Management at Singamas, the world’s fourth largest container maker, disclosed today (17 August) that the company had to close its factories, intermittently, as demand for new containers plunged in the first six months of 2023.
Revenue at Singamas, a subsidiary of Singapore-based liner operator Pacific International Lines (PIL), declined 60% year-on-year to US$189.13 million in 1H 2023, while net profit fell 74% to US$11.59 million.
Sales of dry containers dropped by 65% year-on-year in the first six months of the year, with just 49,000 TEU sold, compared with 142,000 TEU in 1H 2022. Revenue for the container manufacturing business fell in tandem, recording a 62% year-on-year contraction to US$175.44 million.
During the first half of 2023, the average selling price of a 20-foot dry container dropped to US$2,078, from US$3,330 in 1H 2022, amid shrinking demand and low steel prices, exacerbated by overcapacity and a sluggish real estate market in China.
Singamas chairman and CEO, Teo Siong Seng said, “In order to better control costs, the group elected to temporarily close some of its dry freight container facilities during the review period.”
As container freight rates have regressed to pre-Covid-19 levels, there is now an oversupply of containers, as opposed to the pandemic-fuelled boom, when delays in repositioning empty containers drove liner operators and box lessors to order new containers.
The performance decline of the dry container segment has further highlighted the importance of Singamas’ specialised container business, which accounted for nearly half of the company’s manufacturing operation revenue, up from 13% in 1H 2022. The growth in specialised container business was mainly due to the continuous increase in the demand for renewable energy-related containers, both from local and overseas customers.
Other specialised containers that have performed encouragingly and possess good potential are Singamas’ environmental protection containers, which can be used for sewage treatment, 5G equipment containers and digital-data-related containers. Singamas has been cooperating with different customers in China and overseas, aiming to develop even more products, creating greater opportunities for the specialised container business. Singamas also plans to expand the overseas marketing team to seize opportunities outside its traditional markets.
Cushioning the decline in container earnings was the growth in Singamas’ logistics business, which generated revenue of US$13.69 million in 1H 2023, up from US$12.56 million in 1H 2022. Pre-tax profit for the logistics segment grew to US$4.92 million, up from US$3.96 million in 1H 2022.
Martina Li
Asia Correspondent
