Hubline to add new vessels in anticipation of higher demand

KUCHING: Hubline Bhd, the operator of tugboats and barges based in Sarawak, is planning to add new vessels to its fleet this year in anticipation of higher demand for its services.

The company also foresees freight rates in general to recover from recent lows.

“Based on our general observation of the barge logistics industry in South-East Asia, we expect the demand for operating tugs and barges to continue into the foreseeable future.

“As such, we expect all our operating tugs and barges to remain highly utilised,” Hubline said in its 2018 annual report released on Jan 31.

The Sarawak-based shipping company currently owns a fleet of 23 tugs and barges, which transport mainly coal, gypsum, palm kernel shells, scrap metal, sand and aggregates.

Hubline, according to chief executive officer and managing director Dennis Ling Li Kuang, has placed orders for two additional tugs and barges for RM20mil.

The purchase of the new tugs and barges, which are expected to be delivered in the middle of this year, will be funded by the proceeds from the company’s recent rights issue with warrants and proposed issue of redeemable convertible notes with an aggregrate principal amount of RM200mil.

The rights issue with warrants exercise, which was completed more than a month ago, raised gross proceeds of about RM52mil.

“The acquisition of the additional tugs and barges for the group’s dry bulk business will increase the fleet size to 25 tugs and 25 barges.

“The additional tugs and barges to be acquired will have the capacity of 10,000 to 12,000 tonnes each, as compared to the existing tugs and barges that have a capacity of between 8,000 to 10,000 tonnes each.

“This will enable the group to increase its operation in the provision of tugs and barges services and consequently contribute to earnings growth,” Hubline said in the annual report.

Hubline’s clintele cover the North-South trade routes from Indonesia to Thailand, Cambodia, Vietnam, the Philippines and return, as well as trade routes covering East-West from Thailand to Vietnam, the Philippines and return.

“The routes being plied by the dry bulk shipping tugs and barges are flexible and can be varied in accordance with market demand, as each voyage caters to a single client per shipment.

“We are able to streamline costs and maximise profitability by optimising our routing and scheduling of cargo, which then allow us to achieve a high level of vessel utilisation whilst still successfully gaining and maintaining market share,” said the company.

Hubline said it was currently focusing its efforts on Vietnam and the Philippines.