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

Business Details

Operated by consolidated subsidiaries (Shanghai AIT International Logistics Co., Ltd. and Nissin International Logistics (Shanghai) Co., Ltd.) with bases in Shanghai, Dalian, Tianjin, Qingdao, Suzhou, Ningbo, Xiamen, Shenzhen, and other locations. This segment handles the China-side operations for import cargo bound for Japan, providing a wide range of ancillary services including ocean container transport arrangement, customs clearance, inspection/needle detection, distribution processing, and bonded warehouse utilization. The segment also collaborates with equity-method affiliates to secure revenue related to domestic transport within China.

Recent Overview

Revenue declined, but profit rose 31.2% year on year due to improved margins

In Q1 of FY2027 (ending March 2027) (March-May 2026), while cargo bound for Japan was handled stably, operating revenue declined to ¥1,740 million (down 6.7% year on year) due to the impact of yuan appreciation against the US dollar and other foreign exchange fluctuations, combined with a decline in orders for inspection and other services. On the other hand, improvement in gross margin and cost containment efforts were effective, and segment profit increased significantly to ¥196 million (up 31.2% year on year).

Key Products

Growth Drivers

• Securing revenue related to domestic transport within China through stable handling of import cargo bound for Japan
• Expansion of third-country transport via ASEAN routes originating in China, against the backdrop of the China Plus One trend
• Focus on expanding transactions in overseas-to-overseas transport, such as between China/Taiwan and Southeast Asia
• Expansion and functional enhancement of business utilizing overseas bonded areas (zones) to improve the convenience of bonded logistics
• Strengthening competitive advantage through digital service deployment of Cargo Information Service

Risks

• Risk of reduced yen-denominated revenue due to foreign exchange fluctuations, such as yuan appreciation against the US dollar
• Risk of changes in revenue structure due to declining orders for ancillary services such as inspection and needle detection
• Risk of declining gross margin due to ocean freight rate fluctuations
• Risk of decreased cargo handling volume due to a slowdown in the Chinese economy or contraction in Japan-China trade volume
• Risk of increased costs due to rising labor and logistics costs within China
• Geopolitical risk (US-China trade friction and trade policy fluctuations) affecting Japan-China trade
• Changes to the business foundation resulting from the reduced scope of consolidation following the liquidation of the Hong Kong subsidiary

Business Details

The "Others" segment is a business category outside the reportable segments, consisting of three local subsidiaries in Taiwan, Vietnam, and Myanmar. The segment mainly handles import cargo bound for Japan, while also developing third-country transport and inspection/needle detection services, playing a role in complementing the group's overall international transport network. The Taiwan subsidiary has seen steady third-country transport, while the Myanmar subsidiary has experienced sluggish domestic logistics orders, and the Vietnam subsidiary has been affected by organizational restructuring.

Recent Overview

Taiwan remained steady, but revenue declined significantly due to sluggish performance in Myanmar and organizational restructuring in Vietnam

In Q1 of FY2027 (ending March 2027) (March-May 2026), the Taiwan subsidiary secured stable revenue through increased handling of import cargo bound for Taiwan and steady orders for third-country transport. On the other hand, the Myanmar subsidiary was affected by sluggish domestic logistics orders within Myanmar, and the Vietnam subsidiary was affected by a decline in operating revenue due to organizational restructuring. As a result, segment-wide operating revenue was ¥395 million (down 12.3% year on year), and segment profit declined significantly to ¥38 million (down 47.5% year on year).

Key Products

Growth Drivers

• Opportunities for increased handling volume from ASEAN, Myanmar, and Vietnam amid the accelerating China Plus One trend
• Expansion of third-country transport orders at the Taiwan subsidiary (such as between China/Taiwan and Southeast Asia)
• Strengthening competitive advantage through digital service deployment of Cargo Information Service
• Stable securing of transport-related revenue and continued inspection/needle detection orders at the Myanmar subsidiary

Risks

• Impact on business continuity due to political and geopolitical risk in Myanmar (domestic logistics orders trending sluggish)
• Continued risk of declining operating revenue due to organizational restructuring at the Vietnam subsidiary
• Deterioration in profit margin due to increased costs (personnel expenses and business activity costs) (segment profit margin of 9.6% in the current first quarter, versus 16.0% in the same period of the prior year)
• Risk of decreased handling of import cargo from Japan at the Taiwan subsidiary
• Impact on yen-denominated amounts due to foreign exchange fluctuations (yen depreciation/appreciation)
• Risk of rising logistics costs due to regulatory changes and stricter labor regulations in each country