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For more than a year, Singamas Container Holdings has been quietly expanding its container depot network in the mainland and developing new specialised containers.

 In its most recent venture, it also has begun supplying steel structures for the Philippine home-building market.

 The container manufacturer and depot operator, like most companies, had to restructure and streamline because of the Asian financial crisis and economic recession.

 As the market became increasingly difficult and more competitive in the past two years, Singamas has worked hard to spread its costs, especially in dry-freight container manufacturing - its core business - which is still a depressed market.

 Last year, the company scaled down its container-manufacturing operations due to lack of orders, only to find that by doing so the cost of making a unit grew higher than the depressed sales price.

 So, it did a U-turn and increased its production line from one to two shifts in April at its Shanghai factory.

 Chief executive Teo Siong Seng said the unit cost per container was higher using one production line and by having two lines, the company was able to maintain a 'certain margin and sales price'.

 In August, Singamas produced 7,000 teu (20 ft equivalent units) of containers, a record high for a single month's production at its Shanghai Pacific International Container, the world's largest single dry-freight container-manufacturing factory.

 Singamas' joint-venture factory in Xiamen produced 3,000 teu in August, compared with 1,800 teu before Singamas management took over the facility in the middle of last year.

 'We are targeting a production of 4,000 teu monthly,' Mr Teo said.

 The mainland's container-making industry has been hit hard in the past few years because of a glut of containers, which has put pressure on prices.

 Despite receiving subsidies and other forms of support from Beijing, only 25 of 40 container manufacturers in the mainland are said to be still in regular production.

 This is because they cannot get enough new orders due to the fierce competition and a massive rise in container manufacturing capacity.

 The situation was exacerbated by over-purchasing by the leasing sector in 1995 and 1996.

 According to industry officials, the price of a dry-freight container fell from US$1,900 in 1996 to an average $1,700 last year.

 The price weakened further to $1,300 towards the end of last year and is still hovering between $1,400 and $1,500, despite a rise in floor board prices earlier this year and, more recently, a steep rise in steel prices between July and September.

 The pressure on container manufacturers is so great that customers are realising that some factories are unable to pay off their suppliers and workers, and are close to shutting down.

 Mr Teo said container prices were slightly higher in the mainland's south where there was more demand, but were lower in central and northern regions.

 Leasing companies were only carrying out back-to-back deals.

 Mr Teo, who also is managing director of Singapore-based Pacific International Lines (PIL), said PIL's container-building programme provided 10 to 15 per cent of the container orders for Singamas.

 Singamas, which has orders until November, expects to sustain its activities through diversification into production of specialised containers and other new sources of business.

 'We have just completed developing a new product - bitutainer - at our facility in Yixing [in Jiangsu province],' Mr Teo said, adding the project had been undertaken in partnership with a US company over the past nine months.

 Bitutainers are specially built containers for transporting asphalt bitumen used in the building of roads and highways.

 When the loaded container arrives at its destination, it is heated by lighting an in-built kerosene stove, preparing the bitumen for use without further handling.

 Singamas has started to produce these containers for British Petroleum.

 The company expects demand for this product to increase once the cost advantages and convenience of the product are recognised.

 Mr Teo said the company also had chalked a world first recently by producing a 20-foot-high cube 'volumex' refrigerated (reefer) container.

 Working together with its customer Fesco, Singamas produced a box which had proven quite popular, he said.

 The volumex reefer containers were suitable for transporting heavy cargo such as meat and carcasses, unlike 40-foot reefer containers used mainly for transporting light cargo.

 The company also is in discussions with other firms about producing other types of specialised containers for the transport industry.

 As part of its depot network development, Singamas recently signed a letter of intent to establish a depot in Dalian with terminal operator Dalian Container Terminal, Penavico Dalian and another Hong Kong partner.

 The depot operation, using between 500,000 square feet and one million sq ft of warehouse space, is expected to start next year.



Singamas finds future in specialised boxes