$SamuderaShipping (S56.SG)$ Samudera may rise to resistance ...

Samudera may rise to resistance around 1.05.

Samudera Shipping Line Limited owns and operates ocean-going ships and provides containerized feeder shipping services. Through its subsidiaries, the Company also owns and charters vessels, provides sea and air freight forwarding, and operates shipping agency and container freight station services.

Port congestion in Asia, diversions in the Red Sea, and increasing exports from Southeast Asia are driving intra-Asia freight rates to 30-month highs on some routes from China. Carriers and forwarders report rising intra-Asia volumes as long-haul ocean carriers redeploy vessels and skip regional trades to support mainline east-west services. High charter rates and a shortage of feeder vessels are preventing carriers from leasing additional ships to address the capacity shortfall.

A sudden container capacity crunch is causing global ocean freight rates to soar, with rates increasing by about 30% recently and expected to rise further, impacting consumer prices. This surge is driven by the peak shipping season, longer transit routes to avoid the Red Sea, and bad weather in Asia, leading carriers to skip ports and reduce time at ports, exacerbating supply chain issues. Spot rates have spiked by as much as US$1,500 on US routes, with container shortages severe due to high demand and delayed returns of empty containers. This situation is reminiscent of the Covid-19 pandemic, with logistics experts now facing shortages in trade lanes from Asia to Latin America, Europe, and the US West Coast. The ongoing congestion and higher rates are expected to persist, especially with an early start to the peak shipping season to avoid potential labour disruptions at East Coast and Gulf ports in the fall. Shipping companies are increasing rates and adding surcharges, with MSC announcing rates of US$8,000 to US$10,000 for 40-foot containers to the US West Coast. The higher rates are expected to benefit Samudera, enabling it to boost its revenue in response to the increased demand despite the higher prices.

On 27 Dec, Samudera Shipping announced that it signed a memorandum of understanding to acquire two ethylene gas vessels for US$12.6mn, to be renamed Sinar Ternate and Sinar Tidore. Built in 2009 and 2010 and flagged in the Bahamas, the acquisition will be funded through bank borrowings and internal resources. This purchase aims to expand Samudera's fleet and secure more charter contracts, capitalizing on the growing ethylene market in Indonesia, where ethylene is extensively used as a feedstock in petrochemical plants. It announced that the second vessel, Sinar Tidore was delivered on 24 Apr 2024. This will enable it to take on more charter contracts contributing to an increase in its revenue.

FY23 revenue fell by 41.2% to US$582.9mn and net profit decreased 68.6% YoY to USS$101.2mn. The decline was attributed to lower freight rates in the container shipping segment, despite a slight increase in container volume. In 1Q24, its container volume remained relatively stable, whereas freight rates declined to US$244 from US$371 per TEU. Its fleet size increased to 7 vessels. Additionally, both storage capacity and volume handled rose YoY, attributed to securing more management contracts and higher demand for storage capacity.