Carving out the container business into Ocean Network Express (2016)

The business that only earned once it left the accounts

The same business ran losses for three straight years while it was inside the consolidated accounts, and earned ¥634.0 billion after being put outside. It is hard to think the carve-out was a judgement that anticipated the surge in freight rates. What was visible in 2016, when President Ikeda Junichiro drew the line by saying he was not considering extending business integration to other segments, was only a share of two to three per cent, the collapse of Hanjin Shipping, and a run of divisional losses. The 31% ratio can be seen as the price paid in ceded leadership in order to obtain scale.

Yet by putting it outside, the company lost the ability to move its largest source of profit itself. Employees in the container business fell from 3,653 to 52, and decisions on freight rates and dividends sit with ONE. The profit shrank to ¥51.5 billion in the year to March 2024 and ¥26.7 billion in the year to March 2026, remaining as a single line that swings widely with the market. Even granting that folding a loss-making pillar was correct, the size of the fruit cannot be claimed entirely as the company’s own achievement either. The decision to let go was a decision to entrust both the losses and the gains to someone else’s judgement.