Nippon Express looks outward

   Of the company's domestic business, one-third comes from the trucking segment, while air, rail and marine transportation and domestic warehousing take up another roughly 40 percent. By volume, 17.3 percent of the company's business is derived from its international segment, but that volume accounts for 31 percent of the company's revenue. That's a mixture of imports and exports, as the company doesn't disclose its breakup of inbound and outbound.

   'We are aiming to increase this figure up to 50 percent,' Terada said.

   Indeed, the writing has been on the wall for some time. Japan's ascent to become a global economic engine meant production would inevitably head for less expensive shores. Many of Japan's stalwart brands long ago shifted some or all of their production to other parts of Asia. And Japan's proximity to China means no logistics company could ignore that country's meteoric rise.

   'Recent economic and industrial structural changes that took place against the background of rising labor costs in Japan have driven many Japanese manufacturers beyond their own borders,' Terada said. 'They have moved their playing fields both in manufacturing and marketing from Japan to outside growing markets, such as China and other Asian countries. This movement drastically changed the traditional supply chain of the products from 'domestic production and supply' and 'Japan-made for export' to 'foreign production and procurement from overseas.' We see such changes in almost all industries in Japan, such as apparel, home electronics, and personal computers. This change has resulted in declining exports, and growing imports in Japan.'

   Nippon Express' focus is increasingly on serving growing consumption markets in Asia, as metropolises throughout the Far East experience the same evolution those in Japan did. The company honed its business on the principles developed in Japan that have become ubiquitous in the logistics industry.

   'China and many Asian countries have become the most attractive market for consumer products,' Terada said. 'We have been concentrating on this emerging region in order to meet the growing demand for smarter logistics in all segments, including international, regional and domestic.

   'As a Japanese logistics service provider which has been trained for agile just-in-time logistics by a number of demanding Japanese customers, we strongly believe that we can make full use of our    experiences in Japan to set up logistics platforms in these Asian countries.'

   In Japan, Nippon Express is synonymous with more than just logistics or forwarding. The brand ubiquity Nippon Express enjoys in its home country is analogous to that of UPS or FedEx within the United States, only if one or the other didn't exist. That, of course, gives it inherent advantages in dealing with the Japanese market. It has a sizable owned warehouse network and owned truck and short sea shipping fleet. It's the top domestic rail and air forwarder in the country, and the top international forwarder.

   Including Japan, the company has 217 facilities in 97 Asian cities. Among its Asia-based offerings is a trucking service, called SS7000, connecting Shanghai to Singapore 7,000 kilometers away. The service is aimed at shippers who need to move their cargo within Southeast Asia and China faster than ocean and cheaper than air, the company said.

   Nippon Express also operates a domestic trucking network in China, specializing in milk runs for major auto manufacturers, many of whom are located in interior, less developed regions in the country.

   Outside of China, the company established a representative office in Bangladesh in August to focus on the apparel industry there and an office outside of New Delhi in December. In January 2010, the company launched a trucking service from Vietnam to India, the Mekong Express.

   Forwarding services into Laos also began in December, though the company said it is keen to avoid being tagged merely as a forwarder.

   'We're not only serving as just a forwarder, but also as a total logistics service provider,' said Shozo Miyauchi, group general manager of Nippon Express' air cargo business division. 'We've put our resources more on consultation and business solutions by integrating our current business resources ' including domestic and international forwarding by land, air and ocean, warehousing, IT support, financing and e-commerce.'

   An example of Nippon Express' advancement into e-commerce is the NEX @ China DMF platform released in March 2010.

   'This supports the clients who are interested in e-commerce business in China by providing not only transportation but also marketing, trading, financing, money collection and an IT platform in a single window,' Miyauchi said.

   'We used to handle carriage of products and data only,' Terada said, speaking more broadly about the company's development. 'Now we can handle carriage of money and act as the title-holder of the products when the customer wants to maintain a lighter balance sheet.'

   The company is also expanding its vessel operating business. Seven years ago, Nippon Express started operating a roll-on/roll-off service between Shanghai and Hakata, called the Shanghai Super Express.

   'This vessel provides 48 hours service, four days faster than the existing container vessel transit time,' said Toshio Asada, group general manager of the company's marine transport business division. 'Now we are planning to deploy one more vessel on this lane to improve frequency and total capacity, providing high-speed, high-frequency service into the China-Japan trade and targeting time-sensitive export and import products. And we have been working on a modal-shift program, from truck to rail and vessel, with major Japanese automotive manufacturers.'

   To be clear, there is much room, or some would say potential, for Nippon Express to grow internationally. As of March 2010, more than 90 percent of the company's revenue is still derived from trade to and from, or within Japan. Asia (not counting Japan) and Oceania account for another 6 percent.

   In February, a month before the east Japan earthquake, the company said, 'Although corporate earnings continued to improve, concerns grew about a possible downturn in the Japanese economy due to high unemployment, a further appreciation of the yen and unstable overseas economic conditions. The Japanese distribution industry's business conditions continued to be tough, as demand for domestic cargo transportation remained sluggish.'

   It's certainly too early to tell how the disasters in Japan may affect the company's planned evolution. Analysts suggest Japan's required redevelopment may push more production of goods to other Asian economies.

         But that evolution started before the Sendai earthquake, and Nippon Express' efforts will likely benefit from the necessary shift in production away from Japan.