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The following is an excerpt from the New Year's speech made by NYK president Tadaaki Naito as business opened for 2018 at the company's head office in Tokyo.

Excerpt from the speech

I would like to wish everyone a happy new year. At the start of 2018, I would first like to talk about the future image and direction of both NYK and the NYK Group.

Outlook for the Global Economy and the NYK Group

Although risks are increasing, I think the global economy is on track towards a gradual recovery, and I believe that global trade will expand with a focus on Asia in the future. Based on this awareness that this good economy and virtuous cycle will not last forever, we need to construct a firm long-term earnings base.

In July last year, we established the joint venture company Ocean Network Express Pte. Ltd. (ONE) for liner business integration with two other Japanese companies. In October, we announced the acquisition of Yusen Logistics Co. Ltd. (YLK) as a wholly owned subsidiary. These were major decisions that will shape the future of the NYK Group.

This year, I hope to advance the group's activities with a focus particularly on the keywords 'green' and 'digitalization,' i.e., strongly promoting environmental issues and the utilization of IoT. We are already making progress in both fields, and pressing forward to promote their use in practical operations that will allow us to realize a wide range of ideas and further differentiate ourselves. I would like to briefly touch on challenges at respective businesses.

Global Logistics Business

ONE, the joint venture company for liner integration, will aim to commence services from April this year, and the difficult work of bringing the company to life is continuing. It is most important for the NYK Group to provide full support to these efforts.

Regarding logistics, with a focus on YLK, I want everyone to give their best efforts to this core business of the NYK Group. I hope that logistics will be the frontline of the entire NYK Group through the utilization of our global network to achieve closer relationships with our customers.

Air freight cargo volumes have remained strong, and during this time I hope you prepare a system for operations with the jumbo freighter segment, a strength of NCA, and work to make this year a huge success.

Bulk Shipping Business

The automotive industry is facing a wave of major transformation. Without being restrained by past experience, I want you to take a close look at the changes to this industry and to customer needs and strive on to be the first to provide competitive solutions. The automobile logistics business has continued to grow, and I want you to work together with YLK with the aim of achieving the next development by not solely focusing on terminals but also giving attention to overland transportation, among other areas of potential growth. Listen to what the people on the frontlines have to say, and upon 'noticing' new things, proactively utilize IT to increase our competitive strength.

With regard to the dry bulk division, in the second half of last year I believe that we finally exited the long, seemingly endless dark tunnel hampering the dry bulk segment. Now that the market is recovering, it is time to advance structural reforms aimed at transforming all the efforts made with gritted teeth. By using data and IT tools, I hope that you will increase your ability to respond to the market.

I want the liquid division to search for new business opportunities based on the keyword 'green.' Without looking solely at existing cargo, pay attention to trends in the renewable energy field, in addition to transportation demand for energy-related materials and supporting electric power businesses. LNG and the offshore business will be the mainstays of business with stable freight rates in the future, so your continual efforts are still required. I also want you to aim to acquire new business. The transport of oil and petroleum products is one area where the focus is expected to shift to Asia in the future. I want you to work with a broad perspective that includes peripheral businesses, such as terminals.

Non-sales Departments

As the promoter of 'creative solutions,' I want the Technical Headquarters to expand this activity to both NYK and the entire NYK Group and achieve results. Promotion of 'digitalization' and new technology such as autonomous sailing has the potential to advance the next generation of safe vessel operations.

Firmly advancing group management reforms is an important challenge for the General Affairs Headquarters. Of course, in addition to complying with relevant laws and regulations and creating a system for promoting proper work methods, I believe that further advancing our ongoing initiatives for transforming working styles i.e., the training of personnel, the acquisition of diverse personnel, the better promotion of women's participation and advancement in the workplace, and the motivation of personnel in foreign countries is essential for the healthy development of the NYK Group.

The main challenge of the Management Planning Headquarters will be to thoroughly coordinate the medium-term business plan that will be announced this spring and indicate the process management that will be necessary to realize the plan. I want you to focus on overall efficiency, indicate how we are improving our fiscal health, and strive to increase the strength and competitive ability of the NYK Group. It is also an important challenge to obtain stakeholders and society's understanding and support of these initiatives.

Conclusion

The business results for the group are showing signs of improvement. Of course, this is due in a large part to the improvement of the shipping markets, but it is also the result of the efforts made by all employees during the 'Beat the Crisis' internal activity carried out over the past two years.

We have set forth the goal of exhibiting the spirit of the 3 I's (integrity, innovation, and intensity) by continuing to pursue innovation and staying a half step ahead of our competitors. In order to transform these goals into action, it will be necessary for each group company and each headquarters to hold free and vigorous discussions. Most importantly, we should listen to others sincerely, conduct fair dialogue, set a direction, and keep heading forward.

Lastly, I hope this year will be a healthy and prosperous year for everyone in the NYK Group and your families.