Aiming to be the No.1 Logistics Provider [PDF ... - Nippon Express

Aiming to be the No. 1 Logistics Provider

2. Positioning of Nippon Express in the Japaneselogistics industryAdvantages of well-established networks in Japan and beyondOnly Nippon Express can handle all transportation modes, ranging from trucking toair, maritime, and rail transport, as well as warehousing and heavy haulage andconstruction.Outward airfreight 21.2 1Domestic airfreight 29.4 1Rail transport 43.6 1Statistics of 21 majorcompaniesShare (%) Rank Source37.3 1JAFA(Year ending in March 2006)JAFA(Year ending in March 2006)JR Freight(Year ending in March 2006)MLIT(Year ending in March 2006)2 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

With the total volume of physical distribution declining, the Japanese logistics industryis undergoing a weeding process. Nippon Express, consistently analyzes customerneeds and maintains the top position in the trucking industry.Compared to other providers in the Japanese logistics market, Nippon Expresshas sufficient competitiveness and potential to handle SCM and 3PL in themidst of the industry shake-up.3 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

3. Strengths of Nippon ExpressBroad customer baseNippon Express has long had the top sales in thetrucking industry. With its broad customer base,Nippon Express has realized managementstability that is less susceptible to moves bycertain customer or industry sectors.Response to customers' overseas developmentProduction plants have been shifting from Japanto China and other counties, andNippon Express sees such developments as achance to expand business opportunities. It hasextended its business overseas alongside itsclients and obtained more logistics business,which as a result has increased sales of parentcompany in export/import.4 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

4. Challenges to Nippon ExpressLow operating marginForty percent of sales of parent company comes from the fiercely competitive market.Prior investment in human resource development, quality management, IT, andenvironmental measures is also highly costly.Low ROAReasons include widespread distribution of the company's assets throughout Japanand its holding of large assets in the shrinking Japanese market. However, thecompany has posted extraordinary losses of 4-5 billion yen per annum and isrestructuring its assets.It is necessary to overcome these problems while at the same time takingadvantage of the company’s strengths in pursuing business. In September2005, Nippon Express introduced the "career-change support system" as ameasure to reduce costs in domestic business.6 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

5. Future Management PoliciesObjective: To be the world's No. 1 logistics providerBusiness expansion as a forwarder free of large assets such as aircraft and vesselsIATA (International Air Transport Association) Ranking 2004Ranks of individual local subsidiaries in respective countries7 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

Further accelerating global business expansion and readily responding to the globalexpansion needs of any company, taking advantage of the broad customer base ofNippon Express to increase sales.Reduced asset risks as a result of not owing aircraft or vesselOverseas local subsidiaries yielding high operating marginSegment information by location (Period ending March 2006)Americas Europe Asia/Oceania Japan TotalEliminationConsolidatedSales(in million yen)Operating profit(in million yen)49,416 58,361 80,261 1,643,237 1,831,276 (37,351) 1,793,9252,221 3,221 3,379 36,125 44,947 (1,760) 43,187Operating2.22.5margin (%)4.5 5.5 4.2 --- 2.48 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

Enhancing service concentrating capital investment by the company and promotingquality differentiation in the warehouse/delivery business.Expanding forwarding business in air/maritime transportation as well as in thecompany-run warehousing/trucking business, to offer services of uniform qualityworldwideNippon Express: its past, present, and futureServicesBusiness scopeInternational freightDomestic freightInvestmentPastLargelydomesticHandling of internationalcargo to/from JapanSales of individualtransportation modesseparatelyParent companyPresentGlobal4-polar internationaltransportation3PLGroupFutureGlobal &localizationIntegrated service including financeGlobal SCMPartnershipM&A9 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

In its global business expansion, Nippon Express aims to connect the world asan air/maritime forwarder and offer quality services in every corner of the globe.At individual locations, Nippon Express operates warehousing/delivery on itsown and offers SCM services that meet the needs of clients entering localmarkets.Nippon Express promotes investment to enhance overseas warehousing andintra-region logistics services while expanding to new service areas, includingcommercial distribution business, taking advantage of the functions of itssubsidiary Nittsu Shoji as a trading firm.To this end, Nippon Express eyes the possibility of partnerships and M&A withmajor local companies.10 All Rights Reserved,copyright 2006 Nippon Express CO.,LTD

All Rights Reserved,copyright 2006 Nippon Express CO.,LTD