city in Shiga Pref. to Ichinomiya city in Aichi Pref. in June this year. About 80% of the commercial goods imported from the seven warehouses overseas used to be unloaded at Nagoya port, where numerous ships Asian trade routes call. However, the company projects that the cargoes unloaded at Tsuruga port, where high-speed RORO ship services with Pusan will be commissioned, will swell to eventually hold the largest the share in the company's cargoes.

Senshukai put up the base in Ichinomiya, which is located in the transport route to the Chubu Commercial Center from Tsuruga port, in anticipation of the above move. With this, it has been organizing several of its existing external warehouses, planning to reduce in half the area of the external warehouses around the Chubu Goods Center by early next year, when the consolidation of cargoes to the new warehouse in Pusan New Port will be completed. The series of rationalization moves following the operation of the new Pusan warehouse is expected to lead to Y200 million logistics cost reduction per annum.

The company plans to boost the usage of Tsuruga port as unloading port for import cargoes henceforth. With regard to goods that do not interrupt sales even if they do not have the minimum transport time, the above official pointed out that, "If there are merits that can be enjoyed, depending on the marine freight rates and delivery timing, then we will also unload cargoes at the Hanshin ports, Nagoya port and other regional ports," indicating that Senshukai intends to flexibly choose the rational routes for its goods.

(※Photo is headquarters of Senshukai)

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