[January 5, 2015]

Happy New Year.

I would like to begin by expressing my hope that all group employees in Japan and around the world were able to greet the New Year safely and soundly, and by conveying my gratitude for your daily efforts.

Review of 2014
In 2014 the U.S. economy took a turn towards recovery while in Japan, despite a moderate recovery, personal purchasing slumped following a consumption tax rate hike. Even though there was a feeling that the European economy had stabilized, there continued to be causes for concern including depreciation of local currencies and uncertainty in Ukraine. Europe has yet to achieve a full-scale recovery. In addition, signs of economic slowdown were seen in some parts of Asia including China. Consequently, the global market environment was by no means optimistic.

It was under these circumstances that we expanded on our prior efforts to increase sales and reinforced the Project Re-engineering Yusen Logistics program on a global scale. In the ocean freight forwarding business, some regions did not meet their targets for freight handled, but the air freight forwarding business showed improvement, particularly with regard to departures from Japan. Positive developments were made in the logistics business including the completion of new warehouses, primarily in Asia, and sales increased steadily. In Turkey, which is positioned as a priority region under the Medium-Term Business Plan that was launched this fiscal year, we conducted our first M&A following the business integration with the aim of reinforcing our foundations. We also established an affiliate and began operations in Myanmar in anticipation of future demand. Our policy for the future is to continue investing actively in each country and region as necessary, developing our business, and increasing sales.

Medium-Term Business Plan
The Medium-Term Business Plan, which we have dubbed "GO FORWARD, Yusen Logistics -Next Challenges-," was launched in April of last year. It is my impression that we have intensified measures under the previous medium-term business plan and gotten off to a steady start towards achieving dramatic progress. Following the 2010 business integration, the fusion of individual regions and business units has taken longer than anticipated, and we were not able to achieve　dramatic progress. Thanks to the entire group working together, we began carrying out the Project Re-engineering Yusen Logistics program in the first half of the current fiscal year, and as a result, net sales were up and operating income, recurring income, and net income all increased by more than double compared to the same quarter of the previous year. The upward correction was thanks to your efforts, and I would like to again express my gratitude.

Under the Medium-Term Business Plan, we are improving profitability by increasing freight handled and reforming operations based on three key strategies: our Growth Strategy, Operational Strategy, and Investment Strategy. We are working to achieve 850,000 TEU in ocean freight forwarding, 370,000 tons in air freight forwarding, 500 billion yen in net sales, and 12 billion yen in operating income in FY 2016, the final year of the business plan. As I have stated in the past, this increase in freight is an essential quantitative target for us to compete on an equal footing as a global total logistics provider. Achieving these numerical targets will by no means be easy, but let's combine everyone's Integrity, Innovation, and Intensity and work together towards achieving our long-term goals of entering the global top five and holding the number one share in Asia.

Looking Ahead to 2015
In 2015, we will implement a variety of measures supported by recoveries in the logistics markets in Japan and the United States. There is some sense that the economy will slow in parts of Southeast Asia, but with the establishment of the ASEAN Economic Community (AEC) planned, we can look forward to further expansion. The European economy is unlikely to undergo a rapid recovery so making major advances may be difficult, but there is a feeling that the economy is slowly recovering, and consequently, we will continuously work to improve profits.

We established the Global BPM Department in October of last year with the aim of bolstering the Project Re-engineering Yusen Logistics program and continuing to improve business efficiency and operational quality at the industry's highest levels. This year we will undertake full scale implementation to distinguish Yusen Logistics from other companies and enhance our competitiveness by making company-wide business processes visible, standardizing and normalizing them, and providing highly precise operational and logistical information. At the same time, we will support the global human resources system for which we have already started taking action and increase business efficiency by assigning the right person to the right job.

We will also continue our proactive efforts in each division to expand freight volumes in 2015. To become a world top-class ocean and air freight forwarder, we will reinforce our Ready-Made Products and expand sales to global customers. In the logistics business, we will raise quality while increasing asset efficiency and improving profitability. We will also deploy integrated logistics services (Tailor-made Services) to growth industries and emerging markets. Through these measures, we will establish the Yusen Logistics brand in global markets.

Compliance
I would also like to take this opportunity to discuss compliance. In a highly competitive business environment, compliance violations can result in massive compensation awards, loss of trust and brand confidence, and substantial declines in corporate value. Yusen Logistics is aware that developing the appropriate compliance guidelines and structures is one of the most important management issues. As a company's size increases and its business activities become increasingly diverse, its social responsibilities become even heavier. We have conducted various types of training in the past, but I would like each employee to understand that compliance is not a passing matter and to strive to comply with laws and regulations at all times.

Closing
In closing, I would like to note that in February of this year Yusen Logistics will mark the 60th anniversary of its establishment and in October the fifth anniversary of its business integration. During this period, the market environment and customer needs have undergone drastic changes, and our path has by no means been easy. Thanks to the efforts of our predecessors, the company has successfully overcome various difficulties and established our current foundations. We must not stop our advancement, but rather, we must use these milestones as an opportunity to achieve true dramatic progress. Let's work together and continuously take on the next challenge to establish a new path.

Finally, I will end this New Year's message with my hope that all group employees and their families will be healthy and happy in the next year.


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