Jan 07, 2013

New Year's Message from President Hiromitsu Kuramoto

Strength of All the Members at a Difficult Time

Happy New Year to everyone at the Yusen Logistics Group !
 It is my great pleasure to start the New Year with everyone from all the companies of the Yusen Logistics Group, both in name and in fact.
The integration of Yusen Air & Sea Service and NYK Logistics, which began in Japan in October 2010, was completed in April 2012 with the merger of subsidiaries in China, Indonesia, and Malaysia. This has made us one of the largest Japanese logistics companies in the world, with a network of more than 440 locations in 38 countries and regions and approximately 16,000 employees.

 Looking back on 2012, cargo movement was slow because of the global economic setbacks associated with the prolonged European debt crisis, the delay in the economic recovery of the United States, the slowing growth of emerging countries as a driving force, and other factors. The situation in Japan was also very serious. Overseas transfers of production bases as a response to the persistent strength of the yen were combined with changes in the industrial structure, including modal shifts designed to reduce logistics costs, as a result of which the total volume of air freight from Japan as a percentage of the overall industry remained less than 10% compared to that in the previous year.
 In this very difficult environment, each region of our Group faced major challenges in securing freight volumes and fell short of their sales target. Nevertheless, our group achieved a 22% increase in ocean freight forwarding and also a 1% increase in air freight forwarding, which had previously been contracting, so in fact I think we did very well. This is of course attributable partly to the effects of the business integration, but it is definitely also a result of your consistent efforts at individual regions, sections, and departments to expand sales through PLUS ONE sales activities, bolster purchasing power, and improve our business. Thank you very much for your hard work in your individual sections and departments over the past year.
 Some analysts see a moderate economic recovery in 2013. However, the global economic outlook remains uncertain, and it is likely that cargo movements will struggle for some time to come.

To Further Heights

 In this economic environment, we will be in the final fiscal year of our medium-term business plan “GO FORWARD, Yusen Logistics.” With regard to our numerical targets, ”1 million TEU for ocean freight export, 500,000 tons for air freight export, and 430 billion yen for consolidated net sales”, we must say that it is extremely difficult to achieve the targets within fiscal 2013. We will set realistic budget targets for the new fiscal year. However, we will continue to aim these targets, because we must achieve these figures in the near future if we are to truly be the world-class, global comprehensive logistics company.

Go Forward and Deepen Initiatives

 To this end, I would first like to ask you to raise your awareness. Please be aware that we are an international, comprehensive logistics company. I ask each one of you to stop thinking that all you have to do is to make a profit in your area of specialty, and to undertake the PLUS ONE sales activities from the viewpoints of air freight forwarding, ocean freight forwarding, and logistics businesses.
 As for our air freight and ocean freight businesses, I ask you to continue initiatives for reducing purchase prices by increasing the freight volumes and deepening the Core Carrier Program. I also ask you to promote businesses that are not dependent on cargo to and from Japan; more specifically, businesses involving non-Japanese companies, businesses involving forwarding between Europe/United States and Asia, and cross trade cargo, among others.
 In the logistics business, I ask that you seek to secure profits this year through measures such as establishing a system and business model that will enable us to generate profits and reviewing operations, including the elimination and consolidation of facilities, in addition to continuing to take the No.1 Kaizen Company initiatives.
 Regarding the Corporate Account Program (CAP) that we promote as a sales strategy program, we have begun to be recognized by global companies gradually. I ask you to continue pursuing these initiatives by deepening cooperation further with regional headquarters in the world.

Identify Appropriate Costs

 Increasing the volume of freight is essential for achieving our targets. But this year, I also request each department to be aware of profit as well as freight volumes. After the new company started operating, costs increased temporarily in the “integration” and “fusion” phases. I would like all of you around the world this year to strive to identify appropriate costs at the same time as promoting operational reforms.

Cosmopolitan Outlook

 Meanwhile, I would like each one of you to make daily efforts to develop a cosmopolitan outlook, for instance by paying attention to trends in the global logistics market and in customers’ industries, in addition to the acquisition of the broad knowledge required of a comprehensive logistics company, so that you can pursue solution-based sales activities with a proper understanding of customer needs.

Importance of Compliance

 I also ask each one of you, once again, to reaffirm the importance of compliance in your daily operations by regarding it as your own issue.
 We are required to establish a corporate culture that contributes to society by providing superior logistics services. The price a company pays for a failure to comply with laws, regulations, or other rules is extremely high. Such a failure may also have a serious impact on the company’s performance. I strongly urge you to take the importance of compliance seriously and strive to strengthen compliance once again in each section, department, and company.

The “Key” is Partnership

 The business integration has enabled us to establish the framework for competing globally in terms of both network and the businesses lineup. We are planning to allocate people, goods, and money to growth and emerging countries more aggressively, to establish a better system for responding to customer needs. In addition, we have the advantage of being a provider of finely tuned services, or services made in Japan that we have developed as a Japanese freight forwarder. If we listen sincerely to customers’ issues and respond to them based on the NYK Group values of “Integrity, Innovation, and Intensity,” customers will definitely respond positively.

Fusion to Dramatic Progress

 In 2013, let’s connect these elements organically and deepen our “fusion”, through the effort to increase the amount of freight, reduce purchase prices accordingly, identify appropriate costs, foster as soon as possible human resources who can engage in the sales activities of comprehensive logistics services from a global perspective, and share the know-how and skills we have developed with a sense of respect for each other. I am sure this will lead to “dramatic progress” in the future.