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Ukraine war

Nippon Yusen plans to end Russia automotive land freight business

Transportation demand has plunged due to fall in car production amid sanctions

Nippon Yusen is considering plans to withdraw its land freight business from Russia as sanctions have made it hard to operate in the country.

TOKYO -- Japanese shipper Nippon Yusen, better known as NYK Line, is considering plans to withdraw its automobile land freight business from Russia, Nikkei has learned.

NYK Line is considering withdrawing from the market, within a few months at the earliest, and will coordinate with local affiliates if it does go through with the process.

The company has found it difficult to continue its operations, after Russia's invasion of Ukraine led to international sanctions and boycotts, causing a fall in demand for such delivery services.

Other Japanese businesses could follow NYK Line's lead if it does go ahead with the withdrawal, which will be in line with moves by Western companies.

The company is continuing to move a small amount of goods within Russia. However, its business has been hit after automobile production in Russia ground to a halt and sanctions on banks made it hard to transfer cash.

NYK Line operates its automobile land freight business in Russia through its subsidiary, NYK Auto Logistics (Rus). The unit used to be a logistics company under Russia's largest car dealer Rolf, until NYK Line invested 51% in 2012 and acquired full ownership in 2020. Since then, the subsidiary has been in charge of operations such as transporting new vehicles within Russia using trailers and by rail, and handling cargo.

NYK Line transported approximately 180,000 vehicles in Russia in the fiscal year ended in March, equivalent to 10% of new vehicle sales in the nation. Now, as it prepares to pull back from the region, it will consider selling its subsidiary to local companies.

The withdrawal is expected to have little impact on Japanese car manufacturers' operations, as they have suspended operations since the start of the war.

Currently, business in Russia makes up around 15% of NYK Line's entire automobile land freight operation. The company also plans to halt new investments in Russia, including in other businesses like shipping.

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