NNR Global Logistics Joins the Top 20 Global Freight Forwarders
Narita, Japan Site Visit
May 6, 2014
Eiji Takaki – Managing Director/CEO of NNR GLOBAL LOGISTICS
Shinji Kitamura – Executive Officer
Ravi Dosanjh – Director Global Sales
Kenji Sakamoto – General Manager of Logistics Sales Division
John Berry – Director Global IT
Yuji Hiya – Director, Managing Executive Officer
NNR Global Logistics Overview
NNR Global Logistics is part of the $4.4 billion Nishitetsu Group headquartered in Fukuoka, Japan. Nishitetsu grew out of Nishi-Nippon Railroad, one of 16 private Japanese railroads and is made up of a wide array of companies in multiple industries from Bus and Taxi Services to Leisure and Hospitality. Over 40% of its revenues come from third-party logistics (3PL) activities marketed under the NNR Global Logistics brand.
NNR Global Logistics service offering emphasizes international transportation management with integrated value-added warehousing and distribution capabilities. In 2013, it generated gross revenue of $1.7 billion and estimated net revenue of $450 million. NNR Global’s staff of 4,769 manages operations in 55 countries on six continents.
It was the first IATA (International Air Transport Association) licensed international airfreight forwarder in Japan. With 2013 freight forwarding volumes of 252,068 metric airfreight tons and 120,137 ocean freight TEUs, we rank NNR Global as the 20th largest global freight forwarder and 18th largest global airfreight forwarder. NNR Global’s container freight station (CFS) and warehousing network is comprised of 91 facilities totaling 22 million square feet of space.
NNR Global has grown within an established continuous improvement culture. It has international management teams focused on key operating and performance metrics rolled up into global quality standards. It believes in employee empowerment and engineered operations process management. Strategically, NNR Global is focused on increasing its global operating network and the overall revenue portions derived from ocean freight forwarding and value-added warehousing and distribution activities over the next five years. Its network expansion plans are detailed in the figures below.
NNR Global Logistics – Current Operating Network
NNR Global Logistics – Planned Network Expansion
To support its operations, NNR Global has built a proprietary international transportation management and warehouse management system dubbed “PowerNet” and an add-on application “Videre” for advanced purchase order management and supply chain business intelligence. It has adopted Manhattan’s SCALE WMS (warehouse management system) for customer operations requiring higher-level WMS functionality.
PowerNet offers NNR Global’s customers order and shipment visibility information via custom online portals. Customers can search shipments by:
- Bill Number / Partial Bill Number
- Booking Number / Partial Booking Number
- Master Bill Number / Partial Master Bill Number
- Customer Reference Numbers / Partial Customer Reference Numbers
- Shipper & Consignee Name / Partial Shipper & Consignee Name
- Departure & Arrival Airport / Port Codes
- By Date or Date Range
- Pieces and Weight or Pieces and Weight by Range
There is also functionality to monitor and report on inventory in the NNR Global network and to support VMI (vendor managed inventory) programs.
NNR Global Logistics Narita, Japan Logistics Center
During our visit, we toured the six-floor high, 156,000 square foot Narita Logistics Center (NLC). Located just south of the Narita airport, the NLC has first through third floor airfreight forwarding operations and warehousing operations on the other floors. NNR Global also has an airfreight forwarding operation onsite at the Narita airport for handling full container or palletized airfreight shipments. Both sites are TAPA (Transported Asset Protection Association) “A certified” facilities. TAPA certified facilities are audited and rated based upon specific cargo security storage and handling standards.
NNR Global manages a two-story high, 34,714 square foot export airfreight consolidation operation on the first/second floors of the NLC. It is run by a staff of 65 operating 18 hours per day, six days a week. Approximately 10,000 export airfreight shipments per month are picked up in Tokyo and Eastern Japan by NNR Global contract carriers, or dropped off at the operation by domestic customer-routed carriers.
Information for export shipments received at the NLC is entered into NNR Global’s PowerNet freight forwarding system either automatically via EDI (electronic data interchange) transactions, or manually upon receipt. PowerNet is used to determine which destination air gateway a shipment needs to be consolidated to, the airline being utilized to transport the goods, and it interfaces to Narita and destination country customs officials for regulatory export/import filings and customs clearance.
Export shipments are consolidated into an average of 300 ULDs (unit load devices—specialized air pallets or containers) per month. The ULDs are tendered to eight different airlines out of Narita destined to NNR Global’s international air gateways including: Amsterdam, Atlanta, Chicago, Frankfort, London, Los Angeles, Miami, New York, and Shanghai. Approximately 30% of NNR’s air export shipments from Narita are destined to China, 60% will be delivered in Southeast Asia, Europe, and the U.S., and the remainder are for delivery in other regions/countries.
The export operation utilizes a large X-Ray machine to scan shipments being loaded onto passenger aircraft for explosive materials. It can scan shipments up to 180 centimeters wide by 180 centimeters high.
In addition, there are two 990 square foot, 20 degree Celsius refrigerated storage units for pharmaceuticals, cut flowers, foodstuffs, and other goods requiring low-temperature storage.
The front side of the air export operation
X-Ray machine to scan passenger aircraft cargo
ULD pallet jack
The 36,705 square foot, third floor operation of the NLC houses an import air shipment distribution center. It has a customs bonded area for both export and import shipments.
NNR Global is running a dedicated value-added warehousing and distribution operation for an eye care equipment manufacturer in 22,000 square feet on the fourth floor of the NLC. The operation runs one shift, six days per week and has a daily staff ranging from 10-12. Services being performed include export packaging, domestic service parts distribution, and international freight forwarding. Performance KPIs include: inventory accuracy, order accuracy, and on-time delivery. The remainder of the fourth floor is bonded warehouse space utilized to store export shipments waiting for customs clearance.
The fifth floor of the NLC is split between a customer operation, which we did not tour, and 20,000 square feet of multi-client value-added warehousing and distribution operations. The multi-client section has a staff of 15.
Checking on-hand eye care parts inventory
Imported live plants for distribution
ESD small parts packaging area
First we reviewed an automotive manufacturers’ value-added operation. NNR Global runs a call center supporting its 220 dealers in Japan. If there is a problem with a car’s passenger maintenance system, NNR Global is contacted by the dealer and issues an RMA (return materials authorization). It then arranges for a replacement unit to be delivered as part of an advanced exchange program.
NNR Global is supporting a domestic live plant distribution operation. NNR Global works with local customs officials in importing live plants from Spain. It then fulfills sales orders by packaging the plants and distributing them to approximately 100 agricultural houses and flower growers.
Other fifth-floor operations included a service parts logistics operation for turbine power plant parts, a customer section storing lenses for digital cameras, and a service parts operation for cigarette machines.
NNR Global is running a 14,875 square foot dedicated value-added warehousing and distribution operation on the sixth floor of the NLC for an electronics trading company. It has a staff of 12 and manages approximately 3,000 SKUs of electronics parts and equipment inventory. Small parts are stored in an ESD (electrostatic discharge) secured area on shelves. As orders are processed, parts are picked, packed and shipped primarily to domestic customers with a few exports. Approximately 250-300 orders are processed daily. NNR Global is utilizing Manhattan’s SCALE WMS to manage the operation. It has the ability to capture individual item serial numbers and manage lots of items. The operation’s performance KPIs include: inventory accuracy, dock-to-stock, order accuracy, and on-time delivery.
NNR Global Logistics Operations Summary
NNR Global has been quietly growing internationally and is strategically focused on ramping up its global expansion over the next five years. It has developed significant integrated international transportation management and value-added warehousing and distribution capabilities. Each is supported by its proprietary international transportation management system PowerNet and Manhattan’s WMS which is utilized for more advanced value-added warehousing operations. Its continuous improvement culture and skill set make it a natural partner for companies with international transportation management and warehousing needs.
Sources: A&A Primary Research, http://www.nnrglobal.com/