Malaysian domestic lines weather impact of lifting of cabotage
The strongest remnants of Malaysia’s domestic shipping sector seem to have taken the impact of the relaxation of cabotage rules in June in their stride and have seen good performances from their container shipping operations.
Shin Yang Shipping Corporation (Syscorp), part of the diversified Miri-based conglomerate Shin Yang Group, saw revenue from its shipping business decline 16% to MYR121.2m ($30.9m) in the fourth quarter mainly due to the lower volume carried from its UAE operations in the Middle East.
The other Sarawak-based line Harbour-Link Group meanwhile saw revenue from the shipping and marine segment grow by almost half to MYR113.4m in the final quarter of 2017, driven by a higher volume of cargo handled.
It would appear that these were done on not as lucrative margins as Syscorp however, as segmental profit rose by a slower 54% to MYR4.3m. In contrast, Syscorp’s segmental profit jumped more than 2.5 times to MYR17.1m in the same quarter.
Syscorp attributed the increase in profit before tax in shipping segment mainly due to the improvement of shipping profit margin in container shipping and international shipping operations segments.
In September last year, Northport, Shin Yang Shipping and Harbour-Link Group tied up to establish a strategic alliance called The East Malaysia Network or TEAM Network in response to the easing of restrictions on domestic shipping in Malaysian waters.
The agreement was aimed at achieving economies of scale through the sharing of resources such as vessels, terminals arrangements and networks and the operators seem to be bearing some of the fruits of that cooperation.