Nov 19, 2013

MOL to boost logistics biz scale by 1.5 folds in three years' time

Refrigerated warehouse in Thailand

Mitsui OSK Lines (MOL) talked about its future growth strategies in the logistics business that it carries out through its liner division and affiliated companies at a press briefing that it held recently. The MOL Group has thus far offered unique and strong services in this field, building their strengths in each segment. In the future, however, the position of logistics as an area of growth will be further clarified and partnerships within the Group will be reinforced in a bid to expand business scale. At present, there are eight themes per region and industry, with collaborations fostered per project, centering on the liner division. With this, MOL intends to boost sales in the logistics division to as high as Y150 billion three years from now, or in fiscal 2016, from the current level of approximately Y100 billion.

The above press briefing was attended by Junichiro Ikeda, senior managing executive director of MOL, together with Yusuke Ueno, general manager of the liner division, and Hirohiko Okada, group leader, who talked about the growth strategies for the logistics segment.

At present, the logistics division of the entire MOL Group has a total of 241 bases in 115 cities in 22 countries worldwide. Total warehouse area stands at about 700,000 sqm for the 114 facilities and it has a network that is on a par with that of a quasi-major logistics provider. In particular, it has a reinforced network in the Southeast Asia/Mekong region, which has been designated as an area of growth, and operates local subsidiaries in Thailand, Vietnam, Myanmar and Cambodia. Its warehouse in Thailand is particularly large in area at around 90,000 sqm, with MOL undertaking comprehensive logistics business in the country by offering warehouses, including temperature-controlled facilities, land-based transport services and depot operation.

At present, there is no segment called logistics division at MOL and the functions are being transferred to the overseas logistics business handled by the MOL main unit, MOL Logistics, Utoc and other logistics subsidiaries, and group businesses. As regards sales, net combined sales of its affiliated companies, excluding the units under the control of the Group's business units, comes to about Y100 billion. Further, the profit margin on sales is about double the general average in the industry, claimed an official from the liner division, and the company is keeping the sales steady in the higher levels. The growth strategy for the next three years also aims to boost business scale while maintaining the profit ratio. Ikeda claimed that, "Compared to the liner division, the individual projects in the logistics segment are not that big, but we have come to realize our current scale by piling up track record for responding to such individual needs. There is an option for integration and branding, but at this point in time, we fear that we would be unable to capitalize on the strengths of each company. In setting our targets for the future, we have come to realize that it would be best to deepen partnerships while making full use of the assets in the liner division."

In a bid to promote its growth strategies, MOL has put up eight task forces in each region/industry in spring this year. The dedicated staff in each Group company will be tasked to form a unit that will engage in the promotion of collaboration within the Group. With plant/project transport, trucking/warehousing and the Southeast Asian region as the major themes of growth, the Group will capture new projects by sharing information and gathering know-how. In particular, MOL is thinking of expanding to other countries in Southeast Asia by using its successful comprehensive logistics business in Thailand as the model case.

The Thai unit does not only handle containers, chemical products, steel materials, heavy cargoes and various other cargoes, but also operates 300 trucks in the domestic market. MOL carries out a wide range of businesses in the country as aside from a 90,000-sqm general/refrigerated warehouse, it also operates a container depot in the outskirts of Laem Chabang port and so on. With regard to its warehouses, the company has decided to further expand its facilities in the future, so its warehouses are expected to increase in scale henceforth. MOL intends to undertake the horizontal development of this businesses corresponding to the circumstances in the ASEAN region, including regulations and infrastructure.

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