The president of ocean-forwarder NYK, Yasami Kudo, has said the company will concentrate on doubling sales at its logistics operations, including the freight forwarding and warehousing businesses led by its Yusen Logistics unit. Yusen Logistics is the product of NYK’s integration of its contract logistics division, NYK Logistics, and its airfreight forwarding business, Yusen Air & Sea Service, which it started back in 2010.

In a candid interview with news agency Bloomberg recently, president Yasami Kudo said that the company had a better chance of making more money through logistics that included warehousing, cross-docking and distribution, rather than shipping, which has been hit by a slump in rates because of overcapacity.

Kudo said the company would boost sales in the Yusen Logistics unit to ¥800 billion ($10 billion) within seven years. That will mean the company will have to more than double Yusen's current revenue of ¥309 billion and at least maintain its 3% profit margin. Next year the company is targeting ¥510 billion in its logistics revenue.

This is preferable to facing what Kudo called “another slide into the red” on the container shipping side of the business, which could send the company into “a tailspin”.

Referring to the company’s latest three-year medium term management plan, entitled More Than Shipping 2013, Kudo also outlined how the company will be looking at the automotive vertical in Asia as a growth sector from which the company could continue to benefit.

Asked whether the focus on the logistics side of the business would be at the cost of further investment in container and vehicle shipping, a spokesperson for the company said that it did not mean NYK would be reducing the container business (its Liner division). But NYK has indicated that it would target further diversification in the logistics and freight forwarding business.

“Although essentially a shipping company, we cannot differentiate ourselves through shipping alone,” the company said in an official statement. “This is why we intend to grow further by combining traditional shipping with value-added strategies.”

NYK has also declared a “defensive strategy” toward a light asset business model for its container ship fleet, involving a reduction in ownership of vessels and more long-term chartered vessels. It is also centralising its liner management in Singapore.

Meanwhile, the company is reviewing its container business to Europe. When the 2013 management plan was announced back in 2011, Kudo said that while population movements in the US were likely to remain a bright spot, “dwindling birthrates and the rising age of populations in Europe raise doubts about the growth of cargo shipments to that part of the world”. He added that the company would continue using space leased from other shipping companies to meet fluctuations in demand.

Meanwhile, a large share of the logistics growth is expected to come from the Asian automotive sector. The company intends to build its inbound parts logistics business in Thailand as Japanese carmakers move production to the country to avoid the damaging strength of the yen. (Mitsubishi is shipping vehicles under the Global Small project from a new dedicated factory in Thailand, for instance, while Nissan is moving assembly of the Note, Tiida and Latio small cars to Thailand from this month.)

NYK’s focus on Thailand is part of a wider strategy concentrating on the Asian automotive market, which includes China and Indonesia. Kudo told Bloomberg that demand for cars in Asia was booming and that the intra- Asian trade was by far the biggest growth market at the moment.

The spokesperson added that NYK was expanding its Bulk Shipping sector, which includes car carrier services. “Automobile transport is one of the centrepieces of our business and also would be developed [further],” he said.

Tailor-made solutions in the UK
The decision to integrate NYK Logistics and Yusen Air & Sea into Yusen Logistics was part of a drive to combine further more of the company's service offerings. The company said at the time that the new organisation would expand the individual scope and provide tailor-made global logistics services for the automotive industry, primarily targeting tier one and two suppliers serving major OEMs.

Last week Yusen Logistics announced the set up of just such a tailor-made solution with the launch of its Tamworth automotive facility in the UK Midlands. According to the company, the new 7,500-square-metre facility has been set up in response to tier supplier demand for decanting, cross-docking, stockholding and sequencing operations in readiness for line-feed into the assembly process on a just-in-time basis. The facility is up and running and will see an annual throughput of 400,000 pallets at capacity, according to the company.

“Tamworth provides a good example of a tailor-made, automotive-focused service,” a spokesperson for Yusen told Automotive Logistics. “The facility is supported by our forwarding control tower operations, with volumes arriving by air, sea and road, as we continue to build increased robustness into the automotive supply chain.”

The company would not confirm which suppliers and carmakers would be benefiting from the facility at Tamworth stating only that operations currently included the storage of engines for a construction equipment company.

The Tamworth facility is 30 miles (50km) from JCB’s headquarters in nearby Rocester.

The facility is also supporting sequencing services and quality checking for a leading wiring harness manufacturer and sequencing services and sub assembly for a manufacturer of boot (trunk) lids and spoilers.

“The scale of operations can be exemplified by the combined volumes of wiring harnesses currently handled by Yusen Logistics’ Tamworth and Derby operations combined,” added the spokesperson. “These total just under 1m cases per annum.”