Singapore-based Pacific International Lines (PIL) CEO Lars Kastrup said in a recent interview that the company was profitable in every quarter of 2023 and expects to remain profitable in 2024.
Although PIL's current route network focuses on Asia, the Middle East, Africa, Oceania and South America, and it is not immune to the rapid normalisation of the consolidation market, unlike most of its competitors, Lars Kastrup pointed out in an interview that PIL was profitable in all quarters in 2023.
Lars Kastrup has more than 30 years of shipping experience, having served as CEO of Neptune Lines/American President Lines (NOL/APL) and as an executive at CMA CGM and Maersk. he joined PIL in July 2020 and has been the company's co-president and executive director since March 2021, and was appointed to the company's board of directors on 1 July 2022. He joined PIL in July 2020 and has been Co-President and Executive Director of the company since March 2021, and was appointed Chief Executive Officer of the company on 1 July.
Originally a non-discloser, PIL began submitting financials to ACRA in Singapore following a capital injection and majority stake by Heliconia, a subsidiary of Singapore's investment arm Temasek. According to ACRA, PIL's 2023 revenue fell to US$2.9bn from US$6.1bn in 2022, and profit after tax was US$307m, compared with US$3bn in 2022.
Lars Kastrup pointed out that the decline in revenue and profit is linked to the normalisation of rates in 2023, which also affects the entire consolidation industry, with average single container rates falling by about 56% in the case of PIL.
The fact is that we are getting back to normal in an industry where supply and demand dictate development," he said. But it has been a challenging year, especially in the second half of the year, when rates fell to levels that were unprofitable for many."
PIL's ability to remain profitable in the fourth quarter was largely due to cost control, Lars Kastrup explained, such as the fleet management system, which is now proving its worth. Now deployed in the PIL building, the system reduces fuel consumption and CO2 emissions by 2 to 5 per cent by monitoring all vessels 24/7 from the operations room and ensuring optimum speed. At the same time, the system also means increased punctuality and reliability, and the ability to adjust routes in time to avoid bad weather.
He explains, "We are very cost-conscious. So we have a lot of initiatives to reduce costs and optimise fuel consumption."
Meanwhile, Lars Kastrup expects PIL to remain profitable this year, albeit probably marginally.
The Red Sea crisis, which resulted in the majority of container ships sailing around the Cape of Good Hope, meant that more ships were needed, contributing to a recovery in freight rates. According to Lars Kastrup, PIL's average tariffs in the first quarter of this year were comparable to those in the first half of 2023.
This means that there is no overcapacity for the time being," he said. Now that the Chinese New Year has passed, the market has stabilised as capacity has been absorbed."
Nonetheless, he remains concerned about actual overcapacity, especially in the second half of the year, partly because many large ships will continue to enter the market with a cascading effect, and partly because the Red Sea crisis will one day come to an end," he said.
Then, he said, "the shipping lines will have to show discipline, probably by slowing down the speeds that they had previously increased to sail around Africa."
According to Alphaliner TOP100 data, PIL operates 90 container ships with a controlled capacity of 321,000 TEU, ranking 12th globally. Among them, 71 are owned ships and 19 are chartered-in ships. In addition, it also holds orders for 12 containerships, totalling 118,542 TEU.
https://www.cnss.com.cn/html/shipbuilding/20240422/352954.html
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