Harbour-Link sees erratic global freight rates ahead
  • Home
  • News
  • Harbour-Link sees erratic global freight rates ahead

Harbour-Link sees erratic global freight rates ahead

By In News On December 19, 2022


KUCHING: Harbour-Link Group Bhd expects international container freight rates, which have weakened significantly from their peaks recorded last year, to be volatile going forward.

According to the Bintulu-based shipping and integrated logistics provider, its container freight rates within the Intra-Asia and China trade had encountered downward adjustments by 15% to 20% in the July-September 2022 quarter because of weakened cargo demand and keen competition from main liner operators.

China’s zero-Covid policy and the group vessels’ interim repair and maintenance, which affected its shipping schedules, had also contributed to lower transported cargo volume.

In 2023, Harbour-Link foresees its shipping and marine services business facing challenges due to global economic and geopolitical uncertainties with high interest rates, weak market demand and regulatory compliances.

Harbour-Link operates a fleet of 12 container vessels with a combined capacity of 6,100 20-ft equivalent units or TEUs to service the Malaysia and Intra-Asia markets.

The group also deploys three sets of tugboats and barges to ship timber products – round logs and sawn timber – within the Asean region.

It calls at ports in Vietnam, the Philippines and Thailand.

While Intra-Asia freight rates are weakening, their downtrends are apparently less steep as compared to shipping charges between the South-East Asia and Europe routes.

According to last month’s bi-monthly tropical timber report published by the International Tropical Timber Organisation, the price of a 40-ft container for delivery into Europe from South-East Asia has now fallen from the all-time high recorded at end-2021.

This is due to a big decline in global trade because of increasing economic uncertainty in Europe that has dampened demand, and higher interest rates in the United States.

The global shipping industry has seen its container freight rates starting to climb steeply since May 2020, with container freight rate indexes hitting US$5,000 (RM22,000) per 40-ft container in February 2021 during the boom phase.

The container shipping industry has enjoyed the occasional good year in the past but it never saw anything like 2021, according to AlixPartners 2022 Container Shipping Outlook March 2022 quoted by Harbour-Link in the company’s 2022 annual report.

Despite the big swing in international container shipping rates, Harbour-Link group managing director Datuk Yong Piaw Soon said domestic container shipping between Sarawak, Sabah and Peninsular Malaysia was still stable, with consistent cargo volume and favourable freight rates.

He has attributed the firm freight rates to support by both the export and domestic-oriented industries.

“Furthermore, the consumer cluster grew at a faster pace, supported by strong domestic spending activities.

“This was mainly supported by robust growth in private expenditure and further normalisation of economic activity, as well as improving labour market conditions,” he said.

Harbour-Link’s optimism on the outlook of the domestic shipping business is shared by Miri-based Shin Yang Shipping Corp Bhd (Syscorp), which operates a fleet of 14 container vessels, plying between ports within Malaysia and on the Sarawak-Singapore route.

“The group is confident of the stability of the domestic bulk carrier and container shipping operations, given the high lifting volume after the release of movement control order restrictions as Malaysia entered the transition to the endemic phase of Covid-19,” commented Syscorp on its prospects in the accompanying notes in it latest quarterly results.

The improvement in the utilisation rates of the shipping space for both the container and bulk carrier sectors, coupled with higher profit margins and shipment volumes, significantly boosted Syscorp’s shipping revenue to RM220mil in its first quarter of financial year 2023 (1Q23) by 50.1% to RM220mil (1Q22: RM146.6mil), with the segment’s pre-tax profit soaring to RM48.1mil from RM6.82mil.

To ensure that there is no shortage of shipping space, Syscorp plans to convert three tug-and-barges to transport containers for shorter routes.

The group has leased out two other container vessels to third parties to ply between Hong Kong and China.

The group’s bulk carriers transport timber products, quarry, aggregate, and equipment and machinery and other goods within Malaysia, Brunei, Singapore, Thailand and Indonesia on a regular basis.

Some of these carriers are on time charter, and the key charterers are from the oil and gas, timber downstream, palm oil and other resource-based industries.

Syscorp’s six double-decker vessels consistently ply routes and transport timber products to the Far East region, and for the returning trips ship general cargo to the Philippines and other Asean countries en route to the home region.

A third Sarawak-based shipping and aviation firm, Hubline Bhd, expects its dry bulk shipment business to remain encouraging for the new financial year, as shipment orders continue to be promising.

However, it expects downward pressure on shipping freight rates.

Hubline’s most commonly transported commodities are thermal coal, gypsum ore, dolomite, palm kernel and aggregates within the Asean region, including Indonesia, Cambodia, Vietnam and Thailand.

News Source: https://www.thestar.com.my/business/business-news/2022/12/19/harbour-link-sees-erratic-global-freight-rates-ahead


About the Author

admin