Freight rate hikes spur shipping company profits


According to executive chairman Datuk Yong Piaw Soon, the global industry enjoyed a boom in 1Q21, with container freight rate indexes topping US$5,000 (RM21,955) per 40-foot container in February 2021, after climbing steeply and steadily from May 2020.

KUCHING: The strong recovery in freight rates for container and dry bulk shipping from years of been in the doldrums has given a big boost to the bottom lines of Sarawak-based shipping companies. Harbour-Link Group Bhd and Shin Yang Shipping Corp Bhd (Syscorp), key beneficiaries of the current robust ocean freight rates, have reported better utilisation of their shipping spaces and increased cargo volume.

Hubline Bhd, which ceased containerised shipping in 2015 after incurring massive losses due to overcapacity and depressed freight rates, similarly posted stronger earnings from its dry bulk shipping business.

In the nine-month period to March 31, 2022 (9M22), Harbour-Link saw its pre-tax profit of its shipping and marine segment cross the RM100mil mark to RM100.4mil as revenue grew 35% to RM373.6mil.

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

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

The group, which operates a fleet of 12 container vessels with a capacity of 6,200 TEUs or twenty-foot equivalent unit, services Malaysia and the intra-Asia market.

According to executive chairman Datuk Yong Piaw Soon, the global industry enjoyed a boom in 1Q21, with container freight rate indexes topping US$5,000 (RM21,955) per 40-foot container in February 2021, after climbing steeply and steadily from May 2020.

“We shall see the freight rates for both domestic and intra-Asia trade remain 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, mainly sawn timber and round logs. It deploys four sets of tugboats and barges to service the Asean region.

Yong said container line service will remain as the key revenue contributor to the group, which posted a net profit of RM81.2mil on revenue of RM576.4mil in 9M22. This was a marked improvement from the net profit of RM35.5mil on a revenue of RM437.5mil posted in 9M21.

Meanwhile, Miri-based Syscorp’s net profit soared to nearly RM30mil in the 3Q22 against RM4mil in 3Q21.

Its shipping segment posted a sharply higher pre-tax profit of RM25.3mil in 3Q 2022 as revenue shot up by about a quarter.

Syscorp said the increased freight rates and cargo shipment volume from both the container and bulk carrier sectors had boosted the performance.

The group operates 14 container vessels to serve routes between Peninsular Malaysia, Sarawak and Sabah. It beefed up the carrying capacity with the acquisition of an additional 1,200 TEU container ship in the last financial year.

Besides this, the group is also involved in dry bulk shipping within Malaysia and across the Asean region, and operates chemical tankers for the shipment of crude palm oil for East Asia.

Going forward, Syscorp expressed confidence in the stability of the 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 drove its dry bulk shipping business revenue higher by RM6.8mil to RM30mil in the quarter ended March 31, 2022 from a year ago.

This was despite a reduced number of shipments, due to the ban of coal exports by Indonesia in January 2022.

Hubline said it recorded a nearly 50% increase in freight rates last September from a year ago due to the shortage of vessels to transport cargo in South-East Asia. The company is involved in the transportation of thermal coal, gypsum, ore, dolomite, palm kernel shells and aggregates in Asean countries.

It said freight rates are expected to remain elevated, while shipment orders continue to be promising.

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