Transport sector moving into clearer waters

KUCHING: The financial performance of transport players in the past few quarters implies that the worst might be over for the sector.

ECONOMIC UPTURN: File photo showing a bulk carrier. The global economic recovery has spurred an improvement in trading activities across the board, prodding seaborne transportation back into action as the Baltic Dry Index which rose to an average 3,026 points in 1Q lifted the time charter equivalent (TCE) for bulkers as noted by OSK Research.

A representative from OSK Research Sdn Bhd (OSK Research) stated this through a telephone interview with The Borneo Post yesterday, noting that traffic numbers continued to improve and load factor picked up, partly attributable to a combination of still-low capacity and fares compared with historical levels.

In the aviation segment, Malaysia Airport Holdings Bhd (MAHB) recently announced that it was considering debt financing instead of equity financing.

“With debt financing, there is always worry regarding the impact towards its financial performance especially in terms of claim dilutions, operating expenses and market sentiments,” said the research analyst. “However we believe that MAHB will continue to persevere and grow positively regardless of this option.”

According to OSK Research, the big picture for airlines and shippers remained varied as more planes and vessels would be delivered over the next few years for certain sections of the value chain.

Business travellers were showing signs of bouncing back on top of an improving economy while leisure travel was spurred by attractive air fares campaigns and improved spending, it added.

OSK Research stated that air transporters were beginning to raise fares on certain routes to elevate yields. Nevertheless, it revealed that revenue per available seat kilometres (RASK) was still way below normal levels.

The research house continued to highlight the high jet fuel prices at US$80 per barrel, keeping unit costs on a costly level.

This combined with the fact that the first quarter of the year was a seasonally slower travel period compared with the fourth quarter caused airlines to post a small quarter-on-quarter (q-o-q) profit contraction, it added.

OSK Research stated that the global economic recovery has spurred an improvement in trading activities across the board, prodding seaborne transportation back into action as the Baltic Dry Index which rose to an average 3,026 points in the first quarter of the year lifted the time charter equivalent (TCE) for bulkers.