Yusen Logistics UK has revealed an ambitious expansion strategy that seeks to nearly double its ocean freight segment this year, as well as expanding in the core vertical markets it has come to operate in.
In a short speech to journalists assembled for a press lunch, managing director Ian Veitch reflected on a successful 2012, in which it recorded a 10% increase in revenues, and said that the company was targeting a variety of fields that had proven to retain growth prospects, in spite of the continuing pressure on volumes and rates as the global economy fails to fully recover.
“It was a great year for us – we had revenues of £220m, which was up £20m over the year before and profits were up by 6%. We have a particularly large exposure to the automotive, pharmaceutical, over-the-counter pharmaceutical, while our exposure to retail is smaller – in a way we have benefited from not being in the retail trade.
“Pharma and pharmaceutical goods have largely been recession-proof, while other areas we are targeting in our forwarding division is to increase our UK liftings by 20%. Last year ocean freight was up 20% to get to 12,000 boxes, but next year we are looking for 20,000, which is a very significant increase, although contracts with Tesco, Arcadia and B&Q gives us a platform to get that.”
“Ocean has been a great success, while air freight is a plus-one activity, and we are looking for growth from a new contract with Astra-Zeneca, Japanese volumes, Chinese volumes and hopefully new volumes in Mexico.”
However, Mr Veitch also conceded that the company had lost its share of contracts in some of its areas of business. “We have lost business in the retail area, but that reflects the nature of the UK trade.”
But he reiterated his view that the biggest growth area for the company was in the pharma sector, where there is considerable growth prospects due to the way in which the major drug companies’ products are moving from being prescription-based to becoming retail products.
“Our biggest developments in terms of contracts have been in the pharma business, which has a particularly international character. And as the drugs that our clients develop go from being prescription drugs to over-the-counter drugs, if we follow that cycle then we get into more consumer-based activities,” he said.
The development of Yusen Logistics in Europe represents something of a milestone for its parent, Japan’s NYK Group, the country’s largest shipping company, which embarked on a programme to transform itself by reducing its reliance on maritime activities in the wake of heavy financial losses in 2011, and expanding its logistics focus.
The creation of Yusen Logistics, through a merger of NYK Logistics and Japan’s largest air freight forwarder, Yusen Sea & Air, was the key plank in this strategy, although Mr Veitch also admitted that the rebranding exercise was as yet uncomplete: “There is still the odd quizzical look when we say who we are.”
Nonetheless, in NYK’s most recent financial results, for the nine months up to the end of December 2012, the difference in performance between its container shipping and logistics arms were pronounced.
NYK Line had revenues of ¥331.7bn ($3.5bn) and posted a loss of ¥5.3bn (although it was a lot better than the loss of ¥28.9bn on revenues of ¥320.1bn in the same period in 2011), while Yusen recorded revenues of ¥272bn and an operating profit of ¥2.8bn, slightly down on the year before, but the key point was its ability to cut costs in the face of weak airfreight volumes out of Japan, continuing low demand in Europe and rising freight rates costs – when they were rising, that is.