Swift Haulage eyes bigger market share

Speaking with StarBizWeek, chief executive officer Loo Yong Hui says Swift has started building the foundation for the last-mile delivery service.

BEING in a highly-fragmented industry, logistics player Swift Haulage Bhd has no choice but to increase its scale and operational efficiency to stay competitive in the market.

The group, which is backed by the Retirement Fund Inc (Kwap), calls itself a “dominant player” in the container haulage segment.

However, it only controls a 6.5% market share in Malaysia. This shows the intense market fragmentation, as many players are eyeing for a piece of the same pie.

To capture the booming demand for logistics solutions, Swift is in the midst of expanding its warehouse capacity, increasing its fleet of trucks including the smaller sized ones and building its land bank.

It also aims to expand regionally, going into Indo-China, aside from strengthening its existing footprint in Malaysia and Thailand.

Currently, Swift’s operating model remains on a business-to-business (B2B) basis, but the group hopes to directly reach the end-consumers within the next two years.

Speaking with StarBizWeek, chief executive officer Loo Yong Hui says Swift has started building the foundation for the last-mile delivery service.

In 2020, the group began acquiring smaller sized trucks with the capacities of one, three and five tonnes. Currently, it has over 50 of such trucks. Swift aims to double the size in the next one year.

“Our venture into last-mile delivery will be different from other players. We don’t want to do (last-mile delivery) for e-commerce platforms like Shopee and Lazada but we will do it for our current customers.

“For example, if our customer Unilever wants to eventually send goods to end-consumers, we can do it for them because we are already handling their goods for imports and regional distribution to smaller stores,” Loo says.

Loo’s father, Loo Hooi Keat, took over loss-making Yinson Haulage Sdn Bhd from Yinson Holdings Bhd back in 2011 through his vehicle, Persada Bina Sdn Bhd. A year later, the company was renamed to Swift.

Hooi Keat is an old hand in the transport and haulage game. He was also once a board member of Transmile Bhd and ran Konsortium Perkapalan Bhd and Diperdana Holdings Bhd.

Currently, Hooi Keat is a major shareholder, president and CEO of stationery maker Pelikan International Corp Bhd.

In the past decade, Swift has gained market share through a series of acquisitions.

Among others, it acquired Delta Express, DKSH Transport Agencies and Crossland Logistics (Thailand) for the freight forwarding business, Tanjong Express for the container haulage service as well as Hypercold Logistics and Platinum Coldchain for cold-room storage business.

Another notable acquisition is MISC Integrated Logistics Sdn Bhd, which provided Swift a Petronas vendor licence to bid for logistics jobs from the national oil company.

Swift, which is currently en route to a Main Market listing on Dec 21, owns 1,546 prime movers, 5,518 container trailers, 811 box or curtain-sider trailers, 53 trucks and 42 compressed natural gas tankers.

It also has 849,371 sq ft of warehouse space.

By end-2022, Loo says the warehouse space would expand further by about 40% to about 1.3 million sq ft.

“Our existing warehouse in Tebrau has been extended by an additional 200,000 sq ft. The extension is completed, pending the Certificate of Completion and Compliance (CCC). We plan to commence in the first quarter of 2022.

“In Penang, we are expanding the Seberang Prai warehouse by 100,000 sq ft, with the extension also completed pending the CCC. We plan to commence that in the second quarter of 2022.

“In Port Klang Free Zone (PKFZ), we are building a warehouse with a size of 178,000 sq ft. The construction has started and it is expected to commence operations in the third quarter,” he elaborates.

The PKFZ warehouse will be partly financed by the proceeds raised from the initial public offering (IPO).

About RM28.6mil from the total RM161.9mil raised will be used to pay for the construction of the new warehouse.

About RM41.6mil is allocated for the purchase of land, RM12mil for the purchase of 30 prime movers and RM69.7mil for the repayment of borrowings. The remaining RM10mil would cover the listing expenses.

The IPO entails a public issue of 157.1 million new ordinary shares and an offer for sale of up to 157 million existing shares, at a retail IPO price of RM1.03 per share.

Post-IPO, the substantial shareholders of Swift would be Persada Bina, Kwap and Bluefin Bidco Ltd, with their respective equity interests reduced to 35.9% (from 62%), 9.1% (from 13.6%) and 7.8% (from 12%).

Loo also says that Swift’s warehouse capacity would jump to 1.8 million sq ft by 2024, from 1.3 million sq ft. This would be achieved by pre-leasing part of a mega warehouse project in Shah Alam, undertaken by Global Vision Logistics Sdn Bhd in which Swift has a 25% stake.

The warehouse is set to be the largest logistics hub in South-East Asia.

“Global Vision is a property company, so it will be a landlord-tenant arrangement by leasing out the warehouse space.

“But with Swift being the only logistics shareholder, we want to provide container haulage, freight forwarding and land transport for all the customers there, and maybe build a container depot at the site,” says Loo.

Looking ahead, Loo expects Swift to record a topline growth of 10% and a bottom line growth of 20%.

“Next year, our warehouses are coming onboard in stages, so the full contribution will only be seen in 2023. The growth also depends on our future capital expenditure,” he says.

For the third quarter ended Sept 30, Swift posted a revenue of RM430.9mil and a pre-tax profit of RM47.8mil. About 77% of the total revenue is contributed by container haulage and land transportation.

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