Port complex lifts Japan’s grain handling efficiency

Ground Cover writer Catherine Norwood concludes her series on Asia’s grains value chains with this report on the vast Chiba Port storage and processing complex

Photo of a port

While a Panamax vessel unloads its cargo of US wheat at the Chiba Kyodo Silo Company, another vessel enters the port to deliver more grain.

PHOTO: Catherine Norwood

When it comes to grain imports and processing, Japan’s Chiba Port has been a model of production efficiency for more than 50 years. And with the recent lifting of government controls on grain delivery, the Chiba Kyodo Silo Company is finding new efficiencies and a customer-focused attitude that is set to consolidate its place as one of the country’s leading grain handler.

The Chiba food industrial complex was established in the 1960s, 50 kilometres south-east of Tokyo, with grain-unloading facilities and storage silos connected directly to adjacent flour mills. Nestled between the mills is a major commercial bakery, which is able to draw on other nearby businesses for other raw ingredients such as yeast, sugar and oils. The complex even has its own power-generation plant.

Although all are independent businesses, there is a complex network of cross-ownership and supply. For example, Chiba Kyodo Silo is a grain storage, warehousing and cargo-forwarding business. Its investors include the major trading house Sumitomo Corporation (which also operates the Chiba Flour Milling Co Ltd) and the Nisshin Flour Milling Company. Both mills are also shareholders in the adjacent Yamazaki Baking Co Ltd, Japan’s leading bakery.

While grain imports to Japan are still largely controlled by the government’s tender system, there has been some deregulation of purchasing and logistics. In 2010, the Japanese Government allowed traders to take more control of vessel allocations, grain sales and warehousing.

Previously the government would allocate vessels, quantities and delivery locations, which included the use of smaller 25,000-tonne vessels for imports delivered directly to local ports. The lifting of these regulations has allowed traders to improve freight efficiencies by importing grain in larger Handymax vessels (30,000 to 50,000t) or Panamax vessels (50,000 to 80,000t), which deliver to major ports such as Tokyo and Chiba. Smaller coastal barges are then used for redistribution to local ports.

Tsuneo Naito, chief executive officer of the Chiba Kyodo Silo, says his company has taken advantage of this new opportunity to offer a regional delivery service from its base at the Chiba Port. Grain can be unloaded directly from larger vessels into regional vessels, or into storage. It can also be unloaded and delivered by conveyor, directly to the adjacent flour mills for processing. Chiba Kyodo Silo’s storage capacity – recently reinforced against earthquakes – totals 146,000t with unloading facilities capable of handling the larger Panamax vessels.

This new regional delivery service, along with improved handling efficiencies, has helped the company to expand its business by 30 per cent. Grain handling has increased from 700,000t in 2010 to more than 900,000t in 2013. Almost all of this is wheat, with smaller quantities of maize, soybeans and barley. The company’s target is to receive one million tonnes of grain a year, which will consolidate the business as the top grain-handling hub in Japan.

However, Mr Naito says this has required a cultural change within the company. “Previously we just followed the orders from our clients and the government. We did not have to think about anything new. But now, in order to create new business, we have to change ourselves and think about how we can improve services for customers.”

The more competitive and service-oriented focus over the past three years is bringing results, he says, and the one million tonne target is within reach for 2015.

In 2014, Catherine Norwood undertook a GRDC study tour to learn firsthand from traders and processors what shapes the South-East Asian market.


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Region National, Overseas