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Logistics: We are promoting a modal shift to reduce CO2 emissions and are also enhancing compliance in customs payment and bonding operations overseas.

Green Logistics Initiatives

The SEI Group has made efforts to reduce environmental impact from distribution of products and materials for many years and promoted measures to reduce CO2 and other greenhouse gas emissions and energy consumption during transportation through such efforts as increasing loading efficiency, joint cargo transportation, and replacement of truck transportation by transportation means that have less environmental impact such as rail and marine transportation (modal shift). Thus, we have taken the initiative in establishing an environmentally friendly logistics system.

In response to revision of the Law concerning Rational Use of Energy in April 2006, which now requires all shippers to make efforts to reduce CO2 emissions from cargo transportation, the SEI Group established the Green Logistics Promotion Task Committee and is working together with all domestic affiliates to promote consolidated and joint delivery of freight, a modal shift in long-distance transportation, and maximization of truck-loading efficiency for medium-distance delivery. We will further promote green logistics in the future.

Reducing Delivery-related Environmental Worse Factor

While the total amount of cargo transported for the SEI Group is continuously increasing as our business expands, we are working to minimize the increase in CO2 emissions by reducing the CO2 emissions per cargo transported through promotion of a modal shift and improvement of truck-loading efficiency in all Group companies in Japan, in addition to the known shippers with large freight volumes, which are subject to regulations.

Promotion of Shift in Transport Modes (Modal Shift)

Since fiscal 2002, the SEI Group has been active in promoting modal shift from truck transportation to rail and marine transportation, which have less CO2 emissions, mainly in the case of large-volume freight. In addition, as a modal shift within the Group alone has only limited effect on cost reduction, we are actively promoting the sharing of large JR containers for round-trip transportation in coordination with enterprises outside the Group.

Cooperation with Companies in and outside the Industry

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Under the initiative of the Logistics Committee of the Japanese Electric Wire & Cable Makers' Association, in October 2008 we started modal shift in partnership with Furukawa Electric Co., Ltd. As the first case of a "Solution Team on Modal Shift (composed of shippers, forwarding companies and Japan Freight Railway Company)" proposed by the Japanese Ministry of Land, Infrastructure, Transport and Tourism. Two 31-ft containers are delivering cargo of Sumitomo Electric from Osaka to Utsunomiya and cargo of Furukawa Electric on the return trip from Nikko to Amagasaki.

We also began modal shift in partnership with Panasonic Corporation, a company in a different sector, in December 2008. SEI and Panasonic share a 31-ft container in the round-trip transportation between Osaka and Utsunomiya.

With these two cases of modal shift, CO2 emissions from Sumitomo Electric can be reduced by 200 tons a year.

Increasing Truck Loading Efficiency

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Sumitomo Electric has introduced “Haiso-desu”[*] truck delivery planning system software developed and marketed by Sumitomo Electric System Solutions Co., Ltd, a member company of the SEI Group, to increase truck loading and circulation efficiencies, thereby reducing the number of trucks used and reducing CO2 emissions accordingly.

* “Haiso-desu” is a registered trademark of Sumitomo Electric Industries, Ltd.

Compliance in Customs Payment and Bonding Operations Overseas

As the SEI Group develops its business worldwide, the quantity of exports and imports in the business operations of our Group companies are growing steadily. It is the duty of our overseas affiliates, as players in the global business, to follow customs procedures properly and pay tariffs without delay while engaging in exports/imports. This is also essential for maintaining solid and efficient supply chains for customers, and the SEI Group is therefore working to ensure compliance with customs laws in other countries as well.

In Japan, Sumitomo Electric has been approved in December 2008 by Osaka Customs as an authorized economic operator, which is an excellent exporter in terms of compliance. As part of our internal education program "SEI University," we have also started an education program on customs laws for employees who are to be assigned abroad, in cooperation with the Human Resources Development Department. This program teaches basic knowledge and key points on the customs system and also introduces some examples of failures we actually experienced in the past. We will also enhance compliance in overseas affiliates under the initiative of the Logistics Management Department, in coordination with the Corporate Staff Group, divisions, local staff and experts.

* Annual results (numerical data) are published in the CSR Reports for the respective fiscal years.

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