Shipping container maker Singamas rides pandemic demand boom to post record 40-fold surge in profit

Shipping container maker Singamas Container Holdings reported a more than 40-fold jump in profit, its highest since listing in 1993, amid a surge in demand for containers and higher prices because of the global supply chain disruption caused by the Covid-19 pandemic.

The company, a unit of Singapore’s Pacific International Lines, said that demand for its products was likely to remain stable this year as global supply chain disruption gradually eases, and container production is able to satisfy demand.

“Already, the average selling price of dry freight containers started to retreat in the fourth quarter of 2021 as high production has led to rising inventory, and [also because of] the recent drop in material costs,” chairman Teo Siong Seng said in a filing to Hong Kong stock exchange on Tuesday.

However, since multiple new container vessel deliveries are expected next year and in 2024, container demand growth is expected to resume then, he added.

Since mid-2020, as major economies around the world emerged from the initial onslaught of the coronavirus outbreak, container shortages and congestion at ports led to record freight rates and container prices amid a release of pent-up demand for ocean transport.

Drewry World Container Index, which provides weekly assessments of freight rates, said the rates for a 40-foot container fell 4.1 per cent to US$8,470.45 last week. It was, however, still 74 per cent higher from the year-ago level. Freight rates had risen above US$10,000 briefly last September.

Singamas sold some 347,000 twenty-foot equivalent units for dry freight, more than triple the 112,000 units sold in 2020. Their average selling price jumped 71 per cent to US$3,521, partly because of higher costs of materials such as steel and plywood.