The pandemic has split the Japanese transport industry in two in terms of earnings, reflecting drastic shifts in consumer spending habits.
Major marine transportation companies sharply boosted earnings in fiscal 2020, which ended in March, thanks to active expenditure on goods.
“None of our three-month forecasts came true,” said Toru Maruyama, executive officer at Nippon Yusen K.K., which logged a record group net profit of ¥139.2 billion. Brisk demand for container shipping services prompted the company to raise its earnings projections repeatedly throughout the year.
Freight movements slowed in the early stage of the pandemic but later increased sharply on rebounds in consumption in the United States and Europe, causing container shortages. Steep rises in freight transportation charges helped major shipping companies post robust earnings.
With stay-at-home demand for online commerce spreading to older people, major door-to-door parcel delivery service companies also chalked up strong earnings. In fiscal 2020, Yamato Transport Co. handled 2.1 billion parcels, an all-time high, while SG Holdings Co., parent of Sagawa Express Co., posted a record consolidated net profit of ¥74.3 billion.
In contrast, East Japan Railway Co. incurred a huge group net loss of ¥577.9 billion, reflecting a plunge in passenger numbers. Announcing the result at a news conference in April, Ryoji Akaishi, then managing director of JR East, said, “The foundations (of the business) have collapsed.”
The leading 15 private railway operators registered group ordinary losses totaling ¥314.5 billion, according to the Japan Private Railway Association.
Railway companies were hit hard by falls in the number of commuter pass users due to the widespread practice of working from home. Weaker travel demand hit hard as well.
Air carriers fell deep into the red because of plunges in the number of passengers, although the transportation of air cargo increased.
Amid the prolonged pandemic, transportation companies are wondering how much longer the current business environment will continue.
Although major maritime shipping companies expect the transportation of goods to the United States and Europe to remain brisk, they are bracing for a possible downturn in demand. “If more people are vaccinated, consumption will return from goods to services,” said Yutaka Hinooka, managing executive officer at Mitsui O.S.K. Lines Ltd..
Freight transportation charges are expected to normalize because of a rebalancing of supply and demand after this summer, Hinooka said.
Katsuhiro Kawanago, director at SG Holdings, said, “The ‘new normal’ in lifestyles will not go into reverse.” But with the unclear business environment expected to continue, the number of parcels processed by home delivery service companies is unlikely to post a marked increase from the fiscal 2020 level, he said.
Aviation companies are hoping for a pickup in travel demand following further progress in vaccinations. Yuji Akasaka, president of Japan Airlines, said JAL’s earnings will “depend on when the effects of vaccinations are seen.”
ANA Holdings Inc., parent of All Nippon Airways, expects its earnings from domestic operations to rebound in or after the July-September quarter of this year.
JAL and ANA will step up operational restructuring, including the promotion of nonaviation services, to become more resistant to falls in demand for flight services.
Faced with the unprecedented evaporation of travel demand, JR East is building a “wider earnings structure,” Akaishi said, referring to the joint establishment of a real estate investment management company with Mizuho Financial Group Inc.
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