Syscorp expects cargo volume to pick up

Shin Yang's domestic container feeder vessel, MV Danum 112 at Northport wharf. - Filepic

KUCHING: Shin Yang Shipping Corp Bhd (Syscorp) expects cargo volume to be transported by its fleet of 16 container vessels to pick up going forward.

Chief operating officer Richard Ling said Syscorp anticipates cargo volume to increase due to higher demand for goods in view of the upcoming Hari Raya Adilfiri and Gawai Dayak festival celebrations in April and June respectively.

He said the overall cargo volume shipped by Syscorp had dropped in January and February because of the long festive season holidays.

Another Sarawak-based shipping firm Harbour-Link Group Bhd said based on recent shipping space bookings by customers, it foresees an increase in lifting cargo volumes from now onwards.

Harbour-Link’s Intra-Asia and East Malaysia container shipping trade had suffered low cargo volume and drastic drop of freight from the third week of December 2022 to mid-February because of the festive holidays.

“Domestic trade is stable with lesser freight corrections. Shipping agency business is active and consistent after the Covid-19 pandemic turned endemic,” added Harbour-Link as it released its October to December 2022 quarterly results recently.

“For domestic container shipping, the demand has been quite consistent,” Ling told StarBiz.

He said Syscorp had recently converted two vessels for container shipping, bringing the fleet to 16 container ships to ensure no disruption to services as one container vessel a month will be docked for maintenance.

Fourteen of the container vessels are deployed to service between ports in Peninsular Malaysia, Sarawak and Sabah while two others on the Sarawak-Singapore route on weekly service.

Last year, the group also converted three tugs-and-barges to transport containers for shorter routes to ensure there is no shortage of shipping spaces following the strong rebound of the shipping industry after the lifting of the movement control order to curb the spread of the Covid-19 pandemic.

Syscorp also leased two container ships to a Chinese company for cargo shipment between Hong Kong and mainland China.

In 2022, both Syscorp and Harbour-Link had benefited greatly from the upswing of the shipping industry, boosted by robust freight rates and higher utilisation of shipping spaces with increased cargo volume.

In the financial year ended June 30, 2022 (FY22), Syscorp group’s net profit soared to RM141.8mil (FY21: RM16.6mil) as revenue surged to RM897.7mil (FY21: RM610.9mil).

For 1H23, Syscorp sustained its solid earnings with group net profit surging to RM88.2mil (1H22: RM27mil) as revenue jumped to RM481.7mil (1H22: RM398.2mil).In 2Q23, Syscorp’s group net profit rose to RM37.9mil (2Q22: RM15.1mil) as revenue shot up to RM234.4mil (2Q22: RM217.1mil).

The company attributed the profit growth to increase of margins and shipment volume for both its container and bulk carriers sectors.

Harbour-Link also reported impressive earnings, with its group’s net profit doubling to RM85.7mil in 1H23 (1H22: RM40.4mil) as revenue expanded to RM536.3mil (1H22: RM373.3mil).

The shipping and marine segment is the key contributor to the group’s bottomline,with the segment’s after-tax profit rising to RM92.9mil (RM47.2mil) in line with a 39% increase in revenue to RM345.8mil (RM248.8mil).

In explanatory notes to its financials, Harbour-Link attributed the better performance to increase in ocean freight rates for Intra-Asia trade and better utilisation of shipping space from Intra-Asia trade.

In FY22, Harbour-Link posted remarkable earnings, with the group’s net profit leaping to RM140mil (FY21: RM60.6mil) as group sales surged to RM871.2mil (FY21: RM609mil).

Besides the core shipping business, Harbour-Link is also involved in integrated logistics, engineering and property development businesses.

According to Ling, domestic container shipping freight rates had increased by between 30% and 40% last year.

But going forward, he expects the rates to weaken in line with the drastic drop in international container shipping rates in recent months.

Based on media reports, ocean freight rates between Asia and the West have almost fallen back to pre-Covid pandemic level after the drastic increase by four-to-six fold due to acute shortage of containers and which peaked in September 2021.

On current freight rates for dry bulk carriers, he said these were not as strong as last year’s. Syscorp group also operates a chemical tanker for shipment of crude palm oil,and owns shipbuilding and repair yards in Miri and Bintulu.

Ling said shipping firms, like Syscorp, are faced with increasing operational costs due to the significant hike in crews’ wages, more costly spare parts and big increase in docking fees.

“Docking fees for vessels in Singapore have almost doubled before and after the movement contro order,” he added.

In addition, he said bunker fuel price has gone up following the increase in the price of Brent oil.

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