KUCHING: Swee Joo Bhd has cancelled its order for two new tugboats due to the prevailing soft shipping market conditions.
“We have decided not to take (delivery of) the two tugboats,’’ said chairman Datuk Alexander Nanta Linggi.
The two tugboats are among three new vessels – the other a 400-TEU container deck ship – the company expects to take delivery next year.
Alexander Nanta Linggi … ‘The shipping freight rates for chemical tankers have been sluggish.’
Under an aggressive fleet expansion strategy, Swee Joo acquired 10 vessels, including chemical tankers to transport crude palm oil, last year.
The group also disposed of seven vessels as part of its vessel replacement programme last year.
That leaves the group with 39 vessels currently – 10 container ships, four chemical tankers, seven general cargo ships, 13 support vessels and five dual-purpose vessels.
The capacity utilisation of the fleet was about 82% last year.
Nanta Linggi said the chemical tankers were now plying the Malaysia-India and Indonesia-India routes.
“The shipping freight rates for chemical tankers have been sluggish,’’ he said.
Compared to last year, Loo said the base ocean rates have increased by between 50% and 60% on the main trades, such as Far East-Europe, Middle East and Transpacific. For South American trade, the freight rates had gone up by three times during the past 12 months.
Nanta Linggi said Swee Joo has rationalised its container shipping operations, and had leased out some of its vessels.
On Swee Joo’s high gearing, he said the board had looked into ways to de-gear itself but declined to say how it itends to reduce its debts.
The group is saddled with more than RM450mil in short-term loans and long-term liabilities as it has borrowed heavily to invest in the four chemical tankers.
Swee Joo announced two months ago it was selling a piece of industrial land in Port Klang for RM5.95mil cash, with the proceeds for repaying bank borrowings and as working capital.
Source: The Star (By JACK WONG) 18th August 2010
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