Freight rate hikes boost shipping company profits

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KUCHING: The strong recovery in container and dry bulk freight rates after years of slump has significantly boosted the results of Sarawak-based shipping companies. Harbour-Link Group Bhd and Shin Yang Shipping Corp Bhd. (Syscorp), major beneficiaries of the current strong ocean freight rates, reported better utilization of their shipping space and increased freight volume.

Hubline Bhdwhich ceased container shipping in 2015 after suffering massive losses from overcapacity and depressed freight rates, also saw higher profits from its dry bulk shipping business.

In the nine-month period ending 31 March 2022 (9M22), Harbour-Link saw its pre-tax profit from its shipping and maritime segment cross the RM100 million mark to reach RM100.4 million, while revenue increased by 35% to RM373.6 million.

In the latest third quarter (3Q22), the segment’s pre-tax profit jumped to RM47.6 million on a 33% increase in revenue to RM124.8 million.

Harbour-Link attributed the segment’s strong performance to higher freight rates and better utilization of shipping space from its intra-Asian trade.

The group, which operates a fleet of 12 container ships with a capacity of 6,200 TEU or twenty-foot equivalent, serves Malaysia and the intra-Asian market.

According to Executive Chairman Datuk Yong Piaw Soon, the global industry witnessed a boom in 1Q21, with container freight rate indices exceeding US$5,000 (RM21,955) per 40ft container in February 2021, after climbing strongly and regularly from May 2020.

“We will see freight rates for domestic and intra-Asian trade remaining stable throughout the year (2022),” he said in the company’s 2021 annual report.

Harbour-Link is also actively involved in the transportation of timber products, primarily sawn timber and round logs. It deploys four sets of tugs and barges to serve the Asean region.

Yong said the container liner service will remain the biggest contributor to revenue for the group, which posted a net profit of RM81.2m on revenue of RM576.4m in 9M22. This is a marked improvement from net profit of RM35.5m on revenue of RM437.5m posted in 9M21.

Meanwhile, Miri-based Syscorp’s net profit soared to nearly RM30 million in 3Q22 from RM4 million in 3Q21.

Its shipping segment reported a significantly higher pre-tax profit of RM25.3 million in Q3 2022 as revenue rose by around a quarter.

Syscorp said increased freight rates and volume of freight shipments from the container and bulk carrier sectors boosted performance.

The group operates 14 container ships to service routes between Peninsular Malaysia, Sarawak and Sabah. It has bolstered shipping capacity with the acquisition of an additional 1,200 TEU container ship in the past fiscal year.

In addition, the group is also involved in dry bulk transportation in Malaysia and the Asean region, and operates chemical tankers to transport crude palm oil to East Asia.

Going forward, Syscorp expressed confidence in the stability of domestic, coastal and container shipping operations given high cargo volumes, following the easing of Covid-19 movement restrictions.

Hubline said the significant increase in freight rates pushed its dry bulk revenue up from RM6.8 million to RM30 million in the quarter ended March 31, 2022 compared to a year ago. year.

This despite a reduced number of shipments, due to Indonesia’s ban on coal exports in January 2022.

Hubline said it saw an almost 50% increase in freight rates last September compared to a year ago due to a shortage of vessels to transport cargo to Southeast Asia. The company is involved in the transport of thermal coal, gypsum, ore, dolomite, palm kernel shells and aggregates in Asean countries.

He said freight rates are expected to remain high, while shipping orders continue to show promise.

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