Asia/Pacific News
Malaysia's Shin Yang Says Low Bunker Prices Will Push Profits Up
Malaysia's Shin Yang Shipping Corp. (Syscorp) says low bunker prices will translate into higher profitability, Malaysian media reports.
"Based on the current bunker fuel cost, it will increase the group's profit margin by 7% to 8% assuming that the demand for cargo and freight charges remain unchanged," said Richard Ling, the group's financial controller.
The group's bunker costs have fallen from around $600 per tonne to $450 per tonne, he added.
The comments come in contrast to some shippers, such as Maersk Line, who have said that due to the use of Bunker Adjustment Factor (BAF) fuel surcharges it would not profit from low bunker prices.
Syscorp said bunker costs in the year ended June 30, 2014 made up 30 to 35 percent of the group's operating expenditure with a total fuel bill of approximately RM130 million ($37 million).
"The lower bunker fuel will significantly reduce our operational expenses," said Ling.
While falling bunker prices have a positive effect, the Malaysian Ringgit's (RM) performance against the dollar is making imports more expensive.
Syscorp operates a fleet of almost 300 vessels, including box ships, product tankers, bulk carriers, tugs, and barges.
The group also operates four ship-building yards and a repair yard.
Syscorp said earlier this year that the container shipping environment was becoming unprofitable due to high bunker prices.
