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The Science of Optimized Logistics Written by Tetsumasa Suga /// No.1

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2021.02.20

Introductory Remarks

 

In this book, The Science of Optimized Logistics, the current owner and president of Japan Trust Co., Ltd, a shipping company without ships (NVOCC), based upon his 22 years of experiences in the field of logistics, takes up all kinds of issues raised by many business entities, thoroughly elaborating on the real information of the shipping industry that cannot be usually obtained from the mass media.

 

The author conveys his message about what the optimized logistics is by sharing his actual trade instances and thereby clarifying the past, present and future of the international logistics and shipping industry. Touching upon the reality and current issues of the shipping industry, the author sheds light on the ideal way it should pursue for its prosperous future.

 

In July 2017, Nihon Yusen, Shosen Mitsui and Kwasaki Kisen integrated their container ship businesses and established Ocean Network Express Holdings. As a result of this integration, the shipping company that has the regular international navigation routes has become just one in Japan. Such an ultimate integration trend in the maritime transport is seen not only in Japan but on an international scale. Alliances are thus being established worldwide through the merging of major shipping companies.

 

What is behind the notable reorganization of the world shipping industry is the fact that it has been exposed to the wild waves of recession. One of the causes of this setback is the increase of the vessel volume effected by the enlargement of container ships. The shipping industry is in the midst of the vicious circle that originated from an over-supply of vessel volume in the process of the pursuit of cost cut-down through the increase of transport efficiency. The consequent transport fare decrease has been suppressing the management of shipping companies, which is a conspicuous negative spiral phenomenon in the shipping industry. Excessive free competitions brought about deficit to all shipping companies, causing the number of shipping companies to be reduced 50%  in recent several years through merging or bankruptcy. This is very unhealthy. Shippers are not seeking the kind of cheap fares that will result in ship companies’ deficit.

 

Shippers often speak out their honest feelings, “We’d rather see ship companies continue to offer us secure service with greater opportunities for us since we won’t mind higher fares.” The fact is that the shipping fares have come down to the point where shippers are also worried about ship companies’ welfare.

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