Japan firm woos LBC

SG Holdings Global Pte. Ltd., one of Japan’s largest logistics companies, on Friday signed a business cooperation agreement with LBC Express Inc. in what could be an initial step towards a joint venture.

“Eventually, we have great hopes that it will lead to a joint venture or a strategic partnership between the two companies,” SG Holdings Global Pte. Ltd. president and regional head Tomoki Sano said in a news briefing Friday at Marriott Hotel Manila in Pasay City.

SG Holdings, through Sagawa Express, is a leading international freight forwarding company in Japan, while LBC Express has a nationwide presence in courier and delivery services in the Philippines.

Sano said the alliance between Sagawa Express and LBC Express marked the “beginning of an exciting chapter in logistics in the Philippines” as the two companies would now be able to provide comprehensive logistics solutions to customers.

Sagawa Express Philippines chief executive Lawrence Mendoza said the Japanese company planned to invest or acquire a stake in LBC Express, although talks remained in the courtship stage.

 “Even the owners of the company are aware of this deal and are optimistic. It is just the beginning,” Mendoza said.

Mendoza said Sagawa Express decided to team up with LBC to expedite its Philippine expansion.  “We can only do so much.  The Philippines is divided into 7,100 islands. Setting up a logistics network from scratch is almost close to impossible. So we really need to team up with an able logistics partner,” he said.

LBC Express Inc. president and chief operating officer Miguel Camahort said the business alliance would combine the strengths of both companies to serve their customers.  “Hopefully, we do end up as a joint venture. Our customers are excited about this partnership.  They see a lot of complementary synergies,” he said.

Camahort said the partnership would particularly facilitate the flow of goods between the Philippines and Japan. “Our partner Sagawa has expertise in certain areas. We also have certain expertise.  Sagawa is a Japanese company and we import a lot of products from Japan. It is a collaboration of their expertise and our expertise,” he said.

Sano agreed, saying that the alliance would look at the strengths of each company and use those strengths together.  “There is a lot of homework to be done.  But it is going to be a workable partnership with regards to export as well,” Sano said.

Mendoza said the business cooperation did not involve any financial transaction at this stage, but “this is only the beginning of a strong partnership.”  

“Eventually, we hope that we will become bigger and will lead to a more strategic business partnership. This will benefit not only the two companies, but also all the consumers and all the suppliers that wish to transport goods from port to retailers and end users,” Mendoza said.

Sagawa Express Philippines Inc., the local unit of SG Holdings, currently serves major Japanese companies in economic zones in Luzon.

“Initially, there is no financial transaction involved. It will be a business cooperation agreement, purely operational. But somewhere down the road, we will be able to work on that and we hope we can enter into a strategic partnership, with financial investments involved,” Mendoza said.

Mendoza said the partnership would allow Sagawa Express to tap the nationwide network of LBC Express to transport goods to Visayas and Mindanao.

“Our main line of business is international freight forwarding.  We are catering to Peza [Philippine Economic Zone Authority] locators for their export and import requirements.  We have our own trucks also, mainly for Peza customers.  Last year, we ventured into domestic delivery but it is more of B2B [business to business], instead of B2C [business to consumer] or C2C [consumer to consumer], like what LBC is doing.  But we can only do so much, and only in Luzon island.  What we are trying to do with LBC is increase our reach in the Philippines,” Mendoza said.

“We would use the network of LBC.  Our clients would be using Sagawa and LBC service. From now on, we would be able to pass it on to LBC to have it delivered to Cebu, Davao, Cagayan de Oro,” he said.

Mendoza said the two companies were still working on some details, including co-branding, but the partnership would start immediately.

Mendoza said one of the strengths of Sagawa Express was warehousing.  “Warehousing is our expertise in Japan.  We can bring this technology and know-how to the Philippines. LBC does not have its own office in Japan.  We can also take care of that,” he said.

Mendoza said both companies were expected to benefit from the partnership in terms of increased revenues, “because we will be able to provide end-to-end solutions to customers.”

“We will start immediately because we have lot of customers lining up for that. We are quite excited to work with LBC,” he said.

Camahort said he was optimistic about the sustained growth of the logistics industry in the country.  “As GDP [gross domestic product] continues to grow, and as consumer spending continues to grow, we see the opportunity for growth,” he said. The Philippine economy grew 6.9 percent year-on-year in the first quarter, one of the fastest in the Asia-Pacific region.

Global consulting firm Ken Research said in its Philippines logistics market outlook 2020 report that the country’s freight forwarding market would have a compounded annual growth rate of 6.8 percent from 2016 to 2020, bringing its total value from $20.2 billion to $41.3 billion.

LBC Express saw net income jump 36 percent in the first quarter to P310 million, on P2.1-billion revenues.  Total assets hit P5.78 billion as of end-March 2016.  LBC Express is present in 20 countries, with 1,200 branches worldwide.

“The logistics and freight forwarding industry involves nearly every aspect of the entire economy, so their movement is almost identical,” Camahort said.

“All signs point upward for the Philippines, so our company has ensured that we are well-poised for this growth. We have made significant investments to strengthen our infrastructure, manpower and technology base, in order to anticipate the increased demands of Filipinos across the world,” Camahort said.