Fresh Seafood Direct From Japan to HK - Chilled and Frozen Shipments in 1 to 2 Days

Japanese airline ANA and private courier Yamato have tag-teamed to realize 1 to 2-day delivery of frozen premium seafood from Japan to Hong Kong, Singapore and other nearby destinations.

Teaming up with Japan's largest e-commerce shopping portal, Rakuten, ANA and Yamato made their first deliveries in time for Chinese New Year. Retailers in Hokkaido and Kyushu advertised special holiday packages on Rakuten.

"We had not expected to receive so many orders," said Managing Director Hiroshi Ogasawara of Yamato Ogasawara Shoten of Hokkaido, who participated in this first campaign. His store offered crab and other seafood sets, and received four times the anticipated number of orders - a total of 80 , from Hong Kong. The abverage basket size was 15,000 yen, which is five times the average of purchases made in the airport souvenir shop the business manages at Hokkaido's Chitose Airport.

The crab was collected by Yamato and first collated at Rakuten's logistics facility in Shinagawa, Tokyo. This was then shipped via air from Haneda Airport on a late night flight operated by ANA to Naha, Okinawa, where the cargo was transferred to an international flight to Hong Kong. Once in Hong Kong, Yamato made the last mile delivery.

In this instance, it took two days from collection to deliver, but Yamato claims that a minimum delivery time of next day is physically possible.

Rakuten commenced international e-commerce services in 2008, and now has approximately 7,000 merchants active on the site. However, due to the shipping restrictions, the goods sold have been predominantly apparel and accessories.

"High quality Japanese food is in demand from Asian consumers; but chilled shipping was a bottle neck." The latest test has proven that "there is much potential in reaching out and expanding the business in Asia," says Katsuhiko Hiwatashi, Director in charge of Overseas Sales at Rakuten.

A second test has commenced from 18 March.

ANA and Yamato's collaboration does not stop at supporting Rakuten's new strategy. In November 2012, ANA and Rakuten established a framework to realize a minimum lead time of "next day delivery" to Hong Kong, Shanghai, Taiwan, Singapore, and Malaysia. The last mile in all the destinations will be handled by Yamato's own delivery network.

Shipments can be collected from Kanto (Tokyo and its vicinity) as well as Kansai (Osaka, Kobe, Kyoto and their vicinity) areas. The initial service will commence with documents, and gradually expand to ordinary small packets and even refrigerated shipments during the current fiscal year.

This service was made possible because Naha, Okinawa now enables 24-hour customs clearance and has no restrictions on late night flights, and is conveniently only four hours away from the major Asian cities. At Narita in Tokyo, where there are restrictions on custom clearance and flight operations hours, the shortest delivery lead times are three days.

In addition to the test with Rakuten, Yamato worked with Yahoo! in Hong Kong to promote the sales of apples from Nagano Prefecture in mid-January. 200 boxes sold out in one day - solid proof that there is indeed strong demand for fresh produce from Japan. Fresh apples are available at Japanese department stores in Hong Kkong as well, but "consumers were moved by the notion of having them delivered straight from the farms," says Yamato's Global Business Promotions Division.

Japan Post has teamed up with flag carrier Japan Airlines (JAL) to commence test shipments of chilled goods to Taiwan and Singapore in April 2013 as well. A chilled re-usable case has been jointly developed for this purpose. JAL will carry the cases and the destination post offices - Singapore Post and Hongkong Post - will handle the last mile delivery. The re-usable cases are large enough to hold a medium size Yu Pack parcel box and is capable of maintaining the inner temperature at 2 to 10 degrees for up to approximately 80 hours. "If the destination was not in tropical Asia, the temperature can be maintained much longer," says Japan Post.

The test will initially be restricted to shippers sending goods from the areas covered by Hokkaido's Chitose Post Office and Kawasaki's Kawasakiko (Kawasaki Bay) Post Office, but will gradually be expanded. Goods collected by the Kawasakiko Post Office may be delivered on the following day, but those originating from other locations will be delivered in two days from collection.

In 2012, another private courier, Nittsu, has won a contract by the Ministry of Economy, Trade, and Industry (METI) to assist in the post-earthquake recovery of the Tohoku region by promoting produce via e-commerce. Nittsu has created a designated e-commerce site on Yahoo! posting products by 64 businesses including Japanese beef, Inaniwa noodles, and necklaces made of Nanbu steel. 70% of the approximately 6,800 items they shipped have been sold in Taiwan through February 2013, either online or at stalls Nittsu have established at events and at popular shopping areas.

Nittsu says at first, they struggled as the number of products available were limited as well, but such efforts as the stalls and Nittsu staff appearing on local news programs have helped raise awareness and realized quick sales growth.

"Just carrying the goods over here alone is not enough. It is key to do the promotions as part of the package," says Nittsu's Global Logistics Solutions Division General Manager Haruya Tajima.

The METI program comes to an end at the end of this month, but Nittsu plans to launch a new service in its place from April by drawing on its established know-how. Nittsu will open a new site to promote the goods and hold business events where sellers can sit down with Taiwanese retailers. Japanese businesses who are interested in participating need only to hand over their goods to Nittsu and pay a nominal fee of several thousands of yen per month.

SG Holdings, owner of Yamato's rival courier service, Sagawa Express, has takkyubin (small packet express delivery) services operations in Shanghai, Guangzhao, and Vietnam. The Chinese operations is through a joint venture and the Vietnamese business is a subsidiary. There are no significant next-day or chilled shipment services announced as yet, but while other major couriers only deliver to major cities in Vietnam, Sagawa's strength is that it covers the outskirts of Hanoi and Ho Chi Ming with approximately 100 delivery trucks.

### CarpediemJapan Comments and Observations ###
While refrigerated small parcels delivery may sound novel and worthy of hefty surcharges in other markets, Yamato has made it a cost of doing business in parcels delivery here in Japan and it is now offered by Japan Post as well as Sagawa at very reasonable prices.

With Yamato, refrigerated shipping is available for four sizes and surcharges of 210 yen to 610 yen per item apply.

Japan Post has a two-tiered pricing structure based on whether the shipment needs to be merely refrigerated or frozen, and classified by total weight of shipment, not size:

Light blue (top row) is for refrigerated
Gray (bottom row) is for frozen
Once again, the surcharge is from 180 yen (frozen goods up to 4kg) to 640 yen (frozen or refrigerated goods up to 21kg or 30kg respectively).

The service has definitely squeezed out the florist network service that enabled consumers to place orders with their local florist to have a network member local florist at destination to deliver fresh flowers as florists throughout Japan can sell via e-commerce to consumers anywhere for delivery direct via refrigerated shipments.

For my family, ordering ice cream cake made of fresh milk by a specialist near a dairy farm for birthdays have become a norm, as well as receiving crab and other fresh seafood from family in Hokkaido and friends in Hiroshima (famous for oysters).

Yamato initially developed the "direct from farms and ports" services as a way to help boost the local economies of farming and fishing communities that were losing its workforce to major cities due to lack of work. In some areas it has become so successful, people have migrated back to their hometowns.

The Japanese are known to pay for convenience and to be spoiled for it. Now that Japanese businesses are reaching out to our Asian neighbors to spoil them in the same way, how will the local businesses respond?

See also: Cheaper, More TLC, and Same Speed - Yamato's Edge over DHL and Other Couriers

Nikkei MJ 22 March 2013 Cover Story,
Rakuten Promotion Site:
Rakuten: Discover Gourmet Japan! Premium Seafood Shipped Directly to Hong Kong - Shopping Japanese products from Japan


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