Message from the President

I would like to take this opportunity to thank our stakeholders for their continued support and understanding.

The global economy showed signs of a gradual recovery during the previous consolidated fiscal year, with certain countries and regions demonstrating resilience in domestic demand and a pause in surging resource prices. However, a full-fledged economic recovery remained some way off, as high interest rate policies, mainly in Europe and the United States, put downward pressure on economic activities. In addition, geopolitical and economic security risks, including the Russian invasion of Ukraine, the Israel-Hamas conflict, and confrontations between the U.S. and China, have emerged with increasing frequency. As a result, the business environment was challenging overall, reflecting an uncertain future.

In this economic environment, the logistics industry was sluggish overall despite a recovery in international logistics cargo movement stemming from the completion of inventory adjustments and other factors. The tight supply-demand situation in air and ocean cargo transportation, which persisted since the COVID-19 pandemic, eased significantly, and supply chains have continued to normalize. The logistics sector in Japan saw improvements in the retail and service sectors due to the return of inbound travel by foreign tourists, the recovery of automobile production due to the easing of automotive semiconductor shortages, and other developments in certain industries. However, overall cargo movement lacked strength due to the impact of falling production in the manufacturing sector, associated in part with a slowing global economy. In addition to continuing geopolitical and economic security risks, the situation in Japan requires close monitoring of trends that include rising procurement costs due to higher prices and the weakening of the yen, as well as the coming 2024 problem and other issues.

While worldwide inflation appears to have peaked and the monetary tightening phase in Europe and the U.S. has reached a turning point, global economic conditions will likely remain uncertain due to the prolonged invasion of Ukraine by Russia and heightened geopolitical risks such as the situation in the Middle East. The logistics industry is facing corporate clients who are reviewing existing supply chains from the perspective of safe procurement. At the same time, the industry must deal with climate change, chronic human resource shortages, digitalization, and the development of new logistics services based on advanced technologies. As a whole, the logistics industry must transform into a new value-creating industry that supports the sustainable growth of society.

The NX Group has been implementing various strategies and measures based on its Business Plan 2023 to realize its long-term vision of becoming “a logistics company with a strong presence in the global market" by 2037, the 100th anniversary of the Group’s founding.
Among our accomplishments in this regard have been transitioning to a holding company structure, introducing a Group brand, switching to international accounting standards, promoting new work styles, spinning off our security transport business, and reorganizing the Group’s other businesses, but there are still many issues that need to be addressed if we are to realize our long-term vision.
Perspectives on global supply chains have also changed dramatically with the emergence of geopolitical risks and the experience of the COVID pandemic. One of our key missions as a logistics service provider is contributing to the realization of safe, secure, and sustainable societies, and I feel that the roles required of us grow with each passing year.

Against this backdrop, the NX Group launched the NX Group Business Plan 2028: Dynamic Growth 2.0 -Accelerating Sustainable Growth- this year. This plan will serve as our management policy for the next five years. We will continue pursuing our long-term vision of where we want to be in 2037, and we will be even more strongly committed to achieving this vision.
The three key points in this respect are “ Accelerate Growth in the Global Market, “ “ Rebuild Businesses in Japan, “ and “ Sustainability Management Promotion.”

To accelerate growth in the global market, the first point, we will be supporting our customers' logistics operations on a Group-wide basis using an even more customer-oriented approach. Account management based on group-wide optimization will help us provide end-to-end solutions for customer global supply chains and expand our business domains.
We will also accelerate growth by solidifying cooperation with cargo-partner, which joined our Group through M&A. We will also take on the challenge of expanding our business in India.

On the second point, " Rebuild Businesses in Japan," we are aiming to become a highly profitable company by appropriately allocating management resources in our mother market of Japan. We plan to reallocate management resources among the Tokyo, Nagoya, and Osaka metropolitan areas based on a customer-in, market-in perspective from which we will launch business growth in the global market. We will improve profitability and capital efficiency in other regions based on our assessment of future prospects.
In light of the preceding, Nippon Express, the core of our Japan operations, started considering an in-house company system, aiming to clarify the roles of each area and increase management flexibility in accordance with market characteristics.

The third point, " Sustainability Management Promotion," is the starting point and the base for everything we do. Helping resolve social issues through our business is a role that the NX Group has always played and will continue playing more proactively than ever.
However, the world has already changed to a point where simply continuing to do things the conventional way will not bring about solutions to social issues. Decarbonization and labor shortages are two of the most important social issues for the logistics business.
To resolve these problems, we as logistics providers need to change our own awareness and behavior. Automation, DX and other technologies will be the key to the future, and we will focus our energies on these even as we maintain steady low-key efforts.

Through these endeavors, we will move forward as a Group to contribute to society and create a prosperous future. We would be grateful for your continued understanding and support.

March 2024
President & CEO
Satoshi Horikiri

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