Kintetsu’s Torii pumps up the volume on air cargo

In June, Nobutoshi Torii assumed the role of president and CEO of Japanese forwarder Kintetsu World Express, Inc. (KWE). As a 34-year veteran of KWE, Torii has held numerous roles at the company, beginning in sales for the export airfreight forwarding office in Nagoya, and most recently serving as president, CEO and general manager of KWE’s Americas region.

During his welcome statement as overall CEO, Torii outlined a few broad goals KWE would undertake as part of its new, three-year “Going to the Next Phase” program. Central to the strategy, he said, will be placing a “higher  priority” on airfreight volume growth, as well as taking full advantage of the 3PL services offered by Singapore-based APL Logistics, which KWE purchased last year. Torii also mentioned that a recent slowdown in the economies of China and other Asian countries doesn’t “allow optimism” for the future of forwarding. However, earlier this year the company launched its bonded warehouse in Chongqing to expedite the delivery of cross-border e-commerce imports for Yhopu.com.

Soon after taking the reins at Kintetsu, Torii spoke with Air Cargo World about how KWE will meet the goal of building air cargo volume, strengthen business in China and shift its supply chain strategy, as e-commerce becomes increasingly important  to the 3PL’s freight forwarding activities.

Q: What some of the initiatives KWE will undertake to boost airfreight volumes?

The key to increasing our airfreight volume over the next three years is to shift our focus from Japan-centric business to trans-Pacific traffic. Trans-Pacific is the largest airfreight market, particularly Asia to North America. We already have about 15 percent market share of Japan-to-U.S. airfreight, but only about 1 percent of Asia-to-U.S. We feel there is major growth potential here. Our network spans over 700 locations in 44 countries around the world, but they are, for the large part, Japan-centric, and each of them is not exactly functioning in an organic way. In the future, by focusing on and growing our non-Japan business, will make our network truly “global.”

Q: In which markets do you see the most opportunity for airfreight growth?

We believe the key to our future airfreight volume growth will be to further strengthen retail and automotive business. Retail covers a wide range of items, including apparel, toys and sundry goods, which is a client segment in which APLL is strong. Working together with APLL, we think there is a great opportunity to expand our retail related business, particularly on trans-Pacific long-haul routes. KWE has been successful in permeating the Japanese automotive market, while some of APLL’s top customers are North American automobile companies.

Q: What are the challenges facing KWE as the air cargo industry takes on more e-commerce activity?

It’s true that the flow of goods is trending towards business-to-consumer [B2C] models, [but] we believe there is still significant room for share expansion in the business-to-business [B2B] model, and KWE will focus on this. We will continue to look into what kinds of services we can offer in the B2C supply chains, but our main focus for growth does not lie in this area.

Q: While KWE’s Chongqing warehouse creates demand for 3PL services, does it also bolster airfreight services?

At this time, most of the e-commerce-related business that we are servicing in Chongqing is the actual 3PL bonded warehousing and distribution activities. However, this is a good example of an opportunity to expand e-commerce-related airfreight forwarding services. We plan to start taking the necessary steps to ensure that we can secure the forwarding business of goods from overseas to our Chongqing bonded warehouse.

Q: How will KWE be affected by China’s “positive list” of goods allowed for cross-border e-commerce in 2017?

At this time, most of the products we handle into China are shipped on a B2B model. For instance, we have a significant share of healthcare products and industrial equipment, such as semiconductor capital equipment manufacturing tools, so these items will not be impacted by the new cross-border e-commerce B2C tax laws. As for the B2C products shipped though our bonded warehouses, most of them are on the “positive list,” so we do not anticipate a big impact. Overall, when you think of e-commerce as a key business, you have to think of the last-mile solution, which is a major investment. Those companies specializing in the last mile for B2C business in China might be more heavily impacted by the changing regulations.

Q: What is your outlook for the overall size of the airfreight forwarding market?

While there are various predictions about the future of airfreight, I personally believe it will continue to grow for freight forwarders. I also believe the competition among forwarders will intensify. The most important thing is that the center of the market is moving day by day. We have to keep our eye on the ball and be careful not to overlook the changing flows, and be flexible to adjust quickly.