Singapore-based container shipping company Pacific International Lines (PIL) has announced a significant increase in its earnings for the fiscal year 2024, more than quadrupling its profits. This robust performance is attributed to a surge in demand for container shipping services and a concurrent rise in freight rates, reports the Straits Time.
Robust Earnings
Singapore-based shipping line Pacific International Lines (PIL) announced robust earnings for 2024, reaching US$1.34 billion (S$1.73 billion). This marks a significant increase of over 330% compared to its 2023 performance.
The company’s revenue surged by 49% year-on-year to US$4.31 billion, primarily driven by strong growth in its container shipping segment. This segment benefited from higher freight rates and a 9.6% increase in the volume of containers transported by its vessels. Container shipping accounted for more than 87% of PIL’s total revenue in 2024. The liner’s key operational routes include Africa, South America, the Middle East, and intra-Asia trades.
PIL’s container manufacturing business also experienced growth, propelled by increased demand for containers. This surge in demand was attributed to disruptions in Red Sea shipping and pre-election restocking activities in the United States.
This strong financial turnaround follows a challenging period for PIL. In 2021, the company received a crucial US$600 million lifeline from Temasek’s wholly-owned Heliconia Capital Management to avoid bankruptcy. This bailout involved Heliconia acquiring a majority stake in the liner. Since then, PIL has been actively expanding its revenues and investing in its fleet of vessels.
Operational Strength
PIL Chief Executive Lars Kastrup attributed the liner’s strong 2024 performance to its operational strength, robust cash position, and effective cost-cutting measures, despite a challenging external environment for shipping.
In 2024, the shipping industry grappled with significant disruptions, particularly those stemming from the Red Sea situation. These disruptions led to:
- Port congestion: Scrambled shipping schedules resulted in bottlenecks at key ports.
- Longer routes and increased vessel deployment: To ensure timely delivery of goods, more vessels were diverted to longer routes around Africa.
- Accelerated shipments: Shippers expedited deliveries in anticipation of potential disruptions like dockworker strikes at major US ports and new tariffs on US-bound goods. This surge in early shipments further contributed to supply chain bottlenecks and tightened shipping capacity.
Looking ahead to 2025, Mr. Kastrup anticipates an intensification of these challenges. A major concern is the inability of many terminals to develop quickly enough to handle the increasing volume of cargo and the introduction of larger-sized container vessels into existing and emerging markets.
Kastrup stated, “The year ahead is expected to be filled with uncertainty and heightened challenges. The additional capacity brought on by newbuild vessels coming on stream in 2025 is expected to outpace the market demand for goods, although continued port congestions may absorb some of the capacity growth.” This indicates a potential oversupply of vessel capacity relative to demand, though ongoing port congestion could temporarily mitigate some of this imbalance.
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Source: The Straits Time
