Keiji Aritomi
We will raise competitiveness through high-quality services.

Yamato Transport Co., Ltd. believes that the value of TA-Q-BIN is in transforming customer inconvenience into convenience and dissatisfaction into satisfaction. As apioneer leading the express parcel delivery market in Japan, Yamato Transport has constantly created new needs based on customer feedback and steadily expanded operations.
    Since the launch of TA-Q-BIN 25 years ago, the parcel delivery market has gradually matured, and bipolarization of the market is expected to advance amid intensified competition. Our strategy to ensure sustainable growth under these conditions is outlined in this year’s annual report.

Can you tell us about future plans for the Company’s TA-Q-BIN business?

Although the economy continues to struggle, we predict overall expansion in demand for our TA-Q-BIN business. There are several factors that we believe are spurring demand for frequent, small-volume parcel deliveries in the business-to- business (B2B) and business-to-consumer (B2C) fields: growth in mail order sales, an increasing trend toward streamlining of distribution among corporations as they attempt to boost delivery speeds and lower retail inventory levels, and finally the growth of e-commerce as the Internet achieves greater penetration throughout society.
  Yamato Transport Co., Ltd. plans to respond to this trend toward frequent, small-volume parcel deliveries and growth in e-commerce. At the same time, the Company is making efforts to meet demand from corporations that are responding to impending B2B growth, strengthening its IT solutionbased businesses and bolstering existing services, including settlement functions for distribution.

Can you tell us about trends in the market and the Company’s performance during the fiscal year under review?

Demand in the truck transportation sector improved steadily in the fiscal year ended March 31, 2001. Nevertheless, we saw increasingly severe competition from participants in the same industry in terms of pricing and other areas, and the operating environment as a whole remained harsh.
  Amid these unfavorable conditions, Yamato Transport focused on raising the quality of its existing products, such as TA-Q-BIN and Kuroneko Mail, in line with the three-year plan. Our efforts also focused on measures to increase customer convenience, such as promoting Internet capabilities. We also worked to increase revenues by strengthening our logistics operations with the reorganization of our head office and business locations, and through programs aimed at expanding our transactions with corporate customers, including aggressive development of solution-based marketing to support corporate distribution operations.
  As a result of our activities, consolidated operating revenues rose 11.6% to ¥906,944 million (US$7,314.1 million), and consolidated operating income climbed 17.6% to ¥52,026 million (US$419.6 million). However, during the fiscal year under review, we undertook a lump-sum writeoff of a shortfall in retirement benefit liabilities that arose as a result of changes in our accounting standards, which we believe will eliminate downward pressures on earnings in upcoming terms. As such, the Company recorded provision for retirement benefits totaling ¥47,963 million (US$386.8 million), and net loss totaled ¥4,181 million (US$33.7 million).

Can you tell us about the three-year plan and the Company’s initiatives in the current term?

The core of Yamato Transport’s management strategy is an emphasis on product quality. Such a strategy involves maintaining the quality of the delivered merchandise up until its final destination. If we can raise the quality of our services, customers will make Yamato Transport their natural choice.
  When service quality improves, the number of parcels handled rises, bringing increased revenues to the Company. At the same time, pickup and delivery frequencies also increases, causing a boost in er-employee productivity and a corresponding decrease in costs. The overall effect is to make Yamato Transport into an even more competitive company. Furthermore, boosting product quality curtails sorting and delivery errors, while reducing freight accidents and wasteful costs. Improvement in service quality, therefore, is directly linked to growth in earnings.
  To achieve our goal in this area, we are focusing on the following five policy guidelines: (1) developing products and services that spark new demand, (2) pursuing customer satisfaction (CS), (3) raising customer service levels, (4) installing increasingly advanced systems and (5) bolstering staff training.
  During the fiscal year under review, we worked to raise the level of customer service of our drivers, improve delivery quality through shortened transport times and high valueadded services, and increase the quality of our clients’ merchandise by transporting goods directly to their customers. In addition, the Company boosted delivery quality, continued the development of new products, restructured its information networks and improved the organizational bodies that support these activities.

Could you explain Yamato Transport’s initiatives in C2C, B2B and B2C?

The Company spun off the construction of logistics information systems and settlement services derived from its transport business into separate subsidiaries. These businesses will play an important role as the infrastructure that supports e-commerce in the emerging IT era, and they have already begun to generate growth in earnings. Yamato Transport is trying to cultivate markets in not just customer-to-customer (C2C), but the B2C and B2B fields as well.
  In C2C businesses, the Company began a new intermediary bill settlement service, TA-Q-BIN Escrow Service, in November 2000. We expect this business will experience robust demand from rising Internet transactions.
  The Company’s B2C settlement method, Collect Service, recorded 20% year-on-year growth in the fiscal year under review. This service provides integrated delivery, collection and settlement for catalogue sales and nationwide direct marketing, and is becoming a powerful tool for new businesses in areas such as e-commerce. Also, in August 2001, Yamato began the Kuroneko@Payment Credit Card Service, a credit card service for settlement in mail order transactions and related areas.
  Our initiatives in B2B, and especially B2b (business-to-small business), enable users to save considerable money on distribution costs. For example, manufacturers can use the Company’s bases as storage space for the repair parts they generally store as inventory at retail outlets.
  In anticipation of significant business opportunities for this service, in April 2001 we established a Logistics Division to handle distribution operations for corporate customers.

Can you explain the Company’s capital investment policies?

Capital investment in land and buildings was given a large boost during the fiscal year under review with projects commenced in the previous year. The main building targeted by this investment was our Base Terminal in Osaka, where logistics operations are under way as a means of more effectively utilizing available space. From the standpoint of environmental protection, the base is equipped with the industry’s first in-house liquefied petroleum gas (LPG) service station, which is compatible with Yamato Transport’s new low-pollution vehicles.
   In addition to investments in land and buildings, Yamato Transport stresses investments that produce synergies and increase network efficiencies in its operations. We are committed to making further investments in upcoming terms to realize a more advanced and sophisticated information system. The 5th NEKO system, for example, is currently online at Yamato. We plan to continue developing a more advanced, more open host computer and to upgrade the advanced features of our network while maintaining a strong focus on promoting Internet compatibility.

Could you explain Yamato Transport's group management?

Yamato Transport has worked to build a strategic business portfolio that can contribute to growth across the Yamato Group. Group companies have access to Yamato Transport’s management resources—such as the Company’s network— which they can use to create high value-added business models and efficiently promote their new businesses. At the same time, the parent company provides support for these group companies while advancing TA-Q-BIN as a part of the social infrastructure. Yamato Transport’s major strength lies in its transport infrastructure and expertise, as well as the delivery quality it has built up through its TA-Q-BIN business. To say that these strengths form the principal base for Yamato Group businesses is by no means an exaggeration.
  On the global front, our TA-Q-BIN business in Taiwan is on track with assistance from our Taiwanese tie-up partner and now conducts business throughout the island, a fine example of the positive influences of Yamato Group management.
  In addition, as part of efforts to consolidate international operations, in April 2000 we split group company UPS Yamato Co., Ltd. into three smaller entities: UPS Yamato Express Co., Ltd., which handles express international parcel delivery; Yamato UPS International Air Cargo Co., Ltd., which handles airborne cargo; and UPS YAMATO Co., Ltd., which handles customs clearance.
  We believe that spinning off the strategic functions of group companies and working toward greater specialization will allow our international transport businesses to provide higher value-added services. The start of airborne cargo businesses in the United States, as well as further consolidation of our logistics bases in Europe, were undertaken during the fiscal year under review with this strategy as the guiding principle.

We would like to thank our shareholders and ask for their continued support and understanding.


August 2001   
Keiji Aritomi's sign
Keiji Aritomi