Hubline to add shipping capacity

KUCHING: Regional bulk shipper Hubline Bhd is set to invest more in its fleet renewal programme to boost shipment capacity and operational efficiency.

In the 12-month period to Sept 2024 (FY24), Hubline had put into service two new barges .

“These brand new barges have shown exceptional yield and performance due to it being a new asset and also partly due to larger physical dimensions, which allow for a larger maximum loading volume and, therefore, translating to a higher gross revenue per voyage.

“As planned, our on-going yearly fleet renewal and expansion programme continued to perform well and within expectations, similar to prior years.

Our renewal programme continues to see the introduction of a new barge each financial year, with consideration of a further new barge, assuming steel pricing and shipyard availability are in our favour.

“Going forward into FY25, we will continue our fleet renewal programme which will complement our thriving business as well as reflect our commitment to reduce our rate of carbon emission,” said Hubline in its newly released 2024 annual report.

The Sarawak-based logistic provider said as each new barge is able to load in excess of 10,000 tonnes of maximum cargo per voyage, this helps to achieve greater economies of scale despite the initial higher capital outlay in the barge’s acquisition.

“Maintenance expenditure and steel plate upgrading are also significantly reduced for these newer barges, giving us immediate savings in the short term while aiding us in bringing down the average fleet age.

“Lowering fleet age has the added benefits of reduction in maintenance outlay, reducing our overall insurance premium on sums insured, lower our carbon emission per tonne of cargo carried as well as appealing to other clientele of the shipping industry,” added Hubline.

Currently, Hubline group operates a fleet of 20 sets of tugs and barges which are being deployed for shipping services throughout the South-East Asian region. Coal and gypsum are the main bulk cargo shipped by the group.

“We will continue to pursue greater margins and alternative routes, which include Cambodia, the Philippines, Peninsular Malaysia and Thailand to compliment the Vietnam trade.

“We will continue to pursue and secure whichever cargo best elevates our market position in the shipping industry with the South-East Asian region and target the sectors which create the best routing efficiencies, with a higher focus on profitability as well as economies of scale.

“We will maintain a methodical and measured approach, recognising the impressive industry demand over the past three years and anticipating continued strength into a fourth consecutive year,” said the company.

In FY24, Hubline group’s shipping revenue fell by RM5.66mil to RM136.3mil from RM141.96mil in FY2023 as a result of subdued freight rates during the financial year under review.

“Our shipping business segment continued to deliver respectable results during the year with an almost full fleet utilisation rate for most of the year with vigorous forward and return cargoes.

According to the company, freight rates had periods during the financial year where they came under pressure due to various industry-wide factors, similar to bunker prices which were seemingly driven by renewed concern over global demand, particularly demand from China.

“For most of the financial year under review, we were able to maintain consistency in our barge scheduling and maintained full logistics capacity.

“Freight rates consistently rebounded and we see a healthy relationship between freight and index-based outgoings, such as bunkers.”

Hubline expects a rebound of ocean freight rates in FY25.

Via subsidiary Layang Layang Aerospace Sdn Bhd, Hubline group’s other core business is in general aviation and flying academy services.

Layang Layang currently operates a fleet of 29 fixed wing aircraft and helicopters serving major towns in Sarawak, Sabah and Peninsular Malaysia from its primary bases located in Kota Kinabalu, Ipoh and Miri.

Layang Layang provides critical flying doctors’ services to rural and remote Sarawak and Sabah settlements, emergency medical services, logistical support for ancillary health services, search and rescue operations as well as aerial survey services to the energy, forestry and agriculture sectors.

Its other aviation services include time-charter.

In FY24, Hubline said there were increased demand for specialised aviation services like search and rescue operations and pilot training programme driven by government’s initiatives and private sector’s needs.

Layang Layang undertook an asset rationalisation exercise to upgrade and improve its existing fleet and service delivery efficiency in FY24, and had divested aircrafts that no longer aligns with its business operations as well as to improve fleet utilisation.

Year-on-year, Hubline reported a sharp decline in its aviation segment’s revenue by RM19.8mil to RM72mil (FY23: RM91.8mil) due to the completion of a sizeable one-off general aviation charter contract in in 2023.