Needs relating to good eating habits have been growing and diversifying among customers and within society at large. In the drive to further strengthen its core competencies and proactively resolve social issues, Nichirei will leverage its production technologies and expertise, while drawing on new developments including those in AI, IoT, autonomous driving, and robotics.

• *Artificial Intelligence (AI) is the use of computers to artificially realize the workings of human intelligence. Specifically, AI refers to computer programs that can understand natural human language, perform logical reasoning, and learn from experience.

Strengthening food processing and production technology capabilities

Eco-friendly Plant for Rice Products Begins Operation with Capital Investment of Approximately ¥11.5 Billion

The new rice products plant of Kyurei Inc., one of Nichirei Foods Group companies, in Munakata City, Fukuoka Prefecture began operation in April 2023, with a production capacity of approximately 70 tons per day. We have also introduced the latest equipment and ramped up initiatives for eco-friendliness and automation. Environmental measures to reduce CO₂ emissions include using refrigerators that use natural refrigerants instead of CFCs, installing solar panels on the roof and utilizing renewable energy. For automation, the plant has introduced inspection and disposal of burnt items using AI robots and high-performance cameras, in addition to automating unloading of raw materials, product pallet loading and pallet transportation.

Overseas Sales Expansion from Our Processing Base in Vietnam

Trans Pacific Seafood Co., Ltd., which operates Nichirei Fresh’s processing plant in Vietnam, produces a variety of processed marine products to meet customer needs. We will expand the business by increasing the plant’s production capacity to produce products that have been processed to different degrees. Expansion of sales of these products will encompass North America and China as well as Japan. As the COVID-19 pandemic subsides, Japanese food service companies are ramping up their overseas expansion. Using our current customers in Japan and the products we sell there as a foothold, we will develop products rooted in local cultures overseas while consistently taking market needs into account in offering new products and expanding sales.

• Note: The plant has obtained certification under the BRCGS Global Standard for Food Safety and the Marine Stewardship Council Chain of Custody Standard.

Harnessing AI to Automate and Optimize Production and Personnel Planning

Nichirei Foods has collaborated with Hitachi, Ltd. in creating a system that uses AI to automate and optimize production and personnel planning. In FY2021, the system was introduced at two model factories in Japan. It uses sophisticated AI technology to reproduce and refine plans previously formulated by experts based on complex constraints. In addition to legal and regulatory requirements involved in personnel planning, a variety of other conditions must also be considered, including individual ability, overtime, and paid leave. Until now, experts formulated plans based on such preconditions, often relying on experience-based intuition. The new system uses AI to automate planning and identify optimal solutions from among the various permutations, while also quantifying and incorporating intuition-based criteria. As a result, planning requires one-tenth of the time and can be conducted by non-expert employees. The system is expected to contribute to work style reforms such as by reducing the number of hours worked and encouraging more employees to use paid leave. Given that in recent years food manufacturers have been called upon to make and supply products while responding to fluctuations in demand, the system is contributing to improved customer satisfaction due to its application of advanced digital technologies and the creation of efficient production systems. Nichirei Foods will continue to harness digital technologies to promote further improvements in productivity, reductions in lead time and inventories, as well as work style reforms.

Enhancing Temperature-controlled Logistics Services

Establishment of a Joint Venture to Expand into Vietnam

On January 31, 2023, Nichirei Logistics Group Inc. entered into an agreement to establish a joint venture with Tan Bao An Logistics Joint Stock Company, which operates a temperature-controlled logistics business in Vietnam. Following additional investment in the joint venture company, Nichirei TBA Logistics Vietnam LLC, it was made a consolidated subsidiary on July 21, 2023.
Vietnam will be the third ASEAN country where we do business, following Thailand and Malaysia. Vietnam is a huge market for exports to Japan, mainly agricultural, forestry and fishery products. In addition, domestic demand is rising for imports and retail products due to improvement in the standard of living of the growing middle class. The market for logistics with precise temperature control is therefore expected to expand.
The new company plans to build a new refrigerated warehouse (scheduled to begin operation in the second half of 2024) in Long Hau Industrial Park, Long An Province, which is located approximately 20 km south of Ho Chi Minh City. Going forward, we aim to roll out operations with a view to collaborating with our businesses in Thailand and Malaysia.

Expiration Date Reader AI Solution for Tablet Inspections*

Following field tests, in FY2021 Nichirei Logistics Group began introducing an AI solution for automatically reading expiration dates from image data at 50 bases nationwide. As part of its efforts to fully digitalize warehouse operations, the Group has adopted tablet devices and is using AI solutions to enhance their functionality. Previously input manually, expiration date input can now be completed hands-free using AI, enabling highly accurate readings of 93% or higher and fast processing speeds of about two seconds. This has further improved quality control as it enables us to capture expiration date images and to then convert those images into data records, simplifying overall operations so that they can be performed by anyone, thus facilitating stress-free work.

• *Automated expiration date reader AI solution: Preprocessing technologies that use AI-OCR (Optical Character Recognition/Reader) and image recognition to identify the characters of the expiration date from the image and cross-reference the recognized expiration date with information in the cloud, thereby achieving higher reading accuracy.

Autonomous Driving Forklifts

In January 2018, Nichirei Logistics Group began conducting field tests of autonomous driving forklifts at refrigerated warehouses. In 2021, they were introduced at the Daikoku Distribution Center of Group company Kyokurei. A distinctive characteristic of autonomous driving forklifts is that they can be given instructions using a tablet device, thereby making safe operation possible for employees who might otherwise lack the physical strength or operating skills to manually operate a forklift. Going forward, we will steadily increase the number of facilities with autonomous driving forklifts and tie that measure into reducing working hours, economizing on manpower for on-site work, and improving occupational health and safety at our warehouses.

Automated Guided Vehicles (AGVs)

In 2021, Nichirei Logistics Group introduced automated guided vehicles (AGVs) at the Sendai Distribution Center of Nichirei Logistics Tohoku. AGVs are used for transporting pallets supplied by Phoxter Corporation (Headquarters: Toyonaka City, Osaka; President & CEO: Junichi Sonoda), which develops image processing technology and AGVs. AGVs for transporting roll pallets have also been introduced at five transfer centers.
The Group is focused on process innovation to address labor shortages, reduce the load on workers, and revolutionize on-site work so that anyone can do it. We will continue to work on building an optimal labor environment and system leveraging the characteristics of both humans and machines.

Start of Proof-of-Concept for Introduction of New Robot

Nichirei Logistics Group Inc. collaborated with Telexistence Inc. to conduct a demonstration test in which Telexistence’s remote-controlled robot loaded mixed cargo on basket carts in the refrigerated area of a logistics facility.
The test confirmed the feasibility of creating a remote, stress-free work environment in logistics centers in which an operator in an office remotely controls a robot in a refrigerated area. The work involved the operator visually confirming each piece of cargo and its place of loading, them moving the robot and its arm by remote control.
We will continue to proactively introduce cutting-edge technology and digitalize operations in working to achieve sustainable logistics that support the supply chain.

Promoting Overseas Operations

Further refine the Nichirei Group’s core competencies in food processing, production and logistics to resolve social issues and improve profitability through competitive advantages in global markets.

Operations in North America (Processed Foods Business)

The household-use frozen foods market in North America has been growing steadily every year, and its subcategory, the Asian food market, continues to grow due to factors such as an increase in consumers of Asian origin. Looking to expand its North American operations, in 2012 Nichirei Foods acquired InnovAsian Cuisine Enterprises Inc. (ICE), which plans and sells frozen foods in the United States. ICE has grown significantly faster than its markets and has become a growth driver in the processed food business outside Japan.
ICE has three core strengths. The first is marketing power. It has been analyzing trends in the Asian food market for many years and is leveraging this data in product development and sales strategies. Its second strength is product development capabilities. ICE’s ability to create products that match local tastes is also the result of many years of experience. The third strength is sales capabilities. ICE has earned the acceptance of major mass retailers for a diverse array of products and promotional offerings.
ICE’s main product categories are chicken and processed rice products, and it has established its own processed rice product production capabilities to further expand its business. In July 2022, it acquired all the shares of a joint venture originally formed with another company in 2019 and changed the company’s name to Nichirei Sacramento Foods Corporation. The company will strengthen its production and sales in the processed rice product category by incorporating Nichirei Foods’ technology and knowledge to improve productivity and enhance product development capabilities. It also plans to expand its chicken and processed rice product lineup and make a full-fledged entry into the appetizer category, which is the largest market.
ICE will continue to expand its business through marketing and product development tailored to local tastes, with the goal of achieving top market share.

Operations in Europe (Temperature-controlled Logistics Business)

More than 30 years have passed since Nichirei Logistics Group initiated European operations in 1988 with the acquisition of a cold storage company in Rotterdam, Netherlands. We subsequently expanded our operations to Germany, Poland, France, and the United Kingdom through mergers and acquisitions. We have continued to grow by providing high-quality temperature-controlled logistics services to local companies throughout Europe, and currently have the fifth largest refrigerated warehouse capacity in Europe.

●A Business Model for Delivering One-stop Service

The Port of Rotterdam is where we developed our port business model, in which we provide one-stop service that combines cold storage capabilities at the port with marine transport, drayage, customs clearance, distribution processing, and transportation and delivery. We aim to expand this model to major ports in neighboring countries including the United Kingdom, Germany, and France.
Our distribution business model involves temperature-controlled logistics services for retail chains in Germany and Poland. Operations in Poland have grown to a leading position in the core refrigerated logistics business for mass retailers. We are also considering expansion into neighboring countries in Eastern Europe.
Our basic strategy is to use these two business models to provide comprehensive services. We will maximize synergies between our increased storage capacity and the acquisition of companies in the United Kingdom and Poland while expanding the provision of one-stop cross-border services through collaboration among our locations.

All of our operating companies are managed locally. Nichirei Holding Holland B.V. (NHH), an intermediate holding company led by Japanese employees posted overseas by Nichirei Logistics Group, plays a supervisory role, monitoring the operations of our European companies, formulating strategies for business expansion, and supporting implementation. Strategic initiatives are a particular focus, and as part of its day-to-day operations NHH communicates with the management of European companies about large-scale investment plans, mergers and acquisitions.