May 20, 2017 6:00 am JST

Japan's trading houses to spend 200bn yen on logistics centers

Itochu, Mitsubishi and Sumitomo developing facilities amid online shopping boom

A large distribution center being developed by Itochu that will house several tenants.

TOKYO -- Japan's trading houses are opening distribution centers at a rapid pace, investing 200 billion yen ($1.8 billion) over the next three years to respond to growing demand for such facilities catering to e-commerce companies.

Itochu will invest approximately 90 billion yen to open six facilities by 2019 in the Tokyo area. The first will be in Misato, Saitama Prefecture, in July, followed by Chiba city in the fall. Itochu will add four more locations in Tokyo and Chiba Prefecture in 2018 and 2019. The facilities' total floor area will range from 10,000 to 130,000 sq. meters and house several tenants.

From April 2015 to March 2017, Itochu brought online five facilities in the greater Tokyo and Osaka regions. Itochu is ratcheting up investment as it sees Japan as lacking modern, large-scale warehouse facilities.

Mitsubishi will open five centers in the Kanto region this year and next. By May 2018, the company will complete construction of a 49,000-sq.-meter addition to an existing facility in Kawasaki, which is currently occupied by Amazon. The addition will double the facility's size. Mitsubishi will also complete facilities in Zama, Kanagawa Prefecture, and in Ichikawa, Chiba Prefecture. The total cost of the five projects will be 41 billion yen.

Mitsubishi has already developed and sold eight centers. Including the five planned facilities, the investment in all 13 locations will be just under 130 billion yen.

Sumitomo will open three centers in Osaka, Yokohama and Kanagawa Prefecture's Sagamihara at a total cost of about 50 billion yen, bringing the total number of facilities to seven.

Labor shortages at delivery and packaging centers are acute in the logistics industry. The trading houses is trying to make it easier for e-commerce companies and others to recruit workers by creating a suitable business environment.

Itochu will also build business offices for trucking companies in its Chiba city facility to reduce waiting times for drivers. Sumitomo's facility will have high-illumination lighting and use a material for the outer walls that maintains constant inside temperatures. 

On average, 1.02 million sq. meters of large distribution facility will be built in the greater Tokyo area each year from 2017 to 2020, according to real estate company Jones Lang LaSalle. That is an increase of about 80% over the average from 2006 to 2015.

Competition is increasing as foreign rivals also enter the market. Japan's trading houses are flexing their muscles to encourage retailers and food companies within their groups to rent their space and are supplying materials like cardboard used in storerooms. 

(Nikkei)

ITOCHU Corp.

Japan

Market(Ticker): TKS(8001)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 25,703.3M
Shares: 1,662.89M

Mitsubishi Corp.

Japan

Market(Ticker): TKS(8058)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 34,323.4M
Shares: 1,590.08M

Sumitomo Corp.

Japan

Market(Ticker): TKS(8053)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 16,697.1M
Shares: 1,250.6M

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