Kuala Lumpur: Hubline is pulling out of the container shipping business, citing weak freight rates and continued overcapacity. The Malaysian shipping line will now focus more on breakbulk.
The company said in a release to the Kuala Lumpur Stock Exchange: “The container liner industry has long been suffering since the economic crisis and overcapacity in the market is still evident. The global liner industry is struggling with the depressed freight rates to meet operating costs. The global trade patterns are fast changing which is challenging to our operating model. Consequently, competition for cargo is still very fierce and operators are struggling to stay profitable with the depressed freight rate environment.”
Hubline said the exit process will involve withdrawal from various trade routes, termination of related service and operational contracts, as well as the disposal of container shipping related assets. The company aims to have exited the sector by the end of September this year. The one-off costs of this exit are expected to cost RM350m.
The container shipping division, in the last four years, has contributed an average of 79% to thegroup’s overall revenue, and an average of -134% of profit before tax.
The main activity of the group will remain as shipping, Hubline stressed, the focus to shift towards breakbulk shipping.
“Breakbulk shipping is a viable and sustainable division with good prospects of further growth,” Hubline said in a statement.