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NYK plans to boost logistics operations

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NYK plans to boost logistics operations

July 12
11:37 2012

NYK President Yasumi Kudo said the company plans to double sales from logistics operations in future as global vessel overcapacity depresses freight rates in its container and other sea-borne cargo division

“We have a chance to make more money through logistics than shipping,” Kudo said, “Margins are small, but stable.”

Kudo said freight-forwarding and warehousing businesses led by unit Yusen Logistics will boost sales to $10 billion within seven years. Revenue at these operations, which bring profit margins of about 3 percent, may soar to more than $12.6 billion, he said without giving a timeframe.

The Tokyo-based company also intends to expand its car-carrying business, particularly in Thailand, after its container ship unit posted losses in two of the past three years. “Our biggest concern is the container market,” Kudo said. “Another slide into the red could send us into a tailspin.”

NYK’s container operation lost $179 million in the company’s October-December third fiscal quarter, reversing a $96 million profit a year earlier. Liner revenue dropped 9.6 percent to $1.3 billion. The loss reflected similar losses at Japan’s two other liner companies, MOL and “K” Line.

Although net profit at Yusen Logistics declined by 30.2 percent year-over-year in fiscal 2011 because of extraordinary losses related to Japan’s earthquake and tsunami, the company still earned $31 million.

Kudo said a key focus in bolstering NYK’s logistics business will be auto parts because of the growth of auto manufacturing in Asia. The company is particularly targeting Thailand as Japanese automakers move production to the country because of lower wages and the strengthening yen, as well as China, India and Indonesia.

“Demand for cars in Asia is booming,” Kudo said. “Intra- Asia trade is by far the biggest growth market now.”

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