Why are shipping giants posting “stellar results” despite the crisis caused by the Strait of Hormuz closure? How they are profiting from longer routes, while some divisions sink

With restrictions on navigation through the Strait of Hormuz expected to persist, Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha raised their full-year earnings outlooks for the fiscal year ending March 2027. This has increased the weighting of long-distance transportation amid a mixed environment of rising demand for energy transportation and soaring fuel costs.

Diversions via the Cape of Good Hope have become established as an alternative route, increasing the number of days per voyage. This has led to a decline in vessel deployment efficiency and growing port congestion, but some observers say the increase in ton-miles has improved the overall earnings structure.

Market conditions for crude oil and petroleum products, particularly VLCCs, reached historically high levels, while higher freight rates for liner shipping, car carriers and chemical tankers supported earnings. CFO Banno Takushi (伴野拓司) said the company was benefiting from strong VLCC market conditions and increased demand for long-distance transportation.

Although lower earnings in the car carrier business remain a common challenge for all 3 companies, the establishment of alternative routes and expanding demand from the United States are boosting profits in their energy-related businesses. Specifically, all 3 companies have raised their full-year forecasts.

The full-year outlooks for the fiscal year ending March 2027 were announced on the assumption that the Strait of Hormuz blockade would continue. Nippon Yusen raised its ordinary profit forecast by ¥65 billion to ¥250 billion, an increase of ¥38.9 billion from the previous fiscal year. Mitsui O.S.K. Lines raised its forecast by ¥80 billion to ¥225 billion, while Kawasaki Kisen Kaisha raised its forecast by ¥35 billion to ¥135 billion.