The current global economy may look gloomy, especially in the US and Europe, but that has not reduced fierce competitions within the global logistics industry. The latest merger of two leading Japanese companies - NYK Logistics (NL) and Yusen Air & Sea Services (YAS) - is proof of this. The merger resulted in a new operating arm called Yusen Logistics. The merger also affects offices in Thailand.

“The merger of NYK Logistics and Yusen Air & Sea Service will make us more competitive in the global logistics business as we will become a single entity with greater size. The global logistics industry is very competitive and the size of the business does matter—the bigger, the better,” Minoru Sato, President and CEO of Yusen Logistics Thailand, said.

Sato said that YAS and NL have integrated their operations throughout the world since October 2010, starting in Japan. The integration of their businesses outside Japan started in April. The merger happened within the same conglomerate group as both companies are parts of the NYK Group, known as Nippon Yusen Kubushiki Kaisha in Japan, which has its headquarters in Tokyo.

“The NYK Logistics’ major business has been in land transport and ocean freight forwarding, while Yusen Air and Sea Service has operated in air freight forwarding and ocean freight forwarding.” Sato explained.

“This merger was a global decision by our headquarters in Tokyo. Most of our companies around the world have already merged and carried on the operations that took effect from April 1 this year. Thailand’s operational merging was delayed because the operation here is bigger than our operations in other countries. We need fine tuning in IT system here,” he added.

The main services of Yusen Logistics are ocean freight forwarding, air freight forwarding and contract logistics. Contract logistics is the biggest area of the company’s services. By merging, the new company will not only improve its business size but also gain further advantages for its operations.

“We have not only improved the size of business, another advantage is that we have easily improved our quality of service because as a single unite, it is easier to get services from our networks in different countries,” Sato pointed out, adding that the merger was necessary for the company to survive and expand globally as customers, especially big, global businesses, tended to look for large, global logistics providers/operators.

Sato said that following the merger, Yusen Logistics’ global target was to become one of the top five in the world for logistics.

“At the moment we are not in the top ten yet, but we have ambitious plans - a single-year plan and a three-year plan. We aim to reach our global target within three years,” he stressed.

Although Yusen Logistics aimed to strengthen its global business, Sato insisted that the company would not overlook the local market, referring to its mother company NYK’s statement - “Globally Dedicated, Locally Focus”.

He said that Yusen Logistics Thailand aimed to expand in many areas because the Thai economy was growing rapidly.

“Thailand is heading towards a consumption society. At the moment the company has not gone much into consuming and pharmaceutical industries yet. We have a few companies in the consuming industry so we aim to expand more in this field,” he said.

While the mother company NYK group in Tokyo was established in 1885, NYK in Thailand first operated for its service in transportation industry in 1969 when NYK and Yusen started under the same company called NYK Transport Service in Thailand. In 2003 Yusen departed from the company before returning to join NYK logistics seven years later.

Currently the company has a good list of leading customers including those in the auto manufacturing industry and chemical manufacturing industry. Its major customers include Auto Nissan, Auto Alliance (a joint venture between Mazda and Ford) as well as electrical goods businesses such as Sharp and Panasonic. For non-Japanese customers, global businesses including Dow Chemical, Procter & Gamble (P&G) and Callaway are its prominent customers.

Yusen Logistics Thailand (YLTH) will come officially into effect on October 1^st, 2011, with a total of 2,900 employees including Double Wing Spirit Service Thailand (DWSS) and registered capital of 70 million baht.

“We are already a big player and rank second in Thailand’s logistics industry. We expect more than 10 percent growth every year. We now aim for the top but our aim is very challenging because the competition is so tough,” the president/CEO said.

Still, although the competition here is very fierce, in both local and global companies, Sato said his company had certain advantages, particularly when dealing with many customers that were Japanese companies. It could easily understand and answer demand from Japanese companies.

“Japanese companies in Thailand are very active. At present 40 percent of flowing investment to Thailand is from Japan. That is partly because of the recent tsunami effect that hit the Japanese economy very hard and made Japanese factories in Japan less competitive. Many planned to move out of Japan while others already moved here,” he said.

According to Sato, Thailand is the best choice for Japanese factories in terms of infrastructure. At present there are 60,000 Japanese people living in Thailand so demand for food and goods from Japan is very high (and that results in demand for shipments and transportation between the two countries). Meanwhile, many Thai people have visited Japan and studied in Japanese universities. Thai government officials also have knowledge and experience with Japanese businesses and business people.

“Besides, the Thai economy is very upbeat because Thailand now enjoys growing within the ASEAN business community. Certainly, Thailand will have big businesses in exports and imports in the US, Europe and ASEAN. That will provide a good opportunity for the logistics industry here,” Sato said, adding that such a good opportunity was not only for Yusen Logistics but also for other players in the same industry.

Regarding the formation of the ASEAN Economic Community in 2015, Sato said that the future of ASEAN was healthy because of the combination of the ASEAN population and the size of the economy.

“Overall, it will bring positive results, very positive. The future of ASEAN will not be simple or smooth but it will be in a better position than the US and Europe. If ASEAN members unite well, this will create a good balance for China, Japan and ASEAN. So, ASEAN, China and Japan should be good partners to one another. That will in effect bring great opportunities to logistics industry around the region, too,” Sato said.

“We have mission statements and one of the statements is ‘Together with the Society’. I am very confident about the growth of the Thai economy and the growth of Thai society. Yusen Logistics aims to grow in line with the growth of Thailand,” he insisted.

Sato took up his position in Thailand in August 2010 and said that he felt very comfortable working here and with Thai people. He worked and lived for more than a decade in other countries including the US, Britain and Italy before moving to Thailand.

“I did not feel like a stranger in Thailand. Thai people are very friendly and quite similar to Japanese in terms of being in Buddhist societies. Still, Thai workers need some improvement in effectiveness.” he added.