Singamas Container Holdings, which makes dry-freight shipping containers, is expected to report a nearly 40-fold jump in profit for 2021 as a disruption to the global supply chain ushered in surging demand for its products.
The Hong Kong-listed company, a unit of Singapore’s Pacific International Lines, said in a filing to the stock exchange on Monday morning that its annual profit in 2021 could top US$180 million, compared to US$4.58 million a year earlier.
The positive profit alert, a result of booming ocean transportation since mid-2020 as air freight ground to a halt, was in line with expectations because shipping and container companies were among the top beneficiaries of the Covid-19 pandemic.
“The past one-and-a-half years were the golden era for shipping and container companies as the coronavirus pandemic enabled them to raise prices,” said Lu Ming, an agent at Shanghai Ocean Shipping Agency. “Indeed, no one [in the shipping industry] could have expected such a big windfall before the disease outbreak.”
Singamas said in the filing that the profit surge was driven by growth in container demand and average prices.
The company’s performance “improved significantly in 2021 with a significant increase in sales volume as well as gross profit margin,” it said. “The company also recorded a fast-growing demand for customised containers, especially for those related to renewable energy and environmental protection.”
Its shares surged 19.8 per cent to HK$1.21 (16 US cents) in morning trade on Monday.
They have advanced 25.8 per cent so far this year, on top of a 246.4 per cent jump in 2021.
According to Drewry World Container Index, which provides weekly assessments of freight rates, the price of a 40-foot containers rose 1.4 per cent to US$9,544.66 last week, which represented a 340 per cent increase over the price in August, 2020.
Since mid-2020, as major economies around the world emerged from the initial onslaught of the coronavirus outbreak, container shortages and congestion at ports led to record freight rates and container prices amid a release of pent-up demand for ocean transportation.
Johannes Schlingmeier, co-founder and chief executive of Container xChange, an online platform for container logistics, said 2021 was an outstanding year for the shipping industry as earnings for ocean freight companies surpassed the combined industry profits made over the whole of the previous decade.
In August, 2019, Singamas said it was pursuing a diversification strategy after dry-freight the shipping containers business shrank because of the trade war between China and the US.
It adjusted its business structure by broadening the use of its shipping containers for chemicals, solar power equipment and even modular data centres.
Analysts predicted that disruption to the global supply chain caused by the Omicron variant of Covid-19 would eventually benefit ocean freight and container companies.
Gridlocks at ports and container yards after the outbreak is contained will drive up freight rates and container prices, Lu said.
Source : SCMP
