Nippon Express, Japan’s top international freight forwarder, established itself on the African continent in 2017 when it opened a Kenyan branch in Nairobi, followed by a Moroccan branch in Casablanca.
We sat with Mr. Mitsuru Saito, Nippon Express’ CEO, regarding their plans on expanding their operations to the entire African continent.
Please tell us about your global network.
As of March 31, 2019, the Nippon Express Group is operating at 705 locations, in 302 cities across 46 countries, with over 22,000 employees.
In 2018, we opened offices in Panama and Laos, followed by Finland and Kazakhstan in 2019. Moving forward, we will be working to bolster and expand our business in India and Africa.
In Asia we are working to expand our warehousing infrastructure in countries such as Thailand, Indonesia, and Malaysia, and are currently building new warehouses in Cambodia and China (Shanghai).
Our extensive international network, superior quality and accumulated know-how are the key drivers of our business expansion. And we intend to continue to grow our network to expand our international business.
In Africa, Nippon Express has established branches in Kenya and Morocco. Could you give us an overview of your Africa business?
Our Kenya Branch opened in August 2017, and is mainly engaged in flower exports to Japan as well as international relocation services. In the near future, we plan to expand our business activities to include air cargo import, warehousing and distribution, and ocean freight services utilizing the port of Mombasa, the gateway to Kenya.
Kenya does significant business with India and China, and occupies an important position in the Indian Ocean rim economic zone. Consequently, we will strengthen coordination with our Indian and Chinese subsidiaries to promote business expansion.
Our Moroccan branch opened in December 2017. Morocco actively imports components from Europe, mainly for its automotive industry, and exports manufactured goods. In June 2019, we began operating the Tanger Med Logistics Center at Tanger Med Port, focusing on logistics and international shipping business with Europe, centered on the automotive industry.
Tell us about your international business strategy as set forth in your Nippon Express Group Business Plan 2023.
The 2023 Nippon Express Group Business Plan called “Dynamic Growth” aims for ¥600 billion in overseas sales and overseas operating income of ¥25 billion. Compared to fiscal 2018, these ambitious targets represent an increase of ¥170 billion in overseas sales and ¥12 billion in operating income.
To achieve our goals, we will globally expand the customer base and business we have built in Japan. In particular, our growth strategy will be based on three pillars: customer-based, business-based, and area-based.
The customer (industry)-based pillar will focus on five core industries: electric and electronics, automotive, apparel, pharmaceutical/medical, and semiconductor industries.
Fir the business-based pillar, we will adopt a multifaceted approach to expand our business, beginning with forwarding and logistics. With particular respect to the forwarding business, we are aiming to achieve ocean cargo volume of 1.3 million TEU and air cargo volume of 1.4 million tons. Above all, we believe that investing effort in our ocean cargo business is a pressing concern.
Lastly, for the area-based pillar, we divided the globe into five regions and will achieve business expansion through strategies that take area features into account. In particular, we will take steps to bolster and expand our business in India and Africa.
Nippon Express has recently been running a TV commercial relating to advanced pharmaceutical distribution. Are global needs rising in this area?
Good Distribution Practices (GDP), which form the basis for appropriate pharmaceuticals distribution and require stringent quality control, have become law in the EU. As the adoption of these practices increase globally, so will the need for compliant distribution.
To get ahead of this trend, we are building a pharmaceutical supply network in Japan to realize overall optimization of pharmaceutical distribution. In addition to quality control based on security, temperature, and other aspects of the GDP guideline, this approach will incorporate business continuity plans to ensure uninterrupted pharmaceutical supply, reduced CO2 emissions from joint distribution and container round use, and measures to cope with driver shortages.
Moreover, we will be extending efforts relating to our international transport, warehousing, and distribution businesses.
Going forward, can we expect further expansion of your global logistics business for the African market?
Africa’s population is expanding, and we believe it will become a major growth area. We anticipate an increase in demand for distribution as a consequence of that growth, and believe it represents an opportunity for business expansion.
As we expand in Africa, we believe it will be important to do so gradually, while controlling risk.
Nippon Express opened branches in Kenya and Morocco in 2017, and opened a new warehouse in Morocco’s Tanger Med Port in 2019. In South Africa we are operating jointly with a trusted partner as our representative.
Furthermore, we believe West Africa may experience rapid future economic development. European forwarders are actively expanding into Africa, and we will ensure that we are not late in doing so ourselves. To that end, we will continue our practice of following our Japanese customers as they expand internationally, but we also believe we must be prepared to expand overseas in anticipation of distribution demand. We will undertake our business expansion steadily while carefully discriminating between risks and opportunities.