The most famous strategic response of NYK during these years was its substantial investment in passenger services. In 1926 it purchased the Pacific operations of the Toyo Kisen Kaisha, which ran mostly to San Francisco, and proceeded to build a series of world-class passenger ships. Decades later, long after NYK had withdrawn from the passenger business, the company's popular identity was still associated with these vessels. Despite their popularity, the passenger business did represent a specialized version of the already cautious liner strategy and NYK fell behind OSK in introducing express ships on the New York line in the late 1920’s. These ships were fast enough to effect a change in the silk trade, from the rail route via northern Pacific ports to the Panama route. NYK was slow to enter the tramp business also, remaining instead primarily within the conference systems. This presented two additional problems linked to the United States. One was U.S. antitrust law, which forbids exclusionary practices of cartels like the Far Eastern Freight Conference. The second was economic, and emerged through the restructuring of many shipping routes in response to changing demand from U.S. trade and industry. With its cautious strategy NYK had difficulty responding to these changes, and by the eve of World War II it was being seriously challenged by OSK for pre-eminence among Japanese shipping firms.

NYK earned huge profits during World War I, with government controls over freight rates on subsidized lines, the company exploited the war less effectively than many independent Japanese operators, who carried on tramp services outside of government restrictions. The war and its aftermath opened up new lines for the company, to New York via Panama, to Liverpool, and to Hamburg. The central problem of the interwar years was how to operate this more geographically extensive network with steady growth in the face of increased competition from Japanese firms and the emergence of a much larger U.S. fleet.

This was a conservative strategy that lasted until the late 1950s, when the company started a comprehensive series of services, a move which led to the fourth period, one of diversification and expansion, that continued into the new millennium.

(During World War II NYK lost virtually all of its large oceangoing vessels, and its fleet fell from a peak of 866,000 gross tons in 1941 to 155,000 at the end of the war).

In World War II the NYK Line provided military transport and hospital ships for the Imperial Japanese Army and Navy. Many vessels were sunk by the Allied navies, and installations and ports were attacked from the air. Only 37 NYK ships survived the war. The company lost 185 ships in support of military operations in the Pacific. Before the war NYK had 36 passenger ships; by the time of Japan's surrender only one, the motor ship Hikawa Maru, survived (then and now).

Hikawa Maru plan.