Nippon Express ramps up expansion in Vietnam

Nippon Express (Vietnam) Co. will continue to expand its services to meet the diversifying logistics needs of customers in the rapidly growing Vietnamese market, its parent company Nippon Express Holdings said.

The firm's latest expansion move was the launch of its NX Yen Phong Logistics Center in the northern province of Bac Ninh bordering Hanoi.

“Many Japanese and other foreign companies have set up operations in this area, so demand for logistics services is expected to increase in the future,” Japan’s Nippon Express Holdings said in a release on July 12.

The new facility, which covers 10,750 square meters, is about 30 minutes from Hanoi’s Noi Bai International Airport. It provides inventory control, sorting, and packing of apparel and electrical and electronic equipment.

It will also serve as a distribution center for Hanoi and other parts of northern Vietnam and provide bonded inventory management services for export processing enterprises, said Nippon Express Holdings, the seventh-largest third-party logistics provider in the world by gross revenue.

The Japanese giant agreed in May this year to acquire Austrian logistics company Cargo-Partner for up to $1.5 billion, advancing its strategy to become a global mega-freight forwarder. The deal was announced in the same month.

Publicly-listed Nippon Express said it would pay 845 million euros ($924 million) in cash for Cargo-Partner and its subsidiaries, followed by cash payments of up to $607 million based on the companies reaching certain financial thresholds. The deal is expected to close between this November and May 2024, subject to various regulatory approvals.

Nippon Express’ gross revenue was more than $21 billion last year, with 29% of its business coming from overseas sales compared to 20% in 2019. The company, which has more than 73,400 employees at 760 locations, forecasts revenue will decline to $18 billion this year amid the global economic slowdown and weak shipping demand, with international sales increasing to 30%. It is targeting an overseas sales ratio of 40% by 2028, with half of sales outside of Japan by 2037.

The Vietnamese province of Bac Ninh, where the new NX Yen Phong Logistics Center of Nippon Express (Vietnam) is located, is home to the Samsung Electronics Vietnam (SEV) and Samsung Display Vietnam (SDV) factories.

The other two factories of the Korean tech giant in Vietnam are the Samsung HCMC CE Complex (SEHC) in Ho Chi Minh City and the Samsung Electronics Vietnam Thai Nguyen (SEVT) in Thai Nguyen province in the north.

Samsung has so far invested around $20 billion in Vietnam, and produces about half of its smartphones in the country, a new global production hub.