Singamas, the world’s fourth-largest container manufacturer, is to target more revenue from leasing, rather than box sales, as liner operators seek more flexibility with inventory amid a tonnage overhang and economic uncertainties.
Hong Kong-listed Singamas made the announcement yesterday, as it reported net profit in 2023 had tumbled 60% year on year, to $22.49m.
With the average selling price of a 20ft container falling to $2,075 from $2,836 in 2022, and weaker demand driving sales volumes down to to 106,000 teu, from 242,000 teu – as the Covid-19-induced boom dissipated – revenue from sales fell 53%, to $352.19m.
However, income from container leasing went up 80%, to $2.79m.
Singamas chairman and CEO Teo Siong Seng said: “On the leasing of dry freight container business, we witnessed healthy and significant growth in 2023. This has helped generate synergy with the manufacturing operation and enhanced overall margin.
“As our manufacturing facilities allow for more flexible production and timely delivery of containers to our leasing customers, the group is able to better seize relevant opportunities that arise in the market.
“Consequently, we will be able to derive relatively stable revenue, as leasing arrangements with customers are long-term, ranging from three to more than 10 years. We believe the leasing operation will serve as a potential growth driver in the long run, and we will invest more resources in developing this business.”
Although the Red Sea crisis has helped to tie-up vessel supply and keep freight rates elevated, Mr Teo was cautious in his outlook for container demand this year.
He said: “The dry freight container industry performance will depend in part on the recovery of global trade. Further stimulus will come from new vessel deliveries, which will spur new container orders.
“However, overcapacity remains a concern for the dry freight container market.”