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Nissin Corp: Revolutionizing logistics from Japan’s Yokohama Port

Interview - November 23, 2022

A pioneer in multimodal international logistics, Nissin Corporation is readying itself with IT innovation and specialized solutions in order to make international logistics more customer-centric and sustainable.

JUNICHIRO WATANABE, DIRECTOR AND SENIOR MANAGING EXECUTIVE OFFICER NISSIN CORPORATION
JUNICHIRO WATANABE | DIRECTOR AND SENIOR MANAGING EXECUTIVE OFFICER NISSIN CORPORATION

What are some of the advantages of Japan’s logistics sector that could help it become a regional logistics hub?

We think the advantage of Japan’s maritime transportation is its location. Japan is located near many Asian countries that produce a lot of things that are shipped to the US and Europe.

Japan is the first port of call from the USA and the final port of call before the USA, and has up to around 40 to 50 container terminals, which is more than any other country in the world. Before the logistics crisis happened, this was considered a disadvantage because it’s better to have a centralized hub for logistics.

Japan also has a lot of exports, which also fits well with our situation. If you think about Korea, Taiwan, Hong Kong and Singapore, they don’t deal much with imports so Japan is well positioned to use empty containers for export.

We hope that after this logistics crisis, Japan can develop a central hub port like Busan in Korea, or Shanghai in China. I’m not sure where the best place for our hub port would be, but it would have to be supplied by feeder ports and Nissin is able to provide such logistics services, such as moving containers on trucks between those ports.

Our dream is for Nissin to service a hub port, together with our competitors. Before the Kobe earthquake many years ago, Kobe port was such a hub but after the earthquake we couldn’t use that terminal. Most carriers and customers shifted their operations to Busan. At that point, Japan gave up on having a hub. Tokyo couldn’t be a hub because it was busy with imports. Fukuoka was too small and far away. Busan took significant traffic from Japan. We believe now is a good time to take the advantage back from Korea to Japan.

 

Japanese ports have very strong technological capabilities. Yokohama, for example, was voted the world’s most efficient port in 2021. However, they also have some limitations, one of them being that Japanese ports usually are not open 24 hours a day. What additional actions need to be taken to get the advantage back from Korea?

Free port status, that is to say no customs, is key. There are no customs arrangements made in Singapore or Hong Kong. We need to re-explore customs procedures in Japanese ports. They are complicated, and this is clearly a disadvantage.

Furthermore, Japan needs container terminals that accept mega-sized vessels of over 20K TEU (Twenty-foot Equivalent Unit). Currently, 18K is the maximum in Yokohama, and that was only instituted in 2015. However, ship builders are now making over 25K TEU vessels that will be operational in 2024-5. Smaller vessels are used for branch routes, so although we have many ports for those types of vessels, we still need the capability to handle much bigger ships.

Another disadvantage is the labor shortage due to the aging population in Japan. There is a shortage of truckers and terminal workers. The Japanese government needs to take action and we are involved in a trade association which is lobbying the government to formulate an action plan.

 

Which current port do you think is the most suitable to emerge as Japan's hub in the future?

Our company is from Yokohama so we’d like it to be there. We have a packing terminal in Yokohama which is at the center of an integrated logistics operation where Nissin operates all the input and output transportation whilst also manufacturing the packaging materials.


Yokohama Heavy Cargo Packing Center


Our heavy packing center in Yokohama provides Nissin with a great advantage and we’ve gained a lot of experience in integrated logistics services by operating it. In particular, we’re used to handling heavy machinery and machining tools, so although Japan has lost market share in manufacturing to other countries such as China and European countries, we’re hoping to provide our logistics services to industrial manufacturers around the world.

 

The services you offer are extremely integrated at your Yokohama center. From the packing all the way to the moving and the chartering. Why do you think it was important to integrate these services to such a high degree?

Nobody else can copy this kind of support. Not even industry giants that are of a mega size when it comes to Japanese logistics companies. They don’t have a packing factory like ours. By combining our services, our margins can be bigger. We don’t use any contractors so all the income stays within the Nissin group. I think this is a great business practice.

 

You mentioned that one of the potential markets for this type of highly integrated service is machining centers and machine tools. Are there other segments that you are targeting or believe could benefit from this kind of service?

The manufacturers of all products require machines. Automobiles, electronic goods, food and so on, all need machines for production and Japan is still a leading maker of machine tools. For example, one of our customers who makes drinks has big factories overseas, and they are often facing difficulty in sending equipment to their plants in China, Indonesia and Thailand. Even in such cases, we can still arrange those shipments by different means, not only using containers, but also by conventional vessels under a charter basis. We always work together for such shipments internally with several related departments like NVOCC, shipping agencies, terminal operations, warehousing and packing.  

With regard to using IT to satisfy our client’s needs, we do our best to stabilize supply chains by collecting information from our own resources and from our peers. However, it’s getting more difficult to fulfill the needs of our customers using previous methods. Due to the recent staff and labor shortages as well as COVID-19, international logistics have been disrupted.

In these circumstances, startup companies taking advantage of new technologies are rapidly emerging. They can provide logistics platforms for various companies via the internet. They’re also starting to offer advanced services such as automatic predictions and alternative shipping recommendations which traditional shipping companies could not provide. They can do this by analyzing big data with AI technology.

We at Nissin believe we must actively incorporate such technologies to achieve customer satisfaction rather than fighting against other industries. We’re already looking into connecting our services with these technologies.

 

Could you elaborate on the types of collaborative partners you're looking for?

First and foremost, we are looking for a partner with the technology to track international cargo accurately and in real time. We believe the solution could be the Project44 supply chain visibility providers, or Infor Nexus.

We're trying to create a service where we can track not only the truck or the container itself, but individual items. It’s important to collaborate on this. We're changing our mindset from being competitive with rivals to being collaborative, and one example is that as a logistics company, we have collaborated with a network provider and have been trying to establish an end-to-end service where we can track the container or the packaged item.

There are many services that are confined to tracking in just one country. Once an item crosses a border there are very few cases where you can track it, due to regulations. Our big customers in the automotive field, who deal with many parts, are particularly concerned about the delay and congestion in North American ports, and they call us every day asking when products will arrive.

We are trying to establish a new type of end-to-end IT logistics service where we can track our customers’ products working together with the network provider as well as competitors so we can create a big platform.

Currently we're going through experiments and the testing of different IoT platform services, and we're trying to find a definitive answer. In the near future we would like to provide a real time tracking solution that would make the logistics more efficient.

With regard to green logistics, our biggest warehouse is in Osaka and its roof is equipped with solar power systems. We also have a refrigerated warehouse in Kobe which is fully automated. No one works inside because the temperature there is -20 degrees centigrade. In this way, we can save on manpower costs and keep our staff healthy, and our customers happy.

Our newest facility is in Tokyo, Heiwajima logistics center, which only started operating in March 2021. It is not fully automated, but it takes advantage of high performance which can provide a valuable service to customers.  For example, this warehouse can retain its freezing function for 30 hours after power loss. In addition, the temperature can be set in increments of 0.1 degrees, and it is possible to switch between chilled and frozen, allowing flexible use of the warehouse. Those are useful for the customer's BPC, and the efficient warehouse function can result in CO2 reduction.



Temperature control in logistics was widely discussed during the coronavirus pandemic in Europe, when some of the vaccines, such as Pfizer, became unusable because the logistics company that carried it was unable to maintain the right temperature throughout the supply chain and distribution. Why do you think something like that happened, and does your firm also intend to provide services for vaccine distribution?

Pharmaceutical transportation is a very delicate and difficult field. Vaccine transport also requires significant investment and careful preparation. Since COVID-19 is expected to end within the next two to three years, Nissin has not been able to directly transport vaccines.

However, we have been focusing on drug transportation for ten years, and we have obtained GDP licenses in three countries and will continue to expand them in the future.

We have already started operating in the general medicine market and the Osaka marketing team is gradually expanding the number of customers in such sectors.

We also have a strategy for de-carbonization. We are targeting new technologies such as EVs to allow customers to save on CO2 emissions when it comes to truck containers. We have been reducing the use of energy and received an excellent business (Class S) rating for the seventh consecutive year under the Business Operators Classification Evaluation System based on the Act on the Rational Use of Energy (Energy Conservation Law.), that is still a rare case in our industry.

 

How will blockchain technology transform the shipping sector?

In international logistics, multiple carriers work together to carry cargo, but since their business information is not connected by a system, operations still have to be carried out by telephone, fax and email correspondence every day and a lot of staff are required for this kind of work. Therefore providers like us have provided customers with comprehensive services that connect various functions.

However, the evolution of digital technology in recent years has created startup companies that provide us with a platform which connects shipping and logistics services. With an IT platform between customers and traditional logistics service providers, customers will be able to find and select a service which is more convenient, cheaper and faster.


Can you elaborate on your relationship with TradeWaltz?

As you may know, TradeWaltz is a startup company that provides a platform service which enables various players involved in the trading business to exchange information safely by using blockchain technology. I think it is the only company of its type that attracts a lot of attention in the Japanese logistics industry, so we invested in them during August of last year and we’re actively participating in the construction of the TradeWaltz service now.

The TradeWaltz platform is a disruptive element, and I believe it could eventually become the foundation of logistics infrastructure in the future. In that scenario, logistics companies would become operators of the TradeWaltz platform, similar to the way application providers operate on an operating system like iOS. We are in daily contact with TradeWaltz to produce a new service utilizing the TradeWaltz stack. We have staff seconded to TradeWaltz, and Nissin can become stronger through our association with them.

 

We talked about pharmaceuticals a little bit earlier, but are there any specific industries that you're catering to as part of this new approach?

We’re looking at chemicals, special types of oil and dangerous liquids or very high-pressure gas that require high technology and quality for transportation. We have already started to build a second warehouse that is specialized for dangerous oils and high-pressure gas. These are industrial sectors that can show our high transportation technology, and we would like to continue to promote them.

Our strategy is to focus not only on the conventional business model of providing multiple combined services to a specific customer, but at the same time creating a platform and providing edge services to multiple customers at once.

 

Your company is present throughout the world. You have either offices or partnerships in North and South America, Europe, Africa as well as Asia. Looking at the future, is there a particular region that you believe has the most growth potential that you would like to target?

Over the next five or 10 years, Asia and China will still be our best markets. I have confidence in Asia and China because our customers still have new business areas to invest in.

After we follow the customer, we try to expand the local business to other Japanese or local customers in the area. That has always been our strategy. In the next five to ten years I’d like to continue this basic Nissin style to invest in new markets. To be honest, we’ve already developed and invested in the easiest markets, so if we had to go somewhere new, it would be Africa and South America.

 

As an executive officer, is there a particular objective, dream or ambition that you would like to achieve before leaving Nissin?

My objective to achieve before leaving Nissin is to put the company on “an extraordinary growth path” to the future. For this purpose, the most important role of me is to improve the quality of human resources of Nissin.  Many young colleagues are very capable and share a strong commitment to their jobs, so I want to give them something. Several years ago, I started to give them more chances to use their own ideas and ability freely on our important projects. As a success example, I’ve been especially proud of one project in particular, which was the complete changing of our core system.  Our past system was very old fashioned and in order to process the huge amount of necessary data, we had to make drastic changes on daily job operations which were thought to be impossible. In 2018, in order to overcome this situation, I made a project team of young and capable staff from various sections. They solved problems one by one, and after 3 years of struggle, we completed our system renewal successfully.  After the new system began to work, many things changed. Our mindsets changed at all levels of the company, from management level to young employees. I am proud of this project not only as a fundamental system enhancement but also as a successful experience for our challengers. I would like to continue to give many opportunities for growth to my colleagues. Then, my dream of “Nissin’s extraordinary growth” will come true after I leave.

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