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Speech by New NYK President Tadaaki Naito

April 16, 2015

Good morning.

 

I’m Tadaaki Naito, and I have been appointed as the new president of NYK Line as of today. I’d like to take this opportunity to share with you my thoughts as I step up to this new position.

 

Management Policy: Sound and Proactively Bold

In April 2014, we launched our medium-term management plan, “More Than Shipping 2018 — Stage 2 Leveraged by Creative Solutions.” While shipping remains our core business, we are also following a differentiation strategy through a wide range of marine, land, and air services beyond the boundaries of traditional shipping. Looking back to the origins of this strategy, you can see that our basic awareness hasn’t changed since the formulation of our medium to long-term group management vision, NYK21, approximately 30 years ago. Since then, we have considered business diversification, such as expansion into logistics, to be essential in order to continue to grow in the 21st century. This transformation has required us to become a diverse, integrated logistics company focusing on all areas of distribution, rather than relying on the liner trade alone. The “More Than Shipping” has been our guiding light through the disorder following the global recession, and I firmly believe that we must continue to strengthen this differentiation strategy.

 

Supported by a strong logistics demand from China in the mid-2000s, shipping companies progressed proactively with fleet adjustment. Doing this enabled us to expand significantly in terms of business scale; however, this expansion also left us with the adverse legacy of excessive investment when demand contracted sharply due to the global recession that began in 2008. Considering that we are still burdened by this legacy, I believe that it is important to calmly and prudently verify in our investment decision-making process that we are fully in control of business profitability, or in other words, that we are not excessively dependent on factors outside our control. It is also important that we take a rational approach to necessary risk-taking after carefully considering this balance. I firmly believe that in our management as a shipping company we must pay constant attention to soundness built on the foundations of these kinds of necessary processes.

 

Nevertheless, it is without question that the shipping and logistics industries, including ocean transport, are promising growth industries. We expect that the Asia region and emerging nations such as the BRICs will continue to show high growth rates going forward. Because of this, we must accurately ascertain the needs of these growth regions and continue the global development of our business. In order to achieve this, I would like to ask each and every one of you to show your spirit of enterprise and innovative mindset, and be proactively bold as you take on this challenge.

 

We must have sound management decision-making to cement the long-term stability of our business, and a proactively bold approach to high-growth businesses. Both of these are important and have been handed down to us as part of the DNA synthesized throughout the long and unbroken history of the NYK Group.

 

With our keywords of soundness and proactive boldness as a starting point, I believe that we need to reconsider our true growth strategy. And more than anything, I would like us to work together to do what we must so that achieving the objectives in “More Than Shipping 2018” is an unquestionable certainty.

 

NYK Has Always Been an Innovator

Looking back on the path that the NYK Group has taken to date, it’s clear that our history has been filled with various challenges, innovation, and creativity. In 1896, just 11 years after our foundation, we launched liner services on the three major routes to Europe, the U.S., and Australia at basically the same time in order to support the textile industry, which was Japan’s key industry at the time. We were among the first companies to introduce advanced vessels such as full-containerships, car carriers, LNG carriers, and wood-chip carriers in line with industrial diversification and development of trade after World War II. More recently, we have entered offshore business fields using drillships and shuttle tankers. I believe that the way that we have stepped up to these challenges throughout our history is evidenced in the breadth of the NYK Group business portfolio today. Given the highly sophisticated nature of logistics today, we must take a market-in approach to gain an awareness of the needs of our customers through thorough analysis of customer demands by our people on the front lines. By building on this awareness, we should be able to understand what problems our customers face and what we need to do to change.

 

The reason that we included “creative solutions” as a subtitle to the current medium-term management plan is that we believe that solving problems for our customers is the key for a transportation company like NYK to gain a competitive advantage. I would like to emphasise that providing creative solutions doesn’t mean simply aiming to innovate on the technological side. It is more than just technical capabilities. I believe that this is about our creative capabilities in how we use and how we integrate our knowledge and expertise in terms of reaching the solutions that our customers need. Therefore, seeking creative solutions is not the sole responsibility of certain divisions such as the Technology Division and the Marine Division. This is a challenge that needs to unite the whole company in our actions — naturally in the sales divisions, who are in the best position to directly hear what our customers have to say — and also in the corporate divisions, which support the group’s infrastructure and work to eliminate waste and inefficiency in various areas.

 

I believe that we will only be able to begin to see these creative solutions when the company and entire organisation come together to address the challenges and thoroughly debate the necessary methodology, possibly even involving outside specialists in some circumstances. Even more important will be how much of the awareness of each and every group employee we can bring together in terms of addressing these challenges across the company and the entire organisation. Building up this awareness is the only way to embed it into the organisational hierarchy and respond to the needs of our customers. Pursuing creative solutions and maximising proposals that our customers see as new and impressive will lead to the NYK Group becoming more competitive.

 

To Continue Being a Group Worth Working For

We will celebrate the 130th anniversary of the NYK Group on October 1 this year. I think that the fact that our group has survived over such a long period rests in the free, unrestricted culture of the NYK Group, which emphasizes good communication between superiors and subordinates. Our forefathers created these values, and I am most sincerely appreciative of this. Sound debate and wide exchange of information results in a dynamism that is the source of many creative solutions. Free ideas cannot be created without free debate. I’d like to ask each and every one of you to remember this and to do your utmost to generate a better and more creative working environment.

 

In terms of considering the sustainable development of the group going forward, I think there are many important key expressions, and one of these is human resources development. Our medium-level section and team leaders who are involved in day-to-day operations and directly responsible for projects are particularly important players on the front lines. I am very keen to consider human resources initiatives to maximise the abilities of these key people. In addition, we must consider safety, stability, and reliability to be invaluable essentials required for our business. I would like you all to draw on the NYK Values of integrity, innovation, and intensity, and cooperate across all divisions to ensure that our customers recognise NYK as being safe, stable, and reliable.

 

Furthermore, I believe that diversity is an important principle. Our employees should be able to be equally involved, irrespective of age or gender. Moreover, we should give serious attention to compliance and conducting our business fairly.

 

Finally, I’d like to remind you that 130 years is just another milestone. I’d like to ask you all to join me and work towards building an even better and stronger NYK Group from today onwards. Thank you.