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Medium Term Management Plan

New Medium-Term Management Plan: "Ready for the Next! Phase 2"
(FY ending March 2014- FY ending March 2016)

May 9, 2013

Kintetsu World Express, Inc. (KWE) announces that it has established its New Medium-Term Management Plan - "Ready for the Next! Phase 2" - for the period from the fiscal year ending March 2014 through the fiscal year ending March 2016.

Outline of the New Medium-Term Management Plan

Goals and Background of the New Medium-Term Management Plan

The business environment surrounding KWE group is confronted by unprecedented uncertainties. Due to slower growth in emerging markets and a recessionary environment in many developed countries, international cargo transport demand in recent years has suffered from sluggish growth. In Japan, structural changes are taking place in response to accelerated overseas expansion of the manufacturing sector together with major shifts in competition around the world.

The new 3‐year medium‐term management plan is designed in line with and consideration of the prior 3‐year plan. It also provides a longer‐term vision with the aim of securing KWE's position as a truly "Global Logistics Partner" focusing on its customers to offer superior global services. KWE's strategy is based on three key pillars which all aim to secure KWE's competitive position on par with leading European and U.S. competitors.

The first strategic pillar aims to optimize overall revenue portfolio through a more balanced portfolio of business domains and commodities handled. We are working to expand our sea freight and logistics business to balance the weight of the air freight business. Air freight operations will always be a core of KWE's activities, but we will strive to reduce dependency on this segment and seek to increase such verticals as autos and healthcare.

The second strategic pillar is to expand KWE's presence in emerging countries through volume expansion.

The third strategic pillar aims to strengthen off-shore sales structure and activities; establish best in class operations to maximize operational effectiveness and high quality services. We aim to further improve the quality and breadth of our services in order to aggressively increase off-shore business.

In order to respond to the changing global business environment and diversification of customer needs, KWE is committing its full resources and efforts to ensure customers around the world consistently receive superior service satisfaction.

Numerical Targets

  1. Plan Period
    Three years from April 2013 to March 2016
  2. Targets of Final Year (Fiscal year ending March 31, 2016)
    Net Sales: 330,000 million yen
    Operating Income: 18,000 million yen
  3. (Millions of yen, except for the growth rate)

      2013/3 2014/3 2015/3 2016/3 Average annual growth rate over three years
    Net Sales 2,479 2,700 2,900 3,300 10.0%
    Operating Income 132 145 160 180 10.9%
    Ordinary Income 142 145 160 180 8.2%
    Net Income 91 92 101 112 7.2%
  4. Volume Targets of Final Year (Fiscal year ending March 31, 2016)
    Air freight exports (Weight): 600,000 tons (+36% from FY ended March 31, 2013)
    Sea freight exports (Volume): 550,000 TEUs (+81% from FY ended March 31, 2013)

Key Strategies and Policies

  1. Optimize overall revenue portfolio through a more balanced portfolio of business domains and commodities handled
    1. (1)Increase "Corporate Accounts" and expand cargo volume
      - Aggressive investment in bonded areas in China
      - Focus management resources on "Power Lanes" (Intra‐Asia, Asia‐North America and Asia‐ Europe lanes)
      - Expand domains and services offering
      - Strengthen relationships with preferred carriers
    2. (2)Expand sea freight and logistics business
      - Focus on "Power Lanes"; expand cargo volume
      - Strengthen bonded logistics business in China
      - Develop large warehouse facilities in Singapore, Malaysia, Thailand and Taiwan, etc.
    3. (3)Define and focus on selected industry verticals
      - Automotive, Healthcare, Hi-tech, Retail, Aerospace, Energy, and Perishable
    4. (4)Strengthen import sales activities in key consumer markets
      - Market and promote Asia – Europe and Americas trade lanes more aggressively
    5. (5)Improve buying rates and consolidation efficiency
      - Focus on preferred carriers
  2. Expand KWE's presence in emerging countries
    1. (1)Become best in class service provider in India
      - Foster sales activities between KWE Group and Gati-Kintetsu Express
    2. (2)Increase focus on Asia; further expansion of KWE's services and network
      - Expand supply of cross border truck services
    3. (3)Expand network into new markets
      -Mexico, Brazil, Bangladesh, Cambodia, Myanmar and Turkey, etc.
  3. Strengthen off-shore sales structure and activities; establish best in class operations to maximize operational effectiveness and high quality services
    1. (1)Handle more off-shore business
      - Expand off-shore business with Japanese firms and "Corporate Accounts"
    2. (2)3PL Knowledge management
      - Provide superior 3PL skills and know-how

Strengthen Core Competences

  1. Human Resources: Identify and promote talent across regional boundaries
  2. IT: Ensure sustainability of global IT systems and Strengthen global IT management structure
  3. Risk Management: Promote development of global risk management and enhance compliance
  4. Operations Quality: Unify and standardize operations aimed at raising overall efficiency


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