Nov 11, 2014

Nittsu to boost shipper efficiency through transport process visualization

Nippon Express Co. (Nittsu) will promote the visualization of the transport processes in Asia and other regions toward the enhancement of logistics efficiency and development of functions of shippers. At the press briefing held by the company last November 10 at its International Business Headquarters concerning its business results in the first half of fiscal 2014, Jiro Nakamura, its vice president, claimed that, "With Asia, in particular, the transport processes to the ports/airports from the factories of suppliers have become a black box. Making this visible will lead to the enhancement of the logistics efficiency of shippers such as the reduction in emergency air transport." He added that, "Ultimately, we want to offer a service that also incorporates the clearing/settlement function." The company will proactively sell this function to companies in Europe/U.S. and Japan that have decision-making power in the area of logistics toward the expansion of its overseas sales. It plans to put up a process management center (PMC) in Shanghai first, and then deploy the same step to Southeast Asia while monitoring the results.

Nakamura touched on the company's activities under its current medium-term plan, explaining that, "The ratio of overseas sales in our total sales in the final fiscal year (fiscal 2015) under our plan has been set to 40%, but at the end of the first half of fiscal 2014, it stood at 33.5%. Even though such figure represented a 1.1-point jump from the level reached at the end of fiscal 2013, we wanted to raise it to as high as 34%. The nice miscalculation that domestic sales would grow plays an important role, but we will increase the ratio by 1.5 points to 35% in the second half of the year." The business of foreign companies has been active, but Nittsu felt that it had been pressed to cope with a domestic demand-oriented business that requires more manpower and has less profit margin compared to forwarding, according to Nakamura. So in the future, the company plans to use the network in Asia, which was built through a domestic demand formula, for exports to Europe/U.S. and Japan toward the horizontal expansion of its forwarding business.

Nakamura raised the management of the transport processes, especially in Asia, as its strategy for differentiation. "There may be a lot of parent-child deals among Japanese-affiliated companies, but European and American companies are unable to see the processes from the shipment of goods from the factories of their suppliers (the business partners) up to the actual loading of the cargoes onto ships, so they are very concerned," he explained. As a result, unforeseen emergency air transport jobs emerge, thereby increasing logistics costs.

Nittsu is able to visualize the transport processes through such means as developing the right information system. By enabling shippers to grasp the actual state of transport on a real-time basis, the response of customers at the arrival base can be reinforced and emergency transport jobs can be reduced. This kind of rationalization scheme will then lead to the strengthening of relationship with existing customers, expansion of entrusted logistics volume and tapping of new customers.

As its first step, Nittsu will put up a PMC at its Chinese IT-affiliated subsidiary Shanghai e-Technology in December. As an information system foundation, it will utilize the Global WMS rewards.

[Yutaka Ito, executive officer]

*In the Air Cargo Business Division, exports enjoyed a wide-margin growth in September (up 14% from the same month in 2013 to 17,164 tons), with the volume on an upward trend in the first half of the year (up 5% to 95,240 tons). As for automobiles, transport to North America's Midwest region and Mexico evolved on a bullish tone, while the movement of smart phones and electronic parts in Asia also manifested a noteworthy jump. On the other hand, imports remained unchanged from the previous year in terms of number of transactions due to the state of low yen. Sales from imports in the first half of the year surged 10% thanks largely to the incorporation of the surrounding logistics projects following the commencement of the raw wood BILT 2 project. Deals for fresh cargoes using regional airports also expanded, totaling 650 tons in the second quarter. We will continue to tap this market in cooperation with the shippers. In the domestic market, we were worried about the repercussions from the last-minute demand prior to the increase in consumption taxes, but the movement of fresh produce, medical cargoes and security-related goods had been strong. For the whole of fiscal 2014, it is highly probable that cargo movement will evolve in the same manner as in the first half of the year, but we are concerned about exports owing to the labor-management negotiations at the ports in the U.S. West Coast. We might need to take some kind of step to deal with this.

*Foreign companies are enjoying a brisk movement of automobile-related cargoes and the effects of the weak yen will help in the increase in revenues. In the South Asia/Oceania region that has manifested the largest growth rate, there is a rise in the number of airlines and warehouses in Indonesia, while air transport is strong in the Philippines due to congestion at the ports there. As for the East Asia region, China manifested a bullish market, but Hong Kong suffered from a slight drop in air hauls due to the advancement in the shift to marine transport. The demand is generally dwindling. In Europe, Germany and Spain enjoyed the active movement of automobile-related cargoes. Although there is not much strength, it can still probably be considered brisk as a whole. Now without setting aside the Ebola hemorrhagic fever, the condition in Ukraine, demonstrations in Hong Kong and other world affairs, we will focus on the trends henceforth.

[Hideo Hanaoka, managing executive officer]

*Exports handled by the Marine Transport Business Division in the first half of fiscal 2014 evolved on a weak tone with a 0.5% drop. Shipments of commercial cargoes registered a 1.5% jump thanks to the firm movement of equipment-related cargoes, but port transport suffered from a 20% decline due to the integration of trade routes and the plunge in the handlings of operators in Taiwan and South Korea. Imports dipped 5.1%, with the solar-related items and fresh produce in particular suffering from contraction. Port transport at the five major ports also dropped for the major operators. Total sales of this division slipped 1.9% from last year. On the contrary, handlings at the regional ports, which are controlled by our Domestic Business Headquarters, enjoyed strong growth, especially in the South Korea lane. Exports fared well in Kitakyushu, Fukuyama (as well as in rail transport), Hiroshima, Toyohashi (automobile-related cargoes), Toyama (textile) and Fukuoka, while imports soared in Hiroshima (cars/sundry goods), Otaru, Oita (imported rice), Kagoshima (grains) and Fukuoka (sundry goods for mass retailers).

*Handlings by NVOCCs by place of origin posted a 12.8% jump in Japan, 2.9% rise in East Asia, 11.5% surge in South Asia/Oceania, 2.7% jump in the U.S. and 7.6% surge in Europe, with the overall increase standing at 8.6%. Growth was quite slow in South Asia and the U.S., necessitating support. Meanwhile, the ratio of the U.S. and Europe in the trade is high, so when the handlings in East Asia and South Asia/Oceania do not rise, the entire trade will not expand. We want to work on such matters as negotiations with operators some more. The effects of the labor-management talks in the West Coast are already showing. While we take such measures as prioritize operators who use on-dock rail terminals (where cargo transfer onto the railway system is smooth), there will be limits to what we can do. The U.S. East Coast trade route uses small ships, so it is difficult to get hold of space. So, we are discussing about goods for transport, including in Europe. We want to explain this to the shippers soon.

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