The profile of NYK in the UK market has grown dramatically over the past 18 months. The merger of its two component businesses. UCI New Wave, created a logistics business with sales of some £250 million. Since then, NYK Logistics has grown steadily and this year will have a turnover of more than £300 million.
Of course, that is just the UK. Globally, NYK Logistics has more than 110 large-scale storage, consolidation and distribution centres offering a combination of services, supported by sea, air, road and rail resources and supported by the $16bn NYK group.
The company has been growing in the fmcg, retail, consumer electronics, grocery, apparel, automotive and pharmaceutical sectors around the world.
Ian Veitch, chief executive of NYK Logistics in the UK, points out that the business has managed to maintain its growth despite the fact that it has been going through the merger process over the past 12 months.
The UK operation is the single biggest NYK business in Europe and now employs some 4,500 people. Veitch points out that it does a lot of value-added work and as a result the workforce has been growing rapidly.
A lot of the business wins have been in the automotive sector. In February it won a £2.3 million contract to manage parts distribution for Nifco UK to one of its major automotive manufacturing customers in the UK.
Nifco produces plastic mouldings and fasteners, from plastic rivets and weather strip clips to cup holders and fuel related parts. It has a UK manufacturing base located at Stockton-on-Tees, although some parts are supplied from Japan.
Veitch points out that the company has been named lead logistics provider for Bentley at Crewe as well as for Honda at Swindon, which is moving away from direct vendor delivery to a leaner supply chain model.
It is also providing logistics support for production of the new Land Rover Freelander which is being built at Halewood – it is being built on the same line as the Jaguar X-Type.
“We have opened a depot in Newport, South Wales, as well as opening a site in Swindon for Honda – also St Helens,” says Veitch.
Of course, automotive is already a global business and becoming more so. Veitch points out that NYK recently set up a cross-dock operation in the Czech Republic to serve this growing market.
Whereas at one timed some 80 per cent of the components for a car were sourced in the UK, increasingly the proportion is being reversed – about 80 per cent coming from overseas.
With customers increasingly globalising their businesses, NYK is now developing its own global key account management programme.
At the same time, NYK has been growing in non-automotive sectors. Veitch points to contract with Samsung, The Entertainment Network and PC World. For Baxter Healthcare, it handles home delivery of dialysis machines.
Home delivery is a growing sector for NYK which picked up some business following the collapses of Fiege Merlin. “We have constructed a kitchen in a warehouse to train drivers to do the installation of large fridge freezers, which is a new departure for us,” says Veitch.
The group is growing right across Europe. While the UK is the biggest of NYK’s European businesses, it is strong in Germany as well as having healthy businesses in Belgium Holland and Italy. It has fledgling operations in France and Spain and is growing rapidly in the Czech Republic and Poland.
“Russia is starting to pick up,” he says. NYK bought an operation there a couple of years ago and it is growing fast. “It’s a very buoyant market.”
NYK is still principally a shipping company but logistics now makes up almost 23 per cent of its $16bn sales. Veitch points out that logistics is now the main pillar of growth for the group.
In the past, there have been shipping lines that tried to get into the logistics market but failed because they did not understand the differences between the two businesses.
A shipping line needs to make its ships work hard to make a profit. In logistics, asset utilisation is less important than meeting the customer’s service requirements.
Veitch says the NYK strategy has been to build logistics as a complementary business. “Logistics can sit as a separate enterprise and flatten out the swings in the shipping market.”
However, information technology is increasingly being used to improve visibility within the supply chain. NYK has its own supply chain systems in which events trigger emails to the customer providing the essential information flow.
There has been some growth in the concept of fourth party logistics among the larger third party logistics suppliers recently. NYK buys in a lot of services – for example, its has a European transport spend of about £40m a year.
Nevertheless, Veitch is unconvinced by the 4PL concept. “We are selling people skills. the differentiation is the people – and you learn by doing. If your operations are right then the profit levels will be fine.”
CV
1976 Started with NFC in 1976, joining BRS in Leicester. Over 16 years with NFC he took a variety of roles including Regional General Manager for BRS Midlands, which included Truck Rental Product Management for the company and a seat on the Executive Board. Following his time with BRS he moved to Exel Logistics, firstly as Managing Director of the Industrial Business and then as Group Business Development Director for the Temperature Controlled Services Division.
1993 Veitch joined Christian Salvesen Distribution as Business Development Director.
1995 Joined NYK as Managing Director of UCI Logistics. However, over the past 12 months, following the merger of the NYK Logistics companies in the UK, he became the Chief Executive of the newly named company, NYK Logistics (UK).
