AIT CORPORATION

Business Details

Domestic segment operated by AIT Corporation and its domestic subsidiaries. As an independent NVOCC not affiliated with any particular carrier group, it provides ocean container transport (FCL/LCL) for import cargo primarily from China and Southeast Asia, import/export customs clearance, inland transport, and 3PL services to a broad range of shippers. Apparel and general merchandise are the main handled commodities, and the segment leverages the online forwarding and customs clearance service "Cargo Information Service" as a pillar of competitive advantage.

Recent Overview

Despite lower handling volumes, higher freight rates, a weaker yen, and improved margins drove increases in both revenue and profit.

In Q1 of FY2027 (ending March 2027), the shift in the timing of the Lunar New Year holiday (from late January-early February in the prior year to mid-to-late February this year) caused a temporary decline in handling volume in March, resulting in total import/export container volume of 62,397 TEU (down 2.8% year on year) and customs clearance orders of 38,459 cases (down 2.5% year on year). On the other hand, higher ocean freight rate levels due to fuel surcharge increases, higher domestic inland transport costs, and a weaker yen environment were positive factors. Operating revenue rose to ¥12,797 million (up 3.0% year on year), and segment profit, boosted further by improved gross margin, rose to ¥871 million (up 4.0% year on year), achieving both revenue and profit growth.

Key Products

Growth Drivers

• Improvement in gross margin driven by higher ocean freight rate levels, including fuel surcharge increases, and progress in price pass-through
• Continued firm cargo movement in apparel-related merchandise supporting import container handling volume
• Ongoing positive impact on revenue from the weak yen environment
• New customer acquisition and deeper engagement with existing customers through functional enhancements to Cargo Information Service
• Expansion of cargo handling to/from ASEAN (Vietnam, Myanmar, Cambodia, etc.) amid the China Plus One trend
• Improved group productivity through reduced administrative workload and enhanced processing capacity using generative AI

Risks

• Ocean freight rate volatility risk: a sharp decline in freight rate levels directly impacts gross margin, and profit is squeezed in a competitive environment where price pass-through is difficult
• Risk of temporary fluctuations in handling volume due to seasonal and calendar factors such as the Lunar New Year: shifts in holiday timing affect quarterly performance
• Foreign exchange risk: a weaker yen increases costs for importers and dampens cargo movement, while a sharp reversal to yen appreciation could drastically change the business environment
• Rising labor cost risk: continued increases in personnel costs due to base pay increases and salary raises put upward pressure on SG&A expenses
• Risk of rising logistics costs and labor shortages: stricter labor regulations and the "2024 problem" may lead to transport capacity shortages and rising logistics costs, potentially squeezing profitability
• US trade policy and geopolitical risk: fluctuations in US tariff policy and geopolitical risks such as Middle East tensions could affect ocean freight rates and cargo movement
• Intensifying competition risk: while being an independent NVOCC not affiliated with a particular group is a strength, price and service competition among forwarders is intensifying