Volatile freight rates also affecting the shipping industry
KUALA LUMPUR: MISC Bhd, the world’s single-largest owner-operator of liquefied natural gas carriers, sees escalating operating costs due to the sharp rise in the prices of ship fuel.
Chairman Tan Sri Mohd Hassan Marican said bunker prices accounted for a large portion of its operating cost.
“It was US$700 a tonne in the middle of last year, (it then) eased to US$200 per tonne and now it is almost US$400 a tonne,” he said after MISC’s AGM here yesterday.
Besides rising bunker price, the shipping industry is also plagued by volatile freight rates due to the contraction in the global trade apparent in Asia-Europe trade.
But MISC had been cushioned from the impact of fluctuating freight rates due to the nature of its business, where 70% were under long-term contracts, Hassan said.
Nevertheless, its liner division was not spared the gloomy shipping environment and slipped into the red in its previous financial year ended March 31.
Now, the division is under a rationalisation programme to turn it around.
“We are going to transform this business from being a small player in the Asia-Europe trade to become a dominant player in the intra-Asia and the growing halal trades,” he said.
MISC will also completely withdraw from the Grand Alliance shipping alliance by next January due to exposure to the fluctuating Asia-Europe trade freight rates.
“The laying off of 11 container vessels is also part of the programme as it cost less for us to idle the ships rather than operating them in the current environment,” he added.
Going forward, Hassan said MISC would continue to grow organically but would consider mergers and acquisitions.
Its latest projects include a 50:50 joint venture with VTTI Tanjung Bin S.A. to construct, commission and operate an oil terminal with a capacity of 741,200 cu m in Tanjung Bin, Johor, via wholly-owned subsidiary MISC International (L) Ltd.
Other developments include talks with China LNG Shipping (Holdings) Co to form a joint venture to build and supply a liquefied natural gas (LNG) vessel to transport LNG from Bintulu to Shanghai.
In a filing with Bursa Malaysia yesterday, MISC reported a 55.4% fall in net profit to RM233.4mil in the first quarter ended June 30 against the corresponding quarter last year.
Its revenue, however, increased by 6.6% to RM3.9bil.Source: StarBiz