Wednesday, February 24, 2010

MISC pre-tax profit down 38pc in Q3

MISC Bhd reported a 38.6 per cent drop in its pre-tax profit of RM191.627 million for the third quarter ended Dec 31, 2009 from RM312.146 million in the corresponding quarter of 2008.

Its revenue of RM3,047.1 million for the quarter was 17.2 per cent lower than RM3,679.2 million recorded in the previous corresponding quarter.

In a statement today, MISC said the reduction was mainly due to lower profit in the Petroleum business and higher losses in the Liner and Chemical businesses.

The group’s cost reduction efforts have led to lower operating costs of revenue especially in cargo costs, charter hire payable and slots payable, it added.

For the nine-month period ending Dec 31, 2009, MISC said its pre-tax profit dropped to RM625.762 million from RM1.369 billion in the corresponding period of 2008, while revenue fell to RM10.468 billion from RM11.784 billion.

On the industry, it said it would continue to be challenged by low demand and excess tonnage.

The recent pick-up in demand has absorbed some of the excess tonnages resulting in freight rates rebounding from 2009 downtrend.

The recovery in freight rates is expected to continue over the short to medium term, it said.

MISC’s earnings for the medium term will continue to be underpinned by the long term charters in its LNG and offshore businesss as well as growth in its heavy engineering division.

Source: Malaysian Insider

Tuesday, February 9, 2010

PKA won't extend grace period for enforcement of new rules

Port Klang Authority (PKA), the regulator of Northport and Westports, said it will not extend a three-month grace period on enforcing changes to rules that require shippers to pay storage charges for full-container load (FCL) cargo at Port Klang after 72 hours.

FCL refers to a container containing cargo belonging to one consignee in the vessel's manifest.

"We have heard their (shippers') concerns and have given them enough time to put things in place. We have now come to the stage where we will go ahead and implement the change in policy," PKA general manager Kee Lian Yong told Business Times in an interview.

The implementation of the new law reducing the period in which containers can be stored at Port Klang for free from five days to three, has been postponed several times in the last eight years, following objections from some players in the shipping community in Port Klang who feel they were not quite ready yet.

The last deadline that PKA had set was January 1 2010. While the authority actually pushed through with the implementation, it was not without some relaxations.

For one, free storage charges are now based on a calculation of hours (72 hours) instead of days (three days).

PKA also said it will waive the storage charges if delays are caused by Customs, other government agencies or the terminal (Northport or Westports) itself.

Kee said during this three-month "grace" period, the authority will also carry out a pilot run of a new monitoring system, which will determine the accountability of each party as per their committed key performance indicators (KPIs).

"The pilot run is to test the information technology system that has been put in place, which will calculate the amount of period in which the containers are stored at the port," said Kee.

"If any boxes go beyond the 72 hours free-storage period, we can pick them out and go back to the industry players to find out who was the one that caused the delay. We can go back to the logistics players concerned and see how they can improve this particular bottleneck.

"We don't think it would be a problem to address this issue. Come April 1 2010, we are confident that the three-day free storage period ruling will go through and the offenders will be penalised," he added.

It was reported that 80 per cent of the containers in Port Klang could be cleared within three days, but the remaining 20 per cent, or 10,000 containers, could not be done within the short period.

"Sometimes you need punitive measures to accelerate enforcement. All this while, we have delayed its implementation. People have given their commitment but they have treated it so easily. They keep on complaining that they can't do this or that. But now we have more or less sorted out most of the problems," said Kee.

"We hope to help this small percentage of port users to move (their containers) faster. They have to change. Otherwise they will keep on delaying everybody else. Actually they are holding themselves back for reasons they know best," he added.

Nonetheless, shipments from the ports in Asean countries have been given until December 31 2010 to comply with the reduced free-storage period.

"Now is the best time for us to put this policy in place rather than wait for another two years when port activity starts to get busy. This lull period should not be taken as a time for us to slow down," said Kee.

Source: Business Times

Wednesday, February 3, 2010

Signs of recovery in container shipping but industry players are cautiously optimistic of 2010

Container shipping, the worst-hit shipping segment in the global economic downturn last year, is showing signs of recovery but industry players are being cautiously optimistic.

Maersk Line, the world’s largest liner company, sees an uphill climb for the industry this year.

Maersk Malaysia Sdn Bhd managing director Omar Shamsie told StarBiz that container shipping had seen significant value destruction last year and it must be prepared for an uphill climb this year.

“Last year, many shipping companies had postponed existing orders for new vessels, idled existing vessels and increased their scrapping programmes,” he said.

“All these in an effort to take the cost out and better match capacity to the prevailing demand where these combined actions had resulted in a larger-than-expected impact on vessel fleet growth and helped create tighter capacity.

“We expect this situation to continue in 2010 and this in turn will help increase rates further. But, although freight rates have increased in the last four to five months, they are still at a historic low level, and it will be a while before they reach a stage of sustainable returns,” Omar said.

Global markets are showing signs of recovery, but the outlook for the shipping market is still uncertain, according to Omar.

“We believe there is a positive momentum for growth due to a pick up in demand and efforts to curb capacity increases, but it will be a modest growth rate compared to an industry yearly average of 10% in the last 30 years.

“It will be a while more before traditional consumer markets like the US and Europe return to their former strength, and this will contribute to the modest growth rates we expect in the near future in container volumes,” he said.

The shipping industry went through what had been described as its worst period in the post containerised era with the highest number of ships laid idle at the height of the global economic downturn last year.

In November 2008, freight rates in the Asia-Europe trade were slashed by more than 50% compared with the previous year and major shipping companies took evasive measures by cutting down on capacity and consolidating services.

In the same month that year, Singapore-based Neptune Orient Lines (NOL) disclosed that its shipping unit, APL, would reduce its capacity in the Asia-Europe trade by about 25% and by around 20% for its trans-Pacific trade.

Maersk Line had then also cut back on its Asia-Northern Europe network, resulting in a temporary removal of its AE8 service in November 2008.

And in the middle of last year, MISC Bhd announced its withdrawal from Grand Alliance, the world’s largest container shipping alliance effective Jan 1 this year.

Drewry Shipping Consultants Ltd believes that the industry has seen the worst of the global recession, but has forecast a very cautious recovery this year with the global container traffic expected to increase by 3.4%.

It said that rising container freight rates on many routes should not fool the industry into thinking that there was a full-scale recovery going on.

“This year will continue to be a very challenging one for all major stakeholders, even if we appear to have seen off the worst of this awful trade trough,” Drewry said.

Drewry Container Forecaster editor Neil Dekker said several large container operators would have “gone to the wall” in 2009 if major benefactors or governments had not stepped in to bail them out.

“There is a strong argument for thinking that if a major carrier had been allowed to fail, the market would have had a much better opportunity to correct itself and lay the foundations for a more profitable industry in the long term.

“A fairly large chunk of capacity would have been taken out of the market, allowing load factors and freight rates to improve,” he said in statement.

Dekker said even if the industry could secure the same amount of fresh cash in 2010 as it received from shareholders last year, it would not be sufficient to cover its needs.

“Another estimated US$1.4bil of cash may need to be found from other sources to keep the carriers trading. This may then prove to be the catalyst that leads operators to start selling assets – such as their terminals,” he said.

source: the star