Nippon Express is growing its forwarding business and developing specialised shipment services while remaining open to acquisitions.
Japan-based Nippon Express (NX) Holdings has strengthened its foothold in the air cargo forwarding market following last year’s acquisition of several cargo-partner businesses based in central and eastern Europe.
Confirmed in May 2023 and completed in January 2024, the deal saw a special purpose company wholly-owned by NX Europe acquire the Austrian freight forwarder’s businesses in the region.
The deal has paid off. According to data from Armstrong & Associates, NX was the sixth biggest airfreight forwarder in 2024, up two places from 2023. Airfreight volumes were up 32.9% year on year.
Now, the Japanese logistics company says it has moved up to fifth place in the global forwarder rankings.
“The acquisition of cargo-partner has helped Nippon to get from number six to number five in the forwarder rankings, because cargo-partner is very strong when it comes to airfreight,” says Mr Kakiyama, chief executive, Nippon Express Europe.
Strengthening the airfreight forwarding business in Europe is part of the global growth plans outlined in the 2028 Management Plan of the NX Group.
As well as NX Holdings, Inc and NX Co.,Ltd. in Tokyo, the Group includes a company based in Dusseldorf, Germany to handle business in Europe; and a company based near Chicago O’Hare International (ORD) for US business.
Further, there is a company near Shanghai Hongqiao International (SHA) to handle Chinese business and a company in Singapore, covering South Asia and Oceania.
The acquisition deal has in fact allowed for end-to-end operations across Europe, says Mr Kakiyama.
“Especially in Central Eastern Europe, cargo-partner has a very strong base. Nippon Express already had sites in central eastern Europe, but it was not enough.
“There were some (gaps) still, but now, thanks to the acquisition, all these regions are being covered, and this allows us to provide end-to-end solutions in the whole of Europe.”
As well as central and eastern Europe, cargo-partner also has a presence in Asia and operates in around 40 countries overall.
Meanwhile, Tokyo-headquartered NX operates in approximately 50 countries and has an especially strong base in Asia.
“Cargo partner and NX have very different customer bases, and we also are strong in very different regions and different countries,” explains Mr Kakiyama.
“This is the best mix because our weak points were improved by cargo-partner, and cargo-partner’s weak points were improved by Nippon Express.
“The regions or points where NX is very strong, cargo-partner is being integrated. But it's also going to be the other way around, where cargo-partner is very strong NX will be integrated. So actually, the brand cargo-partner will not disappear.
“There is a lot of synergy that was created by this acquisition and the integration."
He adds that despite the complexity of the acquisition, there hasn't been any major integration issues due to the cultural similarities and synergy between the two companies.
Taste for takeovers?
NX has not confirmed whether it is considering any new acquisitions, but Mr Kakiyama did indicate that it was an area of interest.
He stated he had “some idea” about the company’s future M&A plans, but added: “I cannot share at this moment”.
He did, however, confirm that Nippon is interested in further expanding business in Europe, the Middle East and Africa.
“We want to become even stronger on the European market,” Mr Kakiyama says.
He added: “Geographically, I think that it will be necessary to invest even more in Middle East and Africa.”
The company also plans to focus on specialist verticals, including high-value, semiconductor and pharmaceutical shipments.
“Talking about industries we want to focus on. It’s first of all, semiconductors, but also healthcare, including medical pharmaceuticals. I think that these are growth markets."
NX also has ambitious financial plans. NX Holdings finished 2023 with revenue of ¥2,239bn and operating profit of ¥60,000m, according to a company strategy document.
NX Group itself is aiming to secure ¥1.2trn in overseas revenues by fiscal 2028. The airfreight business is anticipated to provide a key contribution to this.
“Airfreight is going to be a huge contributor to this ¥1.3 trillion. It's going to be very important for our growth. And this is why we're going to focus on airfreight even more."
As well as airfreight, Nippon is keen to grow further in logistics.
“At this point, we are already the number one logistics company in Asia, but we want to hit the top three worldwide logistics companies,” stated Mr Kakiyama.
Market changes
But the changing and challenging market makes growth a tough prospect.
Both NX and cargo-partner felt the impact of this year’s US tariff and de minimis changes in Asia, where e-commerce trade out of the region had been strong.
“So that had quite an impact on costs. It was quite a fluctuation which, of course, has had an impact on our results as well,” says Mr Kakiyama.
While volumes improved, the trade volatility means uncertain results for the third and traditional fourth quarter peak season.
“Normally we would have a peak season in the fourth quarter, but now with the tariffs, we really don't know what might happen,” Mr Kakiyama adds.
As a forwarder, NX has noted that trade volatility has affected capacity arrangements out of Asia, which are managed by blockspace and charter capacity deals.
“Now we are negotiating very short-term contracts with carriers and the contracts are being reviewed very quickly compared to the past, where we had very long-term agreements,” reflects Mr Kakiyama.
“That's because of the fluctuations (in shipments), sometimes you might have a contract where you buy some space and then you cannot fill it, or the other way around, you buy space, and it's not enough.”
While capacity in the market has been pulled out of the Asia-US trade lane, for NX, Asia-US is the only trade lane being considered for additional capacity, despite the uncertainty of shipment flows.
Mr Kakiyama says: “At the moment, the only possibility where we might add some charter programme is from Asia to the US, because that's where the space is the tightest.”
There are no plans to expand the network, but NX is staying alert to market changes that might necessitate change.
“We're not planning to add new destinations to the network at the moment. But then, on the other hand, if there are major changes in the supply chain, like new production sites and so on, then we might have to adapt.”
