On the theory that the whole is greater than the sum of two parts, NYK Group is creating a global logistics giant by tapping the synergies between two of its subsidiaries and combining them under a single brand, Yusen Logistics. It rolled the new brand out in the Western Hemisphere on April 1, when it combined NYK Logistics (Americas) and Yusen Air & Sea Service (U.S.A.) into Yusen Logistics (Americas).
Although both companies are broadly logistics operators, NYK Logistics and Yusen have had different identities. With most of its business focused on air freight forwarding, Yusen Air & Sea operates warehouses that are mostly near airports but has no other transportation assets. It has a strong customer base among Japanese shippers.
NYK Logistics runs trucking and warehouse operations to serve mostly ocean forwarding services. Its customer base is mainly among ocean shippers in the United States. Both companies had significant customs brokerage functions in their respective markets. They’ll now operate as a single unit within NYK Group, which also counts Nippon Cargo Airlines as a subsidiary.
The two companies operated in parallel for decades with little overlap. “The two companies are complementary and so the merger really rounds off our product portfolio,” said Michael Noone, executive vice president and chief operating officer of Yusen Logistics (Americas). “We now cover all the services needed to manage a supply chain under one unified brand.”
The keystone to the new brand is the supply chain solutions unit that was part of NYK Logistics, which will now be able to tap into the activities of the combined group to design customized supply chains. The supply chain solutions activity is being marketed and sold in the Americas by an enterprise sales group that focuses on consultative sales to large shippers.
The new approach has been fine-tuned in the last year in preparation for the formal merger and rebranding of the company. “We’ve had some wins in the last 12 months,” said James Craig, senior vice president of sales and marketing for the new company. He cited the example of a large U.S. retail importer that sources imports all over Europe.
“They didn’t need service in six days by air, so we asked if they could do with service in 24 days by sea,” he said. “They said, ‘You can’t do that in 24 days by ocean;’ we said, ‘Actually, you can.’ ”
Yusen redesigned the company’s supply chain by picking a different port of origin in Europe, a different port of destination in the United States and then expediting delivery by land. The redesigned solution saved the importer millions of dollars and is being extended to sourcing from six European countries and from Asia and Mexico.
Globally, Tokyo-based Yusen Logistics will employ more than 17,000 staff in 412 offices and facilities and manage more than 22 million square feet of warehousing space. In the Americas, Yusen Logistics will have more than 60 office locations in North and South America, with some 2,000 employees and 4.7 million square feet of warehousing space.
“It gives them a lot more synergies between the air and ocean freight forwarding, which Yusen Air was very strong in, and the domestic U.S. market that NYK Logistics was very strong in,” said Evan Armstrong, president of Armstrong & Associates, a Stoughton, Wis., research and consulting company specializing in third-party logistics. “It eliminates some of the duplication and brings those two pieces of the puzzle together.”
Armstrong estimates the combined volumes of containers handled by the two companies’ forwarding operations is about 600,000 TEUs a year, which would put Yusen Logistics in 11th place among global logistics companies in ocean forwarding. The combined company’s air freight forwarding activity totals about 500,000 metric tons annually, he said.
The companies’ combined $4 billion in revenue makes Yusen Logistics the 18th-largest global logistics provider, just below GEFCO of France, and above Norbert Dentressangle Group, also of France, according to rankings provided by Armstrong & Associates.
With the brand based in Japan, Yusen Logistics will maintain its relationships with Japanese remanufacturers that it can leverage, Armstrong said. “Plus, NYK Logistics wasn’t afraid to take a risk. Putting them together going forward makes it easier for them to make acquisitions and to grow,” he said.
Noone said Yusen Logistics aims to become what Armstrong & Associates calls a Tier 1 logistics provider — a company with advanced integrated IT systems essential to uniform global operations that constantly improves its technology and information. Noone said Yusen’s IT systems are what enable it to compile data on its customers’ transportation needs and redesign their supply chains.
In addition, the Japanese management process of “kaizen,” or continuous improvement, has been a hallmark of NYK Group’s operations for decades, he said.
Contact Peter T. Leach at firstname.lastname@example.org.