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Courier Nippon Express expands Southeast Asia warehouse network

Newest logistics hub in Indonesian is one of the company's largest outside Japan

Nippon Express completed Tuesday this logistics center on the outskirts of Jakarta, Indonesia. (Photo by Toshihide Takeda)

JAKARTA -- Nippon Express, Japan's biggest logistics group, is expanding its chain of Southeast Asian warehouses in hopes of raising its limited overseas presence.

The latest facility, which was completed Tuesday, is the Bekasi Logistics Center, located just outside of Jakarta. The nearly 46,000 sq. meter warehouse ranks as one of the company's largest depots outside of Japan.

It will handle not just imports and exports for Indonesia's manufacturing sector, such as automobiles, but also goods bound for local consumers. There are also refrigerated areas for food and medical products away from the tropical heat.

Southeast Asia "is a key region, and Indonesia is one of the most important countries," said Nippon Express President Mitsuru Saito at the ribbon-cutting ceremony.

Last fall, Nippon Express opened a logistics center of a similar size in Malaysia, and it plans to build warehouses in Vietnam and the Philippines. The Japanese company is set on differentiating itself in Southeast Asia, where warehouse space often covers less than 10,000 sq. meters.

In terms of revenue, Nippon Express ranks among the world's top logistics groups, generating over 2 trillion yen ($17.9 billion) a year. But only a fifth of the turnover comes from overseas, and mainly from its aerial freight forwarding service. By contrast, German competitor DHL takes in about 70% of its revenue abroad

The Japanese company's medium-term plan released last month aims for 3 trillion yen in revenue in fiscal 2028, with 40% generated overseas. But Nippon Express will have to overcome its late start in global expansion to meet that goal.

It has little room to enter Western markets where big-name rivals dominate. China also offers doubtful prospects, with Saito saying that the country "is at a steady growth phase and lacks the momentum it had before." 

But Southeast Asia is home to one of Asia's fastest-growing economies -- Vietnam -- and other countries poised for rapid growth in manufacturing and e-commerce. The Association of Southeast Asian Nations bloc boasts a combined gross domestic product approaching $3 trillion, putting it behind China and India.

Japanese brands enjoy comparatively strong brand power and competitiveness in Southeast Asia, creating an opening for Japan's logistics king. Southeast Asia is where Nippon Express "can best demonstrate our strengths," Saito sad.

To do that, the company will have to gain footholds there ahead of U.S. and European rivals.

Nippon Express opened offices in Laos last July, gaining a presence in every ASEAN nation except Brunei. Now the company is expanding its logistics network in the region.

It projects 91.5 billion yen in revenue from Southeast Asia in fiscal 2018, and aims to lift the number by 50% over five years. Group-wide revenue is forecast at 2.15 trillion yen in fiscal 2018.

Saito admits that Nippon Express can never catch up to rivals by continuing its present trajectory. 

As it looks to build relationships, "partnerships with local companies and mergers and acquisitions are options" on the table," said Saito.

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