Local logistics companies hope for a sustained cargo volume

Domestic logistics players are looking forward to the sustainability of the industry’s recovery next year after a pick up in cargo volumes since the middle of this year.

The local logistics industry had suffered a double-digit drop in volumes earlier this year, especially in the first quarter, due to the global economic downturn.

Century Logistics Holdings Bhd deputy managing director Mohamed Amin Kassim said the current economic climate had clouded the industry outlook for next year.

“Although there was an increase of freight volumes in the second half of this year compared with the dismal performance in the first half, we should still be cautious until we see the growth continuing beyond the first quarter of 2010,” he told StarBiz.

Amin said the road to recovery might be hampered by upheavals in currencies, devaluation of assets and an overhang of idle transportation assets such as ships and aircraft.

“Going forward, the light at the end of the tunnel seems to be coming from the Asian economies and the economic performance of Brazil and Russia. The logistics industry will rebound with the rise in global trade,” he said.

But despite the bearish economic environment, Century Logistics is expecting its best financial results for the financial year ending Dec 31.

“This expected remarkable achievement will be the result of strategic development after our re-engineering exercise in 2003.

“The building blocks of innovative products and solutions are now bearing fruits,” Amin said.

Freight Management Holdings Bhd (FMH) managing director Chew Chong Keat said while the company was still cautious on the outlook for the next calendar year, it believed it would still chart growth in earnings in the current financial year ending June 30 (FY10).

“This is because we have always adopted a strategy to expand our business in line with industry’s growth. We minimise outsourcing so that we can effectively manage our costs and level of services.

“We are able to withstand the economic slowdown mainly due to this strategy,” he said.

FMH managed to record an 11.5% increase in net profit to RM13.6mil in FY09 amid the economic downturn.

Infinity Logistics and Transport Sdn Bhd managing director Chan Kong Yew said the market expected cargo volumes to return to 2008 figures next year.

“This is supported by the increase of local container volume in October. And if the trend continues, we will see an overall grow on containers (local volume) of between 15% and 18% next year compared with 2009,” he said.

Multi Cargo Express group executive group managing director Hoh Ding Wei expects the market the market to improve after the first quarter of next year.

“Today, China plays an important role in the world’s economic development and is anticipating 9% growth next year, followed by India at 8% and Indonesia 6%. This will help the shipping industry to improve in terms of volume,” he said.

Hoh said Multi Cargo had been preparing for the expected growth next year by hiring more qualified professionals.

“Our mission has always been to scout for new and improved services to cater to the demand of our shippers,” he said.

He added that Multi Cargo’s plans for next year included increasing its existing fleet of trucks for domestic shipments and inland transport, procuring two additional sets of tugs and barges to increase bulk cargo deliveries and expanding into courier and parcel deliveries.

“With these expansion plans, new equipment and services, we are looking at an additional RM3.5mil in earnings and RM20mil in revenue to meet our forecast of RM90mil revenue and RM 7.5mil profit next year,” Hoh said.

Source: StarBiz