Harbour-Link Group Bhd is bullish about its containerised shipping business, which has been boosted by strong demand in cargo transportation and rising ocean freight rates in the region.
Group managing director Datuk Yong Piaw Soon (pic) says ocean freight rates for intra-Asia trade had doubled in the past 12 months and the space utilisation of Harbour-Link’s 12 container vessels had surged to the current 90%, which is higher than 70% to 75% recorded in pre-Covid-19 period.
“Our container line service in intra-Asia trade covers China, Japan, South Korea and Taiwan,” he tells StarBizWeek. The group has overseas operation offices in China, Hong Kong, South Korea, Singapore and Brunei.
Harbour-Link’s domestic container shipping services cover major ports in Peninsula Malaysia, Sarawak and Sabah where its operation offices are located in major towns.
The company has also benefitted from the increase in export-oriented cargo volume from the local manufacturing as well as oil and gas sectors following the easing of lockdown measures.
The double-effect of higher vessel utilisation and freight rates led to a 40% increase in group revenue of shipping and marine segment to RM117mil in the fourth quarter ended June 30, 2021 from RM83.4mil in the fourth quarter of 2020.
The segment made a major turnaround with an after-tax profit of RM32mil from a loss of RM9.35mil previously.
For the financial year 2021 (FY21), the segment recorded a 6% rise in group revenue to RM394.5mil versus FY20’s RM371.6mil. Its after-tax profit soared to about RM62mil from a net loss of RM1.26mil previously.
In FY21, Bintulu-based Harbour-Link posted a group revenue of RM626.2mil, with net profit coming in at RM61.5mil as opposed to RM25.9mil a year ago.
Yong expects the current strong demand for cargo transportation and favourable ocean freight rates to be sustained until Chinese New Year or the first quarter of 2022.
In the long term, he says there is still a lot of uncertainties on the global front due to the adverse impact of Covid-19 pandemic.
On reports of acute shortage of containers globally, he says this has not affected Harbour-Link as it has enough containers to work on.
Harbour-Link container liner service maintains a total fleet tonnage of 5,200 TEUs (20-ft equivalent units), which according to him is ideal to cater for existing market demand along with satisfactory utilisation rates.
The fleet is well-managed by the group’s in-house ship management team, with minimal breakdowns that resulted in the reduction in slot cost.
The group’s tugs and barges are plying countries that include Malaysia, Vietnam and the Philippines.
Yong says the domestic shipping freight rates had also improved and are “quite steady” now, as there is a balance in demand and supply of container vessels.
“There is no overcapacity (of shipping space) as some local shipping companies charter their ships to foreign firms and these ships operate in other countries.
“So, this has reduced the number of domestic vessels in operation. For domestic container shipping trade, we now have four or five local players,” he adds.
Local shipping companies have complained about overcapacity in the industry for years and this has resulted in depressed freight rates.
Due to the liberalisation of the cabotage policy, foreign-owned container liners are allowed to operate within Malaysia and local shipping companies have to face competition from these foreign liners like Taiwan’s Evergreen Line, which is serving Bintulu Port, he says.
“It is very competitive. We depend on customer relationship (to secure business).”
According to media reports, non-Malaysian ships were allowed in 2017 to engage in the transport of cargo services between Peninsular Malaysia and Sarawak and Sabah following the relaxation of the cabotage policy.
Yong says sea cargo volume between the peninsula and Sabah and Sarawak is growing at about 5% a year.
He expects domestic freight rates to be on an uptrend because of the rising bunker fuel price, as shipping companies need to make adjustment to offset the fuel price increase.
Bunker fuel prices have crept up in line with the surge in crude oil prices, which has hit US$80 (RM334.56) per barrel as it rose to seven-year high.
Besides container shipping, Harbour-Link operates a fleet of transport vehicles, including prime movers, cargo lorries and trucks, dump trucks and refrigerated containers for carriage of different types of goods.
The group operates as a third-party logisics provider and offers largely customised supply chain solutions to oil and gas, wood-based and manufacturing industries.
It is also into engineering work, with expertise in the construction of petroleum storage tanks, marine terminals and piping works as well as in property development.