KUALA LUMPUR (Jan 26): Hubline Bhd managed to sail through the Covid-19 pandemic challenges, protect its businesses, delivered its operational plans, and harness disruption to accelerate its strategic aspirations against the backdrop of a pandemic economic downturn.

The diversified company said despite all these disruptions to the group’s operations, the financial performance of the group has not been negatively impacted.

“The dry bulk segment has shown improvement in operating profit which was attributed to the continued upward trend in freight rates and the improved number of shipments performed while the group’s aviation segment continued to show operating profits in the current financial year,” it said in its annual report on Wednesday (Jan 26).

Hubline also expects economic growth to bounce back moderately with inoculation rates demonstrating solid progress.

“We believe some of the more compelling opportunities continue to exist in sectors benefitting from infrastructure projects and logistics services. We have full confidence in our strategies, business network and importantly our teams, to deliver improving results as we progress through a period of uncertain economic recovery,” it added.

On its barge logistics, Hubline said the combination of thriving commodity demand such as coal and iron ore, a return to strength in infrastructure and manufacturing activities, scrapping of older vessels and significant vessel under-investment over the last ten years have collectively pushed dry bulk freight rates higher.

Since the beginning of the pandemic, manufacturing activity in Europe and the United States slowed down due to various lockdown restrictions. However, many businesses in Southeast Asia and China have continued to produce and export goods to the West.

“As the European and US economies re-opened, we expect to witness a surge in demand in shipping services. The scrapping of older vessels and the decline in new vessel orders over the last ten years had collectively led to the current vessel supply tightness.

“Because new vessel capacity is unlikely to come in soon as the average lead time between vessel orders and vessel deliveries in recent years has been more than two years on average. This should keep the market supply tight and spot dry bulk prices at an elevated level for the next few years,” it said.

Hubline added that infrastructure projects and developments such as China’s Belt and Road Initiative and Singapore’s airport expansion are also driving demand for raw materials in general.

Meanwhile, the group’s freight rates were up about 50% in September 2021 from September last year, owing to a shortage of vessels to transport cargo in Southeast Asia.

“We believe that dry bulk freight rates are likely to remain at relatively elevated levels in the short term.

“Our most commonly transported commodities throughout the year under review were thermal coal, gypsum ore, dolomite, palm kernel shells and aggregates,” it said.