Bullish Harbor-Link on Containerized Transport Operations
Group chief executive Datuk Yong Piaw Soon (pictured) said ocean freight rates for intra-Asia trade have doubled in the past 12 months and the space usage of the 12 container ships of Harbor-Link had reached the current 90%, which is over 70% to 75% recorded in the pre-Covid-19 period.
“Our container line service in intra-Asia trade covers China, Japan, South Korea and Taiwan,” he told StarBizWeek. The group has overseas offices in China, Hong Kong, South Korea, Singapore and Brunei.
Harbor-Link’s national container shipping services cover major ports in Peninsular Malaysia, Sarawak and Sabah, where its operating offices are located in major cities.
The company has also benefited from an increase in the volume of export-oriented freight from the local manufacturing as well as oil and gas sectors following the easing of lockdowns.
The dual effect of increased vessel utilization and freight rates resulted in a 40% increase in the group’s revenue from the shipping and shipping segment to RM 117 million in the fourth quarter ended June 30, 2021 compared to RM83.4 million in the fourth quarter of 2020.
The segment made a major turnaround with an after-tax profit of RM32 million compared to a loss of RM 9.35 million previously.
For fiscal year 2021 (FY21), the segment recorded a 6% increase in group revenue to RM394.5mil versus RM371.6mil for FY20. Its after-tax profit climbed to around RM62mil from a net loss of RM1.26mil previously.
In fiscal year 21, Bintulu-based Harbor-Link reported revenue of RM 626.2 million, with net profit of RM 61.5 million compared to RM 25.9 million he a year ago.
Yong expects the current strong demand for freight transportation and favorable ocean freight rates to continue through the Chinese New Year or the first quarter of 2022.
In the long term, he says, there are still a lot of uncertainties on the global front due to the negative impact of the Covid-19 pandemic.
On reports of acute container shortages around the world, he says it has not affected Harbor-Link as it has enough containers to work on.
The Harbor-Link container shipping service maintains a total fleet tonnage of 5,200 TEUs (20ft Equivalent Units), which it believes is ideal for meeting existing market demand as well as rates satisfactory use.
The fleet is well managed by the group’s internal vessel management team, with minimal breakdowns resulting in reduced slot costs.
The group’s tugs and barges crisscross countries such as Malaysia, Vietnam and the Philippines.
Yong said domestic sea freight rates have also improved and are “fairly stable” now, as there is a balance between demand and supply of container ships.
“There is no overcapacity (shipping space) because some local shipping companies charter their vessels to foreign companies and these vessels operate in other countries.
“Thus, this reduced the number of national vessels in operation. For the domestic trade of container shipping, we now have four or five local players, ”he adds.
Local shipping lines have been complaining about overcapacity in the industry for years, which has resulted in lower freight rates.
Due to the liberalization of the cabotage policy, foreign liners are allowed to operate in Malaysia and local shipping companies face competition from such foreign liners like Taiwan’s Evergreen Line, which serves the port of Bintulu, he said.
“It’s very competitive. We depend on the customer relationship (to secure business).
According to media reports, non-Malaysian vessels were authorized in 2017 to perform freight transport services between Peninsular Malaysia and Sarawak and Sabah following the relaxation of the cabotage policy.
Yong says the volume of sea freight between the peninsula and Sabah and Sarawak is increasing by about 5% per year.
He expects domestic freight rates to be on the rise due to the rise in the price of bunker fuel as shipping companies must make adjustments to offset the increase in the price of fuel.
Bunker fuel prices have climbed in line with soaring crude oil prices, which reached US $ 80 (RM 334.56) per barrel as it hit its highest level in seven years.
In addition to container transport, Harbor-Link operates a fleet of transport vehicles, including commercial vehicles, freight trucks and trucks, dump trucks and refrigerated containers for the transport of various types of goods.
The group operates as a third-party logistics service provider and offers highly customized supply chain solutions to the oil and gas, timber and manufacturing industries.
She is also in engineering work, with expertise in the construction of oil storage tanks, marine terminals and piping work as well as real estate development.