We have enhanced medical DCs across the country and provide storage and shipping services specialized in pharmaceutical logistics. In order to enhance intangible aspects of GDP^*1, we are working to strengthen quality assurance system in the pharmaceutical logistics. For example, we set up an organization dedicated to promoting GDP, which is developing a quality management system for GDP management and also conducting verification experiments such as for the next-generation temperature sensor to monitor temperature during transportation. In FY2021, we provided our customers with low-cost GDP-compliant temperature mapping services at the advanced medical DC, including preparation of implementation plans and reports. We also have a fuel procurement scheme and dedicated drivers familiar with characteristics, etc. of medicines as part of the BCP system to sustain supply chain in case of an emergency.

In FY2024, we conducted warehouse temperature mapping in a total of 36 instances and transportation tests in a total of 27 instances in order to enhance temperature management, a GDP-essential requirement. Temperature mapping enabled temperature management at appropriate temperature monitoring points in accordance with GDP guidelines. Transportation tests also verified the validity of temperature management during transportation. In addition, integration with a temperature management system that complies with computerized system validation^*2 enables the "consolidated management of important recorded data," "permanent temperature data storage," and "data management on a secure and reliable platform." Furthermore, "GDP video training," which was developed with the aim of further strengthening on-site quality control and management capabilities, used more advanced content as teaching materials, as well as reviewing the content that has been implemented so far. Going forward, in order to improve the efficiency of GDP document record management and strengthen data integrity compliance, we will consider expanding the number of locations where we introduce the document record management system (HITQUAA^*3), which has functionality equivalent to that of manufacturing GMP and has been introduced at major bases in the Kanto and Kansai regions, and expanding the scope of its application.

Overseas, LOGISTEED Asia-Pacific Pte. Ltd. obtained the CEIV Pharma pharmaceutical transportation quality certification at Singapore Changi International Airport in December 2024. By the end of FY2024, the entire overseas group had obtained this certification at four locations.
We will continue to contribute to maintaining high quality pharmaceutical logistics by working on proper management of increasingly complex distribution channels.

• *1: GDP (Good Distribution Practice): "Appropriate distribution standard for medical supply" to ensure strict quality control to prevent quality deterioration during transportation and storage.
• *2: Computerized System Validation (CSV): A process for verifying and documenting that computerized systems are producing the expected results in the manufacturing and quality control of pharmaceuticals and other products.
• *3: "HITQUAA" is a registered trademark of Hitachi Industry & Control Solutions, Ltd.

The Group is promoting the implementation of automation and labor-saving technologies at logistics sites, and introduction of equipment, in order to respond to social issues such as labor shortages, leading to a reduction in the burden on workers and establish a safe, secure and friendly workplace and a sustainable logistics management system.

The GTP system has the ability to store and ship cased and pieced products. By transporting products to work stations using robots and conveyors, we reduce the amount of walking required by workers and strive to improve work productivity. We began introducing this system in FY2018 and have now implemented it at nine sites.

Utilizing picking assistant type AMRs in picking operations for small goods within warehouses reduces the distance walked by workers, leading to an increase in productivity. We have proceeded to implement these since FY2022, and have now implemented it at three sites.

Interoperability with mobile pallet racks, vertical conveyors, and automated warehouses to automate pallet cargo handling (warehousing/shipping) and transportation, including at night. We have been promoting the installation since FY2018, and have now implemented it at three sites.

Promoting labor-saving in simple work by replacing the manual picking and placing process with piece picking robots with specifications according to the product characteristics. We have been promoting the installation since FY2019, and have now implemented it at three sites.

Depalletizers and palletizers are used with products shipped by the case for loading and unloading between pallets and conveyor lines and for stacking products from conveyor lines onto cage carts, thereby reducing the amount of heavy-lifting work and achieving labor-saving operations. We have been promoting their introduction since FY2019, and have now implemented it at ten sites.

In addition to pallet transport and the like, these are utilized as shelf transport type picking and sorting systems for small goods to promote labor-saving in transport and picking/sorting operations. We have been promoting the introduction since FY2014, and have now implemented it at eight sites.

We are promoting the introduction of automation and labor-saving equipment at our overseas sites as well, and in FY2024, we installed a shelf transport type GTP system at our Beijing base in China.

The Group utilizes experienced mechanical engineers and a wide range of equipment to handle consistent logistics, from the transportation of various products to on-site installation. Leveraging this experience and track record, we transported and installed a dry distillation gasification combustion plant in FY2024.

The plant's "dry distillation gasification combustion system" is a waste treatment technology that heats waste in an oxygen-blocked environment (dry distillation) and burns the resulting combustible gas to obtain energy. In recent years, the diversification of waste types has made it difficult to process them using traditional methods such as simple incineration and recycling. This customer's equipment was the world's first, researched and developed to address these social issues. The Group completed the entire process of this plant, from assembly at the factory to transportation and installation, without incident.

The Group will continue to support our customers' business activities by providing consistent, comprehensive solutions from transportation to installation. We will continue to strive to improve safety at each site and contribute to the creation of a prosperous society.

"SSCV" is a transport digital platform that updates transport business through technology and open collaborative creation, and it consists of the following three solutions.

"SSCV" will build new business models contributing to the resolution of various social issues with services from ideas originating at the worksite that only a logistics company can provide and the utilization of big data obtained from services, connecting transport and society for a better future and contributing to the realization of a sustainable society.

"SSCV-Safety" is a solution with which we aim for "zero accidents," developed as a result of our long-standing commitment to accident prevention and safety as a logistics company. The health status measurement function for drivers and the dashboard function for managers work in tandem to detect in real time near-misses that could lead to accidents.

In addition, the following functional enhancements were implemented.

In the future, we will work on expanding the functions of the system with the aim of strengthening compliance and improving the efficiency of driving management work in response to further legal regulation.

In FY2019, we began full-scale introduction of "SSCV-Safety" to domestic commercial trucks and personal vehicles, and by FY2021 the system has been installed on all of the company's approximately 2,200 vehicles. Since introducing the system, we have maintained zero vehicle accidents caused by distracted driving, thereby minimizing the occurrence of accidents. Starting in 2021, we have been offering the service to other transport companies outside the Group, and we are working to further spread the use of "SSCV-Safety". "SSCV-Safety" is certified as "TDBC Certified Solution" by Transportation Digital Business Conference (TDBC) and is used in initiatives to solve social issues such as research projects by the Ministry of Health, Labour and Welfare and verification experiments by the Ministry of Land, Infrastructure, Transport and Tourism.

In addition, in FY2024, this system was certified as "device contributing to the prevention of overwork driving in FY 2024" under the Ministry of Land, Infrastructure, Transport and Tourism's Accident Prevention Measures Support Promotion Project, and was highly praised for its contribution to improving driver safety, receiving the Minister of Land, Infrastructure, Transport and Tourism Award.

The truck transport industry is made up mostly of small and medium-sized businesses, and many of them still conduct operations using telephone, fax machine, and paper documents. "SSCV-Smart", developed by us, is a transport operations support solution for cargo owners and transporters that supports business efficiency and legal compliance on both sides.

"SSCV-Smart" is an online system that connects cargo owners and transporters via the Internet. It supports business efficiency and legal compliance, as the system allows for centralized management of all processes from acquiring transportation projects to vehicle assignment, issuing driving instructions, and billing, in addition to supporting saving of electronic books and the invoice system.

Vehicle management is complicated and involves a wide range of tasks such as inspection, maintenance, and insurance renewal. In addition, compliance with laws and regulations is required, and inadequate management can lead to major risks. "SSCV-Vehicle" is a new solution for vehicle management that combines the unique perspective of a logistics company with technology.

"SSCV-Vehicle" centralizes and supports the individual management operations from vehicle procurement to purchase. Currently, we are developing preventive diagnosis functions, such as remote diagnosis and failure prediction alerts utilizing IoT technology and big data.

Addressing the transport capacity shortage across society, including the 2024 issue^*, requires urgent measures such as shortening total working hours of drivers and strengthening transportation capacity to compensate for the shortage of drivers. The LOGISTEED Group is pursuing inter-company relay transport, modal shift in collaboration with collaborative innovation partners, and the deployment of double-trailer trucks, enabling reduced labor dependency, increased cargo capacity, and optimized transport distances. In addition, we have implemented our proprietary truck loading dock booking management system at approximately 200 sites, contributing to shorter truck waiting times and more streamlined cargo handling operations. As a result of these initiatives, the number of violations of labor standards by the LOGISTEED Group's truck drivers was zero in FY2024.

In today's increasingly complex and sophisticated supply chains, we act as a strategic supply chain partner, contributing to improving our customers' business value and environmental value, such as decarbonization, through visualization and overall optimization through digital transformation.

In FY2024, we proposed a standard monitor linked with LOGISTEED Solutions, Ltd.'s "ONEsLOGI*" lineup, integrating three visualization solutions for warehousing, transportation, and CO2 emissions, to over 100 customers. We also developed a standard KPI dashboard based on the standard monitoring KPIs cultivated in LOGISTEED's 3PL business and began providing it to our customers' supply chain organizations.

The "2024 Issues" facing Japan's logistics industry are causing declines in transportation capacity and rising logistics costs, raising concerns about the negative impact on the supply of food, pharmaceuticals, and other products. In response to this situation, the government enacted the Act on Advancement of Integration and Streamlining of Distribution Business (Amended) on May 15, 2024, which requires shippers and logistics companies to make efforts to improve logistics efficiency. It also mandates that companies of a certain size or larger appoint a Chief Logistics Officer (CLO) and develop mid-to long-term reform plans. Going forward, it is expected that we will enter an era in which promoting logistics reform across companies and industries will be essential, rather than focusing on logistics efficiency at the individual company level. LOGISTEED has developed a new logistics solution to support CLOs and the staff directly under them, who hold the keys to this era, and has begun offering it to multiple clients.

With the risk of stagnation in international trade due to tariff policies under the Trump administration and uncertain geopolitical risks caused by authoritarian regimes, the importance of responding to resilience in global supply chains is receiving more attention than ever before. SCDOS is accelerating the expansion of its services to meet the needs of global customers, leveraging the supply chain planning and optimization analysis know-how it has gained from supporting customers with various solutions. In FY2024, we strengthened collaboration with the logistics engineering organizations of our major overseas group companies and provided services to multiple customers. The main regions in which we provide services include North America, Europe, and Southeast Asia, making it possible to provide services throughout the LOGISTEED Group.

Many customers have felt the limitations of improving efficiency through data tracking using spreadsheet software in import procurement operations. In this context, the Company provides "SCLINK+" for improving the efficiency of operations though platform-based management of data previously managed separately. Introducing this platform will visualize the number of orders and transportation status, enabling the reduction of manhours spent on inquires among the players in the supply chain and accurate responses on delivery time, leading to improvement of efficiency of operations.

As part of "SCDOS," our DX service to support optimization of customers' supply chain, we offer "CO₂ emission visualization function" from FY2021. This service enables customers to accurately measure and visualize CO₂ emissions and reduction in the supply chain by centrally managing and monitoring their various data, which has received conformity assessment by a third-party organization. In FY2024, we proposed this solution to a larger number of customers than our target number, helping multiple domestic and international customers visualize and reduce the CO2 emissions generated in their logistics operations. In addition, as a new initiative, we have registered a project to reduce CO2 emissions through "collaborative delivery" with the J-Credit Scheme. Under this scheme, as the Operator/Administrator of the project, we will aggregate data based on the "collaborative delivery" achievements of shippers and logistics companies participating in the project, apply for credits, and then sell the issued credits and return them to each company. This allows for the creation of credits while reducing the administrative procedures and costs associated with individual registration and review. Even outside Japan, we are also promoting the development of a system that can express CO2 emissions in monetary terms, in line with the needs of our Singaporean customers.

The Group is promoting DX by accelerating the digitalization, visualization and standardization of a variety of data arising in logistics sites, as labor shortages and long working hours become issues in the logistics industry.

To create new values and innovation by promoting DX, we are working to develop and establish a company-wide digital platform for both business and management systems. We completed renewal of the core management system for domestic group companies in FY2022, enabling us to provide innovative digital services and promote data-driven management through linkage of the digital management platform and the digital business platform. In FY2024, we began building a data infrastructure for our overseas group companies, and have completed implementation at 17 overseas group companies (22 locations). We aim to complete implementation at all overseas group companies by FY2026, and are promoting the standardization of LOGISTEED Group operations and further strengthening data-driven management.

We are engaged in the transformation of logistics services through the utilization of digital business infrastructure to increase efficiency of business operations and improve productivity through DX. Digital business infrastructure is a digital platform for realizing logistics DX, and aggregates and standardizes a variety of digital data obtained day to day in the warehousing domain in the Group. We achieved our 2024 target number of internal improvements utilizing this digital business platform ahead of schedule in FY 2022. Going forward, we will actively recommend the knowledge accumulated by the LOGISTEED Group to our customers and contribute to the further development of the logistics industry.

The Group is actively engaged in not only the promotion of labor-saving in logistics centers, but also in improving efficiency and standardizing warehouse operations through DX to resolve social issues such as logistics delays/stagnation and rising logistics costs caused by labor shortages.

In the LOGISTEED Group, we are working to optimize the key resources of "equipment" and "people" in warehouse operations through RCS, aiming to enhance the overall throughput of the warehouse.

RCS deploys solutions for both equipment management (RCS-Automation) and people management (RCS-Workforce), and we are also looking at the possibility of linking these two solutions in the future.

Automation and labor-saving measures are inevitable if we are to be prepared for future labor shortages. In addition, it is anticipated that various equipment and robots will be introduced in logistics sites in the future, and there will be a need for task coordination between multiple equipment and robots. RCS-Automation supports the improvement of overall worksite throughput by controlling multiple equipment without relying on manufacturers, based on such needs. Even in controlling individual equipment, it is possible to add functions that are not available in the manufacturer's system using the control system developed by LOGISTEED independently, without relying on the manufacturer's control system, and to deploy our control know-how.

We digitalize tasks that were previously dependent on individual workers, which helps eliminate reliance on specific individuals and promotes paperless operations, thus reducing administrative management burdens. Moreover, efforts to standardize worksite operations will enable business processes to be put in place, and it will become possible to compare and verify productivity per cargo owner. Additionally, based on visualized operational status, we can pre-allocate workers to their work areas, adjust allocations on the day, and make placement adjustments according to cut times.

We are also considering developing and deploying a function (RCS-Simulation) that uses physical spatial data, such as warehouse operation plans and performance data obtained from the two solutions, RCS-Automation and RCS-Workforce, to create a virtual warehouse space and conduct resource optimization simulations.

Implementing RCS in the household goods logistics center (Osaka) opened in FY2022 has enabled us to perform integrated control of automated facilities reflecting the Company's proprietary warehouse operation knowhow, and we have achieved efficient automation and labor-saving in work processes from the receipt of products in single and case packing modes to sorting by destination. We plan to introduce a similar system at our sporting goods logistics center (Tochigi Prefecture) in FY2023 and at our cosmetics logistics center (Fukuoka Prefecture) in FY2024, promoting automation and labor-saving measures. Furthermore, the implementation of RCS has enabled swift processing of warehouse operations such as personnel assignment planning, shift planning and work process planning in warehouses that had previously relied on the knowledge of managers. The implementation of the DX solution called RCS has resulted in real-time budget and results management of facilities and personnel and the improvement of efficiency and standardization of resource control.

We are working to standardize Warehouse Management System (WMS) to expand value we provide to our customers. We used to customize WMS by business type or customer. Now, in order to expedite and sophisticate our proposals on and provision of services to customers, we have reconstructed "ONEsLOGI, a new WMS-PF (standardized warehouse management system)" equipped with the Group's expertise on the warehouse domain as well as those acquired through the 3PL business over the years and all logistics-related functions as a standard solution. In FY2024, we improved the conformance rate even further from the previous fiscal year.

The LOGISTEED Group believes that "intellectual property" is the source of its business competitiveness, and aims to achieve sustainable corporate growth and maintain competitiveness through its management and protection. We believe that the introduction and advancement of innovative technology are essential to fulfilling our role as a socioeconomic infrastructure in logistics, and we continue to take on new technological challenges with a proactive attitude that goes beyond the status quo. In our strength in the 3PL business, we combine on-site operations with software to achieve digitization, visualization, and optimization, and we have applied for business-related patents to highlight our achievements. By promoting individual data-driven decision-making and efficiency improvements while improving overall management and internal control performance, we will advance the "Step up DX," one of the Group's material issues. Last fiscal year, we created numerous inventions and filed patent applications in the areas of packaging design, which addressed new market needs, and in VC activities (improvement activities) in our 3PL business and warehouse operations. As a result, the proportion for the digital transformation area was 63%, a decrease from 68% in FY2023; however, the intellectual creation activities and compilation of results through patent applications are evidence that these have penetrated the entire Group, involving on-site operations, and demonstrate that these are activities that develop personnel who continue to tackle challenges and cultivate a spirit of innovation. Through intellectual creation via the securing of patent rights, the LOGISTEED Group will contribute to society by solving customer issues and creating further value, and by providing advanced, high-quality logistics services.

In addition to enhancing DX training to secure DX personnel to handle the creation of new businesses utilizing IT and DX, we are developing data scientists for discovering and resolving customers' supply chain issues based on data.

"Recovice" developed to respond to consumption styles changing from ownership to use and experience is a service supporting subscription services of e-commerce operators through individual item management using RFID* tags and a cloud-based system.

As the fashion industry faces environmental issues such as mass consumption and disposal of apparel, this "Recovice" not only contributes to the realization of cyclical logistics supporting sharing, subscription and rental services, but also leads to "extension of product life" and circular economy through appropriate cargo handling.

We are seeking effective ways to use big data obtained from SSCV services and its new value in order to realize "smart and safe logistics." In collaboration with our collaborative partners, Sompo Japan Insurance Inc. and Sompo Risk Management Inc., we provide a service that analyzes near-misses (hazardous events) detected by the "SSCV-Safety" AI dashcam and delivers targeted, optimal safe driving training content.