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Singapore hub gives new hope for Japan Post's Toll purchase

Acquisition of Australian company has so far generated massive losses

Japan Post unit Toll Holdings' Singapore hub could help the subsidiary live up to its promise as the heart of the shipper's international operations.

TOKYO -- After taking a massive loss on its takeover of Australia's Toll Holdings, Japan Post aims to make a comeback on its investment with a new logistics center in Singapore that it hopes will serve as a hub for all of Southeast Asia.

Japan Post acquired Toll in 2015, which was seen at the time becoming the core of the company's international operations. Toll has instead turned out heavy losses since then, leading Japan Post Holdings to book a roughly 400 billion yen ($3.54 billion) impairment charge in the year ended March 2017.

Toll City -- a 228 million Singapore dollar ($167 million) facility comprising seven stories and roughly 100,000 sq. meters of floor space -- was declared officially open at a ceremony Wednesday, though it has been partly operational since June 2017. The site stores a wide range of goods including autoparts, liquor, and medical and consumer products. Premium services are also on offer, such as packing goods for shipment and packaging products into assortments.

Japan Post Holdings plans to use the facility as "our distribution hub for China and the Association of Southeast Asian Nations," President Masatsugu Nagato said at Wednesday's event, adding that the site is a place to explore technologies such as automation.

Now that Toll City is operating at full capacity, Japan Post is hopeful the Australian company will prove to be worth its 620 billion yen acquisition price. "The acquisition has been called a failure, but it was a good move in terms of taking a first step overseas," Nagato told Nikkei on Wednesday.

Toll had become mired in inefficiency after delaying to eliminate redundant organizations and information systems picked up through repeated acquisitions. Japan Post has responded via such moves as cutting roughly 2,000 jobs. But with factors such as a plunge in resource prices striking directly at the unit's earnings in recent years, these reforms have been only partly successful.

Nikkei staff writer Kentaro Iwamoto in Singapore contributed to this report.

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