MOL and Kintetsu World Express, Inc. (KWE) jointly announced that MOL and KWE have come to an agreement to launch a strategic alliance in their air forwarding, sea forwarding, and logistics businesses. The alliance will result in enhanced services, capitalizing on the strengths of each company.

MOL and KWE share the view that the competitive environment surrounding the global logistics industry has been dramatically changing due to the advent of so called “Mega Integrators”, such as Deutsch Post, FedEx, UPS, etc., leading to international alliances, capital alliances, and so forth. Under these circumstances, the two companies have agreed to take proactive action to remain at the forefront of the industry.

1) Integrated Services

In this alliance, MOL will regard KWE as a major partner in the air forwarding business, while KWE will regard MOL as a major partner in the container shipping business. Under this collaboration, both MOL and KWE intend to render to each customer a wider range of competitive quality services, regardless of the mode of transportation.

2) China

Geographically, both MOL and KWE have strategically focused on China. The combination of MOL’s first-class liner service network and KWE’s cutting-edge logistics network in China enables the two companies to provide highly sophisticated services in China, which can rapidly adapt to changing customer needs.

3) Logistics and IT

In the field of logistics, a common strategic business domain between the two companies, MOL and KWE are planning to stabilize profitability by sharing not only “hardware” such as warehouse and transportation facilities, but also “software” such as know-how and expertise accumulated around the core business of each company. Also, they will jointly consolidate and expand IT capabilities to enable customers to build a “glass pipeline” of their inventory.

4) Cost

On the cost side, MOL and KWE, along with MOL Logistics (Japan) Co. Ltd., MOL’s air-forwarding arm in Japan, will reduce costs as and when feasible, through joint procurement (e.g. space from airlines), optimization of co-loading (e.g. air cargo consolidation), and sharing of overseas offices and agents.

In addition, in order to give weight and strength to the alliance, MOL will acquire approximately five percent stake in KWE, who in turn will acquire an approximately 25% stake in MOL Logistics (Japan) Co., Ltd.