Japan Oil Transportation Co., Ltd.

If a large-scale natural disaster causes significant damage to railway- and road-related facilities or to customers' shipping and manufacturing equipment, providing the various transportation services that constitute the Group's core business may itself become difficult, potentially having a significant impact on business performance. In response, the Group has formulated a BCP, arranged for the deployment of disaster-prevention supplies, secured communication means for use during disasters, and designated backup offices, while also building a mutually substitutable transportation system between railway and motor vehicle transportation.

If extreme fluctuations occur in the supply or demand of petroleum products or high-pressure gas due to changes in domestic and overseas economic and political conditions, technological innovation, or the structure of energy demand, the transportation volume of major handled products may decline significantly, potentially having a significant impact on business performance. In response, the Group seeks to diversify its segments to avoid excessive dependence on any specific segment, and continuously works to expand and develop new businesses, including the Asset Management Business.

Overseas-bound chemical products transportation is highly susceptible to global economic and political conditions, and carries a higher risk of performance fluctuation compared with other businesses centered on domestic transportation. In addition, if agricultural products, a major item handled in the Container Leasing and Rental transportation business, suffer a significant poor harvest, it could have a major impact on that transportation business. In response, the Group seeks to stabilize earnings through segment diversification and the development of new businesses.

If the purchase unit price of diesel fuel used in motor vehicle transportation rises due to fluctuations in crude oil prices, cost of sales such as fuel and lubricant expenses may increase, potentially having a significant impact on business performance. In response, the Group strives to reduce fuel consumption through the introduction of fuel-efficient vehicles and research and consideration of EVs and FCVs, while also working to pass on increased procurement costs to freight rates through the application of fuel surcharges.

Fluctuations in exchange rates affect fuel oil prices and may have a significant impact on the performance of the overseas-bound Chemical Products and Container Transportation Business; in the case of excessive yen depreciation, the overseas procurement price of ISO tank containers would also rise. In response, the Group strives to reduce foreign exchange risk through hedging measures such as forward exchange contracts, but a sudden fluctuation could have a significant impact on operating results and financial condition.

If a serious accident occurs due to negligence on the part of the Group, such as an accident in motor vehicle transportation or inadequate inspection of transport containers, it could have a significant impact on business performance through the termination of transportation contracts or the revocation of permits and licenses by administrative authorities. In response, in addition to hardware measures such as establishing safety training facilities and introducing safe-driving support devices, the Group has established a safety system from a software perspective as well, including thorough re-education in basic work training and horizontal deployment of lessons learned from serious accident cases, and conducts regular voluntary inspections of transport containers in addition to statutory inspections.

Motor vehicle drivers, who make up the majority of employees, are subject to an aging workforce and a tendency to avoid low wages and long working hours; in addition, the application of the cap on overtime work in the motor freight transportation business increases the number of drivers that must be secured, raising concerns of a further driver shortage that could make it difficult to continue business operations. In response, the Group strives to secure drivers by improving the employment environment, including raising wages and reducing labor burdens through systemization.

The application of the cap on overtime work in the motor freight transportation business (the so-called "2024 Problem") may increase the number of drivers required to maintain the same transportation volume, potentially leading to higher personnel costs and constraints on transportation capacity. In response, the Group is promoting operational efficiency through systemization and strengthening recruitment through wage improvements, but if the driver shortage is not resolved, it could have a significant impact on business performance.

If a large number of employees become infected due to the outbreak of an infectious disease or similar event, resulting in a loss of human resources, business continuity may become difficult, potentially having a significant impact on business performance. In response, the Group has formulated a BCP and thoroughly implements infection prevention measures in accordance with government and other response policies, while also establishing a system that balances infection prevention with business continuity through the introduction of flextime systems and the use of telework.