Shipping is the backbone of global logistics: the international shipping industry carries around 90% of world trade. Without vessels, trade and supply chains simply would not function.
But there is also something romantic about shipping, given its role in exploration and adventure throughout human history. The Age of Sail may be in the past, but deep down most of us experience a thrill when we see, a large, ocean-going vessel.
That is certainly the case at Santoku Senpaku, the leading Japanese shipping company that ORIX Corporation acquired in February 2024. Koji Tsutsui, an ORIX employee currently seconded to Santoku Senpaku as Executive Managing Director of Ship Business and Ship Management Group, says: “What stands out to me is how much everyone here truly loves ships.”
The same can be said of many people at ORIX, which like Santoku started in Osaka and has also been involved in the shipping business for more than 50 years. Through this business succession, Santoku Senpaku will become a core company in ORIX Group’s shipping business, with the goal of becoming a world-class leader in both ship ownership and management.
Santoku Senpaku builds a quiet success story
Founded in 1972, Santoku Senpaku today operates around 100 vessels, approximately 70 of which it owns (including ships on order) and 30 that it manages for other ship owners. It is a diversified fleet, spanning bulk carriers, container ships, car carriers, and coastal ships. Apart from operating its own vessels and managing ships for third parties, Santoku also offers ‘manning services’, providing crews through partnerships with specialist recruiters in the Philippines, Bangladesh, China and other Asian countries.
In fact, the company started with crew placements for domestic coastal vessels before expanding into ship management and ownership. Its credibility in the industry grew through transactions with major Japanese automakers, which led to expanded dealings with financial institutions and subsequently major trading companies and large-scale shipowners.
Even as he built Santoku into one of Japan’s leading shipping companies, founder Masashi Taga retained control of the privately-held family business. After his passing in April 2023, Junichi Taga took over as president and decided to accept ORIX’s business succession proposal.
Building a strong company and culture
That ambition is based on an assessment of Santoku’s unique strengths. “Owning and managing our own fleet in-house has been a key factor in our growth,” says President Junichi Taga. The fact that it operates its own vessels has built credibility and trust with other ship owners, with banks providing financing and with ultimate customers like car makers and trading houses. “Trust is extremely important in this industry,” Mr. Taga adds.
Santoku has also been careful not to expand too rapidly, so that it can maintain its high service quality. It has also played it safe by building a diversified fleet (see box) to avoid overexposure to a single market segment. And, indeed, it has built a diversified workforce: a quarter of its employees are non-Japanese, with many English speakers that can communicate with international charterers and overseas shipyards.
Management places a lot of emphasis on a positive workplace culture and creating a closely-knit community of employees, offering benefits such as housing and travel allowance on temporary returns. This sense of “camaraderie” as Mr Taga calls it, has led to a high retention rate and also allowed Santoku to attract workers from overseas and to turn some of its sailors into managers, offsetting a growing domestic skills and labor shortage, a challenge in the shipping industry.
Weathering storms
These strengths helped the firm to weather a series of challenges, from the shipping industry’s inherent cyclicality and its volatile pricing – vessel charter rates can drop from $30,000 per day to $10,000 per day in less than a month – to outright recessions. In the 2015 downturn, a major Korean container operator went bankrupt and suddenly returned chartered ships. Santoku only narrowly avoided having to sell these at steep discounts to secure funds.
What saved the company was its diversified portfolio, argues Mr. Taga: “While our approach may not lead to extraordinary profits in boom cycles, it also protects us from severe losses during downturns.”
The most recent challenge was the unexpected passing of founder Masashi Taga in April 2023. As his son-in-law and already working in the business, Junichi Taga was the logical successor and despite the shock, he managed to reassure customers and employees and engineer a smooth transition.
But he also realized that despite Santoku’s historic success – or rather because of it -- the company would have to make some changes. “After becoming president, my top priority was improving working conditions” he remembers. “We had expanded a lot and needed to revisit our salary structures, HR systems, corporate governance, and financial management.”
Finding the right partner
He came to understand, however, that to ensure a sustainable future for Santoku and its people would take external resources, and it was at this point that Mr. Tsutsui from ORIX approached the company with a business succession proposal.
In terms of management, the larger company had expertise in areas like business management, HR and corporate governance that Santoku lacked – and is indeed now modernizing these systems at its new partner, with eight ORIX representatives stationed across Santoku’s HR, accounting, finance, sales and ship management departments.
As for the business rationale, Mr. Taga says that “ORIX provides a strong financial foundation and access to diverse funding options, which contribute to our company’s further growth. Additionally, ORIX has a deep understanding of both the vessel ownership and ship management industries, making them the perfect fit for us.”
For ORIX, this business succession provided an opportunity to expand the ship-owning business it launched in 1980’s. “Vessel ownership is a core part of our business, and we want to position Santoku Senpaku at the center of ORIX Group’s marine transportation business. Additionally, in March 2025, we acquired 70% of the shares of Sojitz Shipping (now Somec Corporation). Together with 32 professionals who have joined the ORIX Group as new members, we are also considering further business development”, says ORIX’s Yoshitaka Ito, who is currently seconded as Executive Managing Director of the Planning & Administration Group at Santoku.
“Moving forward, we plan to utilize Santoku’s expertise in vessel ownership and ship management to strengthen our overall shipping operations”, he adds. “At the same time, we want to support Santoku in reinforcing its governance and corporate structure, while also preserving its company culture.”
That should not be difficult. Mr. Tsutsui believes the two companies share a similar philosophy, a strong work ethic and a proactive mindset.
Facing the future together
Together, they can face the future with confidence. The rise of e-commerce is increasing cargo volumes, as is the shift of freight from trucks onto ships and rail. The outlook for bulk shipping of commodities like grain and iron ore is also positive despite rising tariffs and geopolitical tensions – at least in the Asian region and for domestic coastal shipping. That adds up to a solid 4% compound annual growth rate for maritime freight volumes until the end of the decade.
Meanwhile, shippers have to learn how to handle next-generation fuels as the industry, which is responsible for around 3% of global CO2 emissions, attempts to decarbonize. Santoku already has some LNG and methanol dual-fuel vessels on order but cleaning up this hard-to-abate sector will be a long and expensive task.
That makes the backing of a financially strong partner like ORIX all the more important. The successful shipping companies of the future will be those that can invest in new technologies such as next-generation environmentally friendly ships early, recruit crews that can operate the new vessels and leverage the expertise gained in managing these vessels to turn themselves into asset managers that can efficiently recycle the capital tied up in their shipping portfolio.
Together, Santoku and ORIX have all of those skills.
