[220415.EN.SEA] NYK to Fix Focus On Logistics Rather Than Containership Operations

JAPANESE shipping giant Nippon Yusen Kaisha (NYK) is plotting a new course by diversifying into integrated logistics focusing on distribution, rather than rely on being a container shipping line in a market plagued by overcapacity.

"We have considered business diversification, such as expansion into logistics, to be essential in order to continue to grow in the 21st century," said the group's new president, Tadaaki Naito, in his inauguration speech.

"This transformation has required us to become a diverse, integrated logistics company focusing on all areas of distribution, rather than relying on the liner trade alone.

"Given the highly sophisticated nature of logistics today, we must gain an awareness of the needs of our customers through thorough analysis of customer demands by our people on the front lines."

The company's current mid-term plan calls for investment of JPY80 billion (US$626.4 million) in the ocean liner trade and logistics business in the five years to March 31, 2019.

In addition to the group's container shipping business, NYK operates air and ocean freight forwarding and contract logistics services via its Yusen Logistics organisation. Its air freight activities also include Nippon Cargo Airlines, which operates a fleet of Boeing 747 freighters.

Between April and December 2014 the recurring profits of the company's global logistics business grew to JPY12 billion from the year-ago level of JPY500 million owing to improvements across its liner, air cargo and other logistics divisions.

According to Mr Naito, the shipping and logistics industries overall offer "promising growth" despite persistent overcapacity since 2008, and that the company is especially keen to tap demand growth in emerging markets.

"We expect that the Asia region and emerging nations such as the BRIC (Brazil, Russia, India and China) will continue to show high growth rates going.

Source : HKSG.