In the first half of 2024, container freight rates have risen sharply, but Samudera, an Indonesian container and bulk shipping company, said in its latest market report that despite the increase in container freight rates, the company has not been able to reverse the sharp decline in profits.

Samudera's main business is container shipping.

According to the company's latest financial results, the group's total revenue was $222.9 million, down 27% from the same period last year. Despite a 20 percent reduction in operating expenses, operating profit was down 67 percent to $21.1 million, while net income was down 68 percent to $21 million.

Specifically, the decline was mainly due to a decline in the company's container business, with revenue in the company's container segment falling 44% to $203 million from $291 million last year. "This was mainly due to lower freight rates and a slight reduction in container traffic," the company said. Samudera shipped a total of 879,000 TEUs in the first half of 2024, a decrease of 2.4% compared to 901,000 TEUs in the first half of 2023.

In contrast, the company's bulk carrier and tanker segment saw a 63.6% increase in revenue from $7.8 million to $12.7 million in the first half of 2023.

Revenue from the logistics business segment also increased 8.2 percent to $7.8 million from $7.2 million a year ago.

Obviously, the decline in the company's performance is mainly due to the decline in the container sector.

Samudera also said in the report that "despite the challenges of declining container traffic and declining revenue, the company has maintained some profitability, especially on the back of other business segments such as bulk cargo, tankers and logistics." The company also said that the recent upward trend in freight rates is expected to have a positive impact on the group, despite ongoing issues such as port congestion and disruptions to the Red Sea route.

Analysts at Alphaliner told Sindh Marine Network that Samudera's container business is focused on feeder services between the Port of Singapore and other ports in Asia, covering Southeast Asia, the Indian subcontinent, the Far East and the Middle East. Freight rates in these areas have risen less than on the main east-west routes. Nevertheless, the company's current container profits are still at a high position compared to pre-pandemic levels. For example, in the first half of 2019, Samudera achieved a pre-tax profit of $2.6 million on revenue of $184 million, while in the first half of 2022, revenue reached $464.9 million and pre-tax profit soared to $169.3 million before falling back in 2023.

To improve fleet and cost efficiency, the company plans to take delivery of two new vessels in the second half of 2024. The move is aimed at optimizing the fleet structure and improving operational efficiency.

In its report, Samudera noted that "lower contract freight rates compared to the first half of 2023 have resulted in lower average revenue per TEU, which, coupled with port congestion issues, has also impacted operating margins." "Freight rates are rising in the market, which should benefit the group."

Despite the above challenges, Samudera remains cautiously optimistic about the future and plans to respond to market changes through continued fleet renewal and business optimisation to achieve long-term robust growth.