TAKAYA Soga breaks the stereotype of top leaders in large Japanese corporations.

The president and chief executive of NYK Line since April last year maintains the Japanese people’s unique politeness and humility. But he confidently communicates in English, likely owing to his years of working in the West. He does not shy away from tough questions and also has a good sense of humour.

However, like most top decision-makers in shipping and logistics companies today, he feels his energy is being consumed by dealing with a constant stream of emergencies, with the rest spent puzzling out an increasingly elusive future.

In an elegant, tidy meeting room at the company’s head office in central Tokyo, Soga tells Lloyd’s List that over the past year at the helm, he has felt as if he was in one of the “batting centres” commonly seen in Japan, swinging tirelessly to hit the baseballs spat out by the pitching machine.

“So many fast balls are coming,” he says. “Shohei Ohtani can hit them, but I can’t.”

Ohtani is a Japanese professional baseball player for the Los Angeles Dodgers known for being a talented “two-way player” that can play both as a pitcher and hitter. He was named the American League’s most valuable player in 2021.

But Soga is not really stealing time to practice baseball, as the “balls” are a metaphor for a string of surprising events that have had a significant impact on shipping and logistics — from the Panama Canal drought to the Red Sea crisis.

“So everyday once something happens, I try to resolve it and then the day continues,” he says, half-joking that this leaves him little time to think about grand strategies for the company.

Just months after Soga was promoted from chief financial officer to the top seat, the NYK-chartered car carrier Galaxy Leader (IMO: 9237307)became the first merchant ship to be hijacked by the Houthis in Yemen last November.

The ship remains stranded off Al Salif in the Red Sea, an area controlled by the Yemeni militia group, according to vessel-tracking data.

Soga says he worries about the lives and health of the 26 seafarers from various countries on board, although efforts to free them continue.

After the Galaxy Leader incident, NYK’s ships began to stop venturing into the Red Sea and instead joined the ranks of the fleet rerouting via the Cape of Good Hope. “I can never allow any ships to go into that area.”

For now, trade dislocations and rerouting are broadly beneficial for merchant shipping, with lengthened distances soaking up available capacity and buoying rates. This is most visible in containers.

But in the still severely under-tonnaged car carrier sector, for example, reduced effective fleet supply could dent NYK’s earnings potential, Soga says. He says Asia-Europe round voyages have lengthened from around 70 days to 110 days due to the Africa detours. Although customers bear much of the extra costs, rates have not surged as in box shipping due to contractual differences.

Before the Red Sea crisis, NYK also shed most Russia-related operations, except LNG shipping from Sakhalin to Japan, which has government approval.

He acknowledges the Ukraine and Red Sea events were unexpected and impactful. Meanwhile, the Taiwan Strait is tagged as the next potential flashpoint, possibly triggering even more profound convulsions.

But Soga does not see geopolitics as shipping’s biggest challenge over the next 10 years, even as more “black swans” and “grey rhinos” (highly likely yet ignored threats) enter discussions from boardrooms to industry forums amid increasingly turbulent global conditions.

Shipping has a long history of navigating such events, he notes. “So we have the experience and knowledge [to handle the situation] and continue our business.”

Soga has been with NYK for 40 years and the company itself is nearing 140 years old, having lived through two world wars. So this perspective is understandable.

However, today’s geopolitical rifts reflect something bigger, which Soga also admitted in his New Year’s message to all NYK staff in January.

Sogo warned of “increasingly confusing global trends” beyond just the “heightened geopolitical risk” shown in the Ukraine war and Middle East tensions.

“Divisions are occurring everywhere worldwide, and the international order established since the end of the Cold War is no longer sustainable,” he said.

And the challenge for NYK is that an increasingly polarised world could risk derailing the global decarbonisation agenda, around which the Japanese giant has built a big part of its growth strategy.

The longer detours have increased ships’ carbon emissions already. From a more macro view, globalisation’s retreat amid great power competition means the world is replacing a system pursuit of integrated, efficient trade and supply chains with a more fragmented, complex and expensive one chanting national security. This runs counter to the global co-operation and resource allocation needed to achieve decarbonisation.

And it seems unrealistic to expect the world’s top two emitters, China and the US, to vigorously confront each other in the political and economic arenas, while happily dancing together on climate co-operation.

Nevertheless, NYK, and some like-minded firms, are determined to become frontrunners on the road to a green transition, beginning to tilt their strategic focus and resources in that direction.

In its latest medium-term management plan issued in March 2023, NYK proposed to invest nearly ￥1.2trn ($7.7bn) by 2026 to ensure future stable shareholder returns. This is equivalent to about 70% of the company’s total revenue in the fiscal year before the pandemic.

More than half of that amount, ￥590bn, is earmarked to develop new markets, businesses, technologies and services. Of the 13 items listed in these areas, at least 10 are directly related to decarbonisation, including renewable energy transport, hydrogen and ammonia value chains, and carbon-neutral shipping.

NYK sees good potential for ammonia as a clean fuel because of its scalable production globally. There are already plants producing the chemical compound around the world. They just lack carbon-stripping units and renewable electricity to turn its colour from grey to blue or green, Soga says.

His company aims to be a “trigger” for shipping’s transition to green ammonia propulsion, even though he expects a widespread uptake of it as a maritime fuel will take about 10 years to materialise.

Meanwhile, as a full supply chain logistics provider moving everything from raw materials to finished products, NYK is also targeting new demand patterns created by the energy transition.

Soga cites a recent example of a Japanese power company wanting to reduce coal usage and increase ammonia feeds, which NYK will transport. Additionally, carbon dioxide captured after electricity generation will be shipped by NYK to the next carbon capture and storage area.

“And if that ammonia or electricity produces hydrogen then we will also carry that hydrogen to the next place. So, new energy can create a new supply chain for us and that, in my view, is the next opportunity for us to achieve our growth.”

But amid all the uncertainties, is NYK betting too much on decarbonisation?

Yes and no

There are no doubt risks, Soga admits.

Whether the International Maritime Organization can deliver a universal carbon pricing mechanism to spur the switch to clean fuels is an oft-debated issue.

And from a broader view, even without the West-China competition inviting trouble, the US itself could set back global climate mitigation efforts.

Donald Trump, a leading contender to be the next US president, has already called for repealing the Inflation Reduction Act, a signature Biden climate policy.

Ultimately, costs could be the decisive factor determining the pace of decarbonisation. New fuels are undoubtedly far pricier than their fossil predecessors and require huge investments. A divided world that shifts focus from efficiency to security will not make it any cheaper.

“All those costs related to decarbonisation are huge in amount if we sum them up. Whether society can pay that is my question,” says Soga. “That’s why it’s a big challenge not only for shipping.”

However, with growing scientific evidence of fossil fuels’ contribution to climate change, decarbonisation is an irreversible trend for humanity, Soga believes.

Short-term frustrations, such as US climate policy backsliding could always happen, but they won’t change the big picture over the next 20 or even 30 years, he says.

For Soga and the like-mined business leaders, this is perhaps one of few compasses available as the world sails into the present uncharted waters.

And NYK should have the agility and flexibility to weather storms, with its commitment to keep investing in existing businesses and the various other sectors it is involved in or seeking to enter, ranging from developing autonomous ships to launching satellites and space ships on the sea.

The company’s mission is bringing value to life, “so everything in our business must be related to people’s happiness,” says Soga.

Of course, having a nice slogan does not mean the company can ignore commercial realities. But it at least provides NYK a greater purpose to strive toward creating a better world, and decarbonisation is clearly one important piece of that puzzle.