Dec 24, 2014

Denso to consolidate trilateral marine transport to Japan, Singapore, China in FY2015

Denso's headquarters in Kariya City, Japan

Denso Corp. (headquartered in Kariya, Aichi Pref.) will consolidate its trilateral transport jobs into the three regions of Japan, Singapore and China in the selection (through a tender) of operators that will be commissioned to take care of its marine transport requirements when it renews its service contracts in April next year. It used to hold tenders in Europe and U.S. regions, too, but by shifting to the three regions where it has large shipment volumes, the company aims to reduce its logistics costs and reinforce its management system. In line with its drive to develop its business interests in emerging nations, the company intends to introduce logistics solutions that it has cultivated in Japan such as the opening of integrated warehouses. It will study Indonesia, India and Mexico as potential sites for such facilities. As regards the air transport of exports, the company will boost the introduction into unit load devices (ULD) of corrugated box (cardboard) sheets that enhance loading efficiency. It will also utilize them on U.S.-bound cargoes starting next year, on top of being use on the conventional Europe-bound shipments.

Denso's marine shipment volume in fiscal 2013 (April 2013-March 2014) totaled approximately 28,000 TEUs in exports, 5,000 TEUs in imports and 19,000 TEUs in cross-region (trilateral transport) in terms of 20-foot containers. Export and import volumes manifested slight increases, but shipments between regions enjoyed wide-margin growths, such as cargoes hauled to the U.S. from Asia and to Europe from Asia. It projects that trilateral transport volume will also expand in/after fiscal 2014.

Against the backdrop of the rise in trilateral marine transport volume, Denso will consolidate its shipments to the three regions of Japan, Singapore and China starting with the tender for operators that will be utilized for its marine transport requirements during contract renewal in April next year. It will hold an explanatory meeting in January next year and then decide on the operators that will be commissioned by the end of March. The logistics division of its regional headquarters in Europe and the U.S. used to be involved in this undertaking, but after integrating its tender process and period, the company will utilize the merits of volume through bids at the three regions with large export shipment volumes toward the reduction in logistics costs.

Denso will also contemplate on the introduction of comprehensive warehouse functions in its bid to expand its business into emerging economies. The design of its logistics/distribution system at overseas markets and within the region is currently being undertaken by the Region unit. But similar to product development, it basically intends to deploy the logistics technologies and distribution solutions that it had developed in Japan to overseas markets and build a logistics system that has excellent competitiveness on a global scale.

The comprehensive warehouse function in Japan is carried out by the Denso Logitem Import/Export Center at Nagoya port (Higashihama, Tobishima-mura, Ama-gun, Aichi Pref.). It adopts a system wherein export and import cargoes hauled by air and sea are carried into the center once. By consolidating the cargoes in one place, the company has been able to optimize its transport routes and slash costs. The specific timeframe for the establishment of comprehensive warehouses at emerging economies has not yet been set, but Denso has decided to engage in measures toward pursuing the effects of consolidation. It has designated Indonesia, India and Mexico as potential sites for such warehouses.

Denso's export cargoes hauled by air stood at about 9,000 tons in fiscal 2013. Airborne transport is basically utilized in emergency cases, with its air cargo volume peaking at above 10,000 tons in 2007, prior to the Lehman shock in September 2008. It is possible that the volume of export cargoes hauled by air in fiscal 2014 will surpass that of fiscal 2013 owing to the growing switch to this mode of transport from marine hauls in light of the prolonged negotiations between the employers and workers at the ports in North America's West Coast, the response to the booming business climate in the U.S. and the problems at the ports in the Philippines. The company has also laid out an emergency system that will boost its local inventories from the start of the fiscal year in order to address unforeseen events such as port lockout following the labor-management talks at the West Coast. It will stick with such system until the labor talks at the said ports are over.

Denso will boost the use of cardboard sheets in air transport. It has made a decision in December on the operators that will be used to haul its cargoes by air in fiscal 2014, but one of the requirements in the selection process was the possibility of their cooperation in the utilization such sheets. Cardboard sheets were first introduced in marine transport in the latter half of the 1990s, but Denso began to study its use in air transport, too, in 2012. It kicked off the utilization of such sheets for cargoes bound to Amsterdam in the same year, and the same will be done for cargoes to be hauled to Chicago and Atlanta from January 2015.

Using thinner cardboard sheets can lead to a larger cargo loading volume in airborne and seaborne containers than corrugated box (cardboard) pallets. In comparison, the utilization of cardboard boxes is expected to result in 1/15 of the chargeable weight, 1/5 of the actual weight and 1/10 of the total costs when corrugated box pallets were used.

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