[January 04, 2010]

Happy New Year to everyone in the YAS group

Last year was a dramatic one with numerous significant changes, such as the global economic crisis that followed the Lehman Shock, the inauguration of the first Democratic administration in the United States in eight years, and an administrative change in Japan as well, for the first time in fifteen years. While anxiety surrounding swine flu continues to this day, I am especially grateful that we are welcoming the new year safely together and that I am able to address you in this way.

Looking back on our company’s past year, with the impact of the global economic downturn that began with the financial crisis in the U.S. ,we experienced a decline in air freight exports during January and March by approximately 60% compared to the same period the previous year for exports from Japan, and by almost half for exports from overseas. These were unprecedented circumstances for our company, which had sustained virtually steady growth other than a few short-term declines. Our group rose to the challenge by implementing the “YAS Emergency Project” promptly and with determination, achieved the fixed costs reduction in big amount that surpassed our first expectation, which included the integration and discontinuation of domestic and international bases, and downsized our organization to match shrinking cargo handling. As cargo transactions in all fields began recovering from their bottomed-out states midway through the year, operating profits, which had recorded negative figures in the first quarter, became slightly but unquestionably positive figures in the first half. This is, without a doubt, due to the efforts of all of you, as you bravely faced up to retrogressive countermeasures the likes of which we had never experienced before. Today, exports of digital home appliances and electronic parts from Japan are recovering, and overall imports and exports have recovered owing to inventory adjustments and the resumption of the supply of parts/materials due to the recovery in production, primarily in Asia. The cargo volume, including spot shipments, is increasing, and our company is recovering at a rate exceeding that of the industry overall.

With this recovery trend, our company is celebrating the 55th anniversary of its establishment this February. This year is also the final year of the “YAS Five-Star Project,” our medium-term business plan. In addition, in aiming to become a “World-class Total Logistics Provider,” as asserted in the Five-Star Project, we have decided to enter talks with NYK on the integration of its logistics businesses, as announced on November 2 last year.

In this era, when logistics have become more diverse and sophisticated, we had been working tenaciously in our ocean freight forwarding and logistics businesses to meet the demands of our customers for comprehensive logistics services. Within the recent economic severity, however, the deepening speed at which customers globalize, global logistics optimize, and demand to reduce total distribution cost is becoming ever more rapid. Our company, just like others, needs to adapt to these circumstances without delay and compete with and win against national and global service players. The NYK Logistics Group has also strengthened its efforts in terms of comprehensive logistics, while engaging mainly in contract logistics and ocean freight forwarding. We believe that by complementing the functions and strengths of both our company and NYK Logistics Group, the upcoming integration will make us a true global player that runs on the dual wheels of air/ ocean freight forwarding and contract logistics, and that offers comprehensive logistics services of exceptional quality to meet the expanding needs of customers. Moreover, our company has the spirit of customer centric ? our DNA, which was strictly enforced by the Japan-based market and our customers ?to share our customer’s perspective on their valuable products , and complete transportation procedures reliably and with the best quality. I hope to continue to look forward and pave our way into the global market as we uphold this DNA with care.

This will be the first time in our company’s history that we will be integrating with another company, and some of you may feel confused or anxious. We are currently working on the details of the integration plan, and we should be able to provide you with more information by the spring. As stated in the slogan we upheld at our 50th anniversary, “Challenging the next 50 years” I believe that our company can step up to greater heights only if we look to the future and take on new challenges.

Let us look once again at where we stand. While the market has been recovering since the latter half of last year, the prospects are still unclear, and concerns of a second economic drop are yet to be erased. Although we are still experiencing difficult circumstances, I believe that our aforementioned future will only open up ahead of a path upon which we execute our current business activities surely and efficiently. Let us strive to improve ‘the transportation quality’ that has been our focusing for several years, continue polishing ‘the sales quality’ and ’operation quality’ to meet the diverse needs of our customers, and work tenaciously in each role we take on to achieve business growth.

Lastly, I would ask you again this year to take good care of yourselves and your families. Strong physical and mental health will enable you to face up to the many challenges that await you this year, both in your corporate and private lives. In concluding this New Year’s Message, it is my hope that you will make sure to check your physical and mental health again, and promptly eliminate any health concerns that surface.

Thank you very much for your attention.

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