TOKYO -- Shares of Japanese logistics companies jumped here Tuesday following the news that home delivery leader Yamato Transport will raise base shipping rates this year.
But investors are also shying away from online retailers, whose earnings may get hit hard by the changes.
Yamato Transport's parent, Yamato Holdings, climbed 4.1% to 2,540 yen at one point before closing at 2,452 yen. Investors reacted to the parcel delivery company's reported plan to raise rates on all clients, from individuals to volume customers like Amazon Japan.
Yamato Holdings shares have swung sharply since the end of January, and turnover has ballooned. The company downgraded its earnings outlook Jan. 30, sending the stock into a tailspin on the projection of group net profit declining 14% to 34 billion yen ($298 million) for the year ending March 31.
It then came to light that Yamato would seek higher shipping rates from large-lot clients during labor-management talks aimed at holding down package transport volumes. The shares have since trended higher, fueled by expectations of wider margins.
Such industry peers as Seino Holdings and Nippon Express are riding the wave. Fukuyama Transporting has gained momentum since Feb. 23, when Yamato's plans to limit parcel volume first surfaced. Between that day and Tuesday, the stock surged 7%.
"Speculation is growing that other companies will follow the lead of [domestic] leader Yamato Transport in raising rates," said Naoki Fujiwara of Shinkin Asset Management. Shares in Okayamaken Freight Transportation, which had already raised shipping rates, have shot up more than 20% since late last year on the second section of the Tokyo Stock Exchange.
The number of delivery boxes in Japan is expected to increase as logistics companies aim to maximize efficiency. Alpha, a maker of delivery boxes and lockers, was up 16% at one point Tuesday.
Package intake limits and rate hikes by couriers could hurt service at online retailers. "If the e-commerce user base shrinks, this could become a negative on internet retail companies' earnings," said Keiichi Yoneshima of Credit Suisse Group.
Some do not see the upswings by transport stocks as sustainable, given the uncertainty as to whether the companies can set shipping rates that offset rising labor costs. Yamato Transport handled 8.3% more packages on the year in the nine months ended December 2016 amid the rise in small packages. At the same time, unit prices fell 3.6%.
"Large-scale profit growth is difficult to foresee without re-examining the earnings structure through the lens of continuous rate increases and operational efficiency," said Yoshihiro Okumura of Chiba-Gin Asset Management. Further stock price gains are "hard to foresee at this stage," Okumura said.