Jan 04, 2016

New Year's Message from President Hiromitsu Kuramoto

Happy New Year.

There can be no doubt that the employees of the Yusen Logistics Group around the world have stepped into the New Year bearing new hopes and aspirations. First, let me express my gratitude that we have all been able to greet 2016 safely and soundly.

Review of 2015

Regarding the state of the global economy in 2015, while there were signs of improvement in the U.S. and Europe both in the state of the employment environment and in consumer spending, in Asia, the sense of uncertainty surrounding the Chinese economy reverberated around neighboring countries. In Japan, too, consumer spending failed to increase as much as expected, and economic recovery failed to materialize. In addition, political instability has afflicted various parts of the world and, since our business operates on a global scale, it is no longer possible for Yusen Logistics to ignore geopolitical risks.

In such an environment, through prior industry-specific customer acquisition initiatives and the strengthening of cross trade transportation, Yusen Logistics was able to expand sales globally, resulting in market-beating growth in both ocean and air freight forwarding. In particular, our ocean freight forwarding business has seen further improvements in market competitiveness as a consequence of increased freight volumes and enhanced relationships with our carriers. Meanwhile, the logistics business has benefited from, on the one hand, business reforms as part of project Re-Engineering, including cost reductions such as the centralization of warehouses and, on the other, continuing strategic investments and expansion of services. These efforts have led to both increased sales and improved business efficiency.

Our Medium-Term Business Plan is progressing well: not only have we achieved our targets, we have also been able to lay the groundwork for the next Medium-Term Business Plan. This has been made possible thanks to the efforts of the group’s employees in every position and business unit, and I believe this is a sincere reflection on our corporate value of 'Intensity' I would like to take this opportunity to express my gratitude to all of you once again.

Medium-Term Business Plan

As far as the Medium-Term Business Plan is concerned, we are continuing to implement “GO FORWARD, Yusen Logistics-Next Challenges-.” Last year, having recognized the potential for future demand, we established a subsidiary in Pakistan in the Indian sub-continent—one of the priority regions in our Sales Strategy. Consequently, Yusen Logistics now boasts in excess of 480 bases across 41 countries and regions, further strengthening our global network. In addition, in Malaysia we acquired Halal certification in both our transportation and warehousing businesses, and intend to establish a one-stop service in the expanding Halal market.

Looking specifically at individual industries, the influence of government policies and the TPP has cast a spotlight on food and, in particular, agricultural produce logistics. We have procured exclusive rights to sell MAXTEND (Controlled Atmosphere technologies in reefer containers) services, which have a long track record of success at our U.S. subsidiary, in Japan. This has allowed us to cater to the needs of our customers by providing ocean transportation services for agricultural produce with a high degree of freshness. Going forward, we will strengthen collaboration with our partners at research institutes and universities, to further develop and expand our logistics technologies.

In the future, TPP, which is set to lead to an expansion of the free trade area, and the establishment of the ASEAN Economic Community (AEC) will undoubtedly create a momentum for the international logistics market. So that we are not left behind by changes in the market, Yusen Logistics intends to actively focus on industries that are expected to grow.

This year is the last year of the current Medium-Term Business Plan and its three core elements: Growth Strategy, Operational Strategy, and Investment Strategy. Let us unite in our efforts to achieve our KPI targets: 770,000 TEU in ocean freight forwarding, 370,000 tons in air freight forwarding, 530 billion yen in net sales, and 12 billion yen in operating income.

Looking Ahead to 2016

We realize this year is a very important period to deliver real 'dramatic progress' for our future, so in order to become a world-class total logistics provider, we will launch "Transform 2025" (tentative name).

This new initiative is designed to prepare our organization for the future, and to be a Global player. The goal is to innovate our corporate structure and culture, and through a series of key projects, which will extend into the next medium-term-business plan.

The core business projects cover the following 5 subjects:-

a) Project Bridge next phase

b) Branding

c) IT and Work style innovation

d) HR Development

e) Organization Development

We will announce more details on each project shortly and we will especially focus on the following 2 subjects in 2016.

First of all, in 2015 we established “Project Bridge” and used this to investigate and draw up a policy which, this year, we intend to realize with the aim of simplifying, standardizing and optimizing our IFF business processes and core systems. It is important that we do not cling to existing methods; indeed, based on these new processes and systems, it will be the group’s employees who carry through a “Culture Change.” Let us ensure this develops rapidly.

The second objective is branding. Five years have passed since the integration of Yusen Logistics. However, while integration has progressed within the company itself, there is no doubt that the global reach of the Yusen Logistics brand—an essential element for significant growth—is limited. We must therefore increase the value we provide and commence full-scale branding initiatives in order to differentiate ourselves in the market and establish superiority. This will, of course, be a long-term project. We will share what we believe to be the ideal state and value of Yusen Logistics with all of our employees, and ask each and every one of you to become embodiments of the brand.

I believe that these two objectives will drive us towards achieving our goal of becoming a global top five logistics company, and holding the number one market position in Asia.

Elsewhere, efforts to improve our global workforce have begun to bear fruit, and we will therefore persevere with these initiatives. We will actively promote national staff to top positions and implement various types of training as well as personnel changes between regions, in order to create a global organization in which talented personnel can display their abilities, regardless of their nationality.

In line with our original plans, in 2016 we will again execute various policies in both our ocean and air freight forwarding divisions, and thereby continue to expand freight volumes. In the logistics business, we will continue to implement “Kaizen” initiatives aimed at Quality Improvement, and provide value-added logistics services.

Code of conduct and compliance

In April last year, we established and implemented the “Yusen Logistics Group Code of Conduct.” It goes without saying that, as a business, we must not only comply with the laws of the countries we operate in as well as international rules, but also be fair in accordance with social norms. The code of conduct outlines correct behavior that group executives and employees alike must always adhere to, and I ask all of you to refresh your understanding of the code, and endeavor to follow it in a trustworthy manner with "integrity". There is no doubt in my mind that such actions are connected to how well we, as a company, can fulfill our social responsibilities.

Closing

In closing, I would like to draw your attention to the Yusen Logistics logo: it represents the unification of our land, ocean, and air services provided by the group, and combines them with action and flight for future success. After our business integration, we endured many hardships. Now, however, I believe we are finally ready to make the ideas embodied in the logo a reality.

The Yusen Logistics we know today was established through the extraordinary efforts and "innovation" of our predecessors. Let us evolve this company further, create a future with value, and develop into a truly global total logistics provider.

Finally, allow me to conclude this New Year’s message by expressing my profound hope that all group employees and their families will enjoy a productive 2016.