New President Takaya Soga.
Image by NYK.

NYK's New President Makes Inaugural Speech

April 03, 2023

On April 3, new president Takaya Soga made his inaugural speech to the NYK Group staff members at the company's head office in Tokyo.

Good morning, everyone.

I am Takaya Soga, newly appointed president of NYK on April 1. As I assume responsibility for the execution of NYK's and the NYK Group's overall operations, I want to share my thoughts with all of you.

First, let me talk about the medium-term management plan. During the previous medium-term plan period, various unpredictable events occurred, such as COVID-19, Russia's invasion of Ukraine, tensions between China and the U.S., and the U.K.'s exit from the EU. These events have significantly impacted not only global politics and economics but also the execution of our Group's business and our daily lives.

We expect outstanding consolidated profits in the 1 trillion yen range for the second consecutive fiscal year. Although people tend to focus on these figures, we should be fully aware of our efforts and the results of the management tasks in the previous medium-term management plan.

The first is solidifying the foundation of a new entity, Ocean Network Express (ONE), to which many NYK and NYK Group staff members have been transferred to drive the company's business activities. Overcoming difficulties at the start-up, ONE has established itself as a competitive and solid entity.

The second is structural reform of the dry bulk business. The fleet of high-cost vessels launched around the 2008 financial crisis had long been a drag on the dry bulk business in terms of profitability. However, under the four strategies that the Dry Bulk Division has been steadily promoting, we have almost completed the disposal of the vessels as a part of the structural reform and have strengthened our resilience to market conditions.

The third is our commitment to the air transportation business. It is an undeniable fact that during the pandemic, people reaffirmed the value and importance of the air transportation business, in particular, dedicated cargo carriers based in Japan. However, after considering the best way to sustain this unique and valuable operating company, NYK has decided to transfer it to ANA Holdings, Inc.

The fourth is the promotion of ESG management. Under the strong leadership of former President Nagasawa, we have been promoting ESG management activities. Many of our staff members now understand the meaning of ESG management and its importance to the Group. We have also planted many seeds for future development, and in each of the E, S, and G areas, our future measures and direction are becoming apparent. We are now at the start of a new phase, where we see a path to solving some critical management issues.

Against this backdrop, NYK drew up and announced a new medium-term management plan, "Sail Green, Drive Transformations 2026 — A Passion for Planetary Wellbeing." , This new medium-term plan is a combination of "Ambidexterity (AX)," ambidextrous management to advance existing core business and invest in new growth business toward decarbonization; "Business Transformation (BX)" featuring a slightly different way of looking at business; support strategies of "Corporate Transformation (CX)," including talent and organizational restructuring; "Digital Transformation (DX);" and "Energy Transformation (EX)" to achieve net-zero emissions. By carrying out the five Xs, we aim to become a group that contributes to society, is needed by society, and achieves sustainable growth. While I will not explain the details of each X here, I will talk about four points that I consider essential: people and technology; environment; governance; and attitude toward shareholders, customers, and other stakeholders.

First, "people and technology." I have always believed that the strengths of NYK and the NYK Group are its people and technologies. The keen sense of responsibility and teamwork of each staff is our culture nurtured over many years in the Group. The awareness of safety that each staff possesses and the technological capabilities that support this awareness are also our significant assets. To further enhance these strengths during this medium-term management plan period, I want to respect each staff's personality and circumstances and make the NYK Group an organization where everyone can fully demonstrate their individuality and work with vitality.

We are currently in phase 3 of our HR system reform to enhance respect for individuality and the self-growth of each staff member. Most importantly, now that we are in the post-COVID era, I hope you will have more conversations with your seniors, juniors, and peers in vertical and horizontal relationships to share diverse ideas and experiences that are the source of personal growth.

Regarding technology, the NYK Group has world-class technological capabilities related to ships and safe operation, developing low-carbon and decarbonized vessels, as well as logistics to enhance Group value as part of our customers' supply chains. Further enhancing "people and technology" will increase the Group's corporate value. We will appeal this advantage to the outside world more than ever to differentiate ourselves from our competitors.

Next, let us look at the "environment." The tasks and challenges we face in achieving net-zero emissions by 2050 are becoming more apparent. While we are also working on a long-term scenario centered on fuel conversion, environmental regulatory measures in each country are becoming industrial policies that favor their own countries, and systems such as the EU-ETS are soon to be introduced. How to respond to or counteract the trend is an urgent issue, and we are in a situation where we have no time to wait. NYK and the NYK Group must work as one, centered on the newly established ESG Strategy Headquarters, to develop concrete plans and actions for decarbonization that we will pursue in the future.

As a reminder, those business units responsible for transporting existing energy sources and materials, such as oil and coal, need not hesitate to continue such transportation. Our customers also try to draw up transition plans to achieve net-zero emissions in their industries and companies. We must be engaged in transportation for customers and society that use existing energy sources and materials for some time to achieve our goal. I want all of you to do your daily work with a sense of mission to support the transition of society as a whole to net-zero emissions. However, we must make the utmost effort to achieve low carbon and decarbonization initiatives in our transportation methods.

The third is about "governance." Our internal control system has evolved considerably through painful experiences for each of us and our company, such as the antitrust law violation case at NYK and NYK Group companies that occurred more than 10 years ago and the scandal at consolidated subsidiaries that occurred several years ago. It is a social requirement to have a well-developed control system. Although the term "internal control" conjures up images of restrictions on individual behavior, our internal control system is more than a device to protect the company; it is also a mechanism to protect you. However, when it comes to compliance, no matter how splendid a system we have, the most crucial bulwark is the thoughts and ideas of each staff member. We must recall what the incidents and scandals were and why they occurred.

The fourth is "attitude toward shareholders, customers, and other stakeholders." One of my missions as president is to convey to as many shareholders, investors, and customers as possible the appeal of NYK and the NYK Group and to make them fans. Sometimes shareholders and investors act as "customers," scolding us for our shortcomings and suggesting measures for improvement. At other times, they support our business development like our "partners." I will never be condescending to them but will treat them sometimes like "customers" or "partners," deepening our communication and dialogue and striving to help as many people as possible understand the mission and business plans of NYK and the NYK Group. Our customers, especially those in the maritime industry, are indispensable to the execution of our business and essential partners who are collaborating and co-creating with us to survive this momentous change.

With the new medium-term management plan as the guideline for our future actions, I will take the lead in business execution from today, but more than ever, unexpected things may occur, and the business environment may change drastically. At such times, as management, we will be flexible and agile enough to modify our hypotheses. I am also looking forward to your flexible action.

Our mission is constant. Despite the uncertainties, with "Bringing value to life" as our mission, let us protect the lives and livelihoods of people around the world, contribute to society, and grow further as a corporate group that is needed by society.

Lastly, I want to share a famous quote from sado (Japanese traditional tea ceremony): Wa-kei-sei-jaku, which translates as "harmony, respect, purity, and solitude." It is a phrase that Sen no Rikyu, the most renowned master of sado, set forth as the fundamental spirit of sado, along with "Ichi-go-ichi-e," or "one meeting per lifetime." "Wa" refers to mutual respect, and "kei" means to honor the dignity of others. "Sei" means to keep pure one's mind and place (in modern times, workplace, or organization), and "jaku" refers to being unperturbed by things.

In today's terms, this means recognizing and respecting individuality and diversity, creating a clean organization that does not tolerate misconduct, and proceeding with a strong will unmoved by small matters. Amazingly, these old words created in the 17th century are compatible with what society seeks today. It may be an immutable truth of humanity.

Keeping this spirit in mind, I will work with you to create an NYK Group where each staff member shines brightly. Thank you for your attention.

NYK Group, press release