08 July 2002 (The Star) - SUTRAJAYA Shipping Sdn Bhd, a shipping linecreated by the country’s single largest shipper, Felda, is continuing tomake waves.

Barely a month after it acquired its fourth tanker, the shipping companyhas just taken delivery of its fifth tanker.

The shipping line, which operates a fleet of another 15 vessels inaddition to its own tonnage, has recorded dramatic growth over the lastthree years.

Set up in April 1999, Sutrajaya Shipping, reflected a strong nationalsense — to ensure that Malaysia, a world leader in the export of palm oil,keep its competitive edge by having a strong control over its shipments aswell.

Invariably the control over shipment — especially selling national cargoon Cost & Freight (C&F) terms — also meant the initiatives by Felda insetting up Sutrajaya Shipping was aimed at addressing the national concernover the outflow of foreign exchange.

The outflow of freight payment to foreign shipping lines no doubtcontributes to the imbalance in the services account of the balance ofpayment.

Last year, for instance, out of the total outflow of about RM24 billion onfreight & insurance, RM12.3 billion constituted net outflow. SutrajayaShipping has in its own way started to address this outflow.

From a modest start, for the first six months of its operations endedDecember 1999, Sutrajaya Shipping recorded a pre-tax profit of RM2.6million on the back of a turnover of RM46.5 million.

Operating with only time-chartered vessels, Sutrajaya Shipping lifted atotal of 426,000 tonnes of palm oil from Malaysia to world markets in thesix-month period.

According to its chief executive officer and executive director NasaruddinAbdul Ghani, the company’s performance exceeded expectation.

In 2000, the company recorded a commendable pre-tax profit totallingRM10.47 million on a turnover of RM176.6 million from the carriage of bothFelda and non-Felda cargoes.

The breakthrough in the carriage of non-Felda cargo was significant — theyoung shipping line was being accepted as an equal among the bigger andestablished shipowners who have dominated the palm oil trade for more thanthree decades.

Sutrajaya Shipping was not only being nominated for the carriage of palmoil sold on C&F terms, but on FOB (Free-On-Board) sales as well. This ineffect meant that overseas buyers had started to use the services ofSutrajaya Shipping.

Last year, the company posted a pre-tax profit of RM11.6 million on theback of a turnover of RM286.9 million, an improved performance only marredby the global slowdown that saw several shipping lines in the red.

The war conditions in the Indian sub-continent following the US-led attackon Afghanistan increased the war risk premiums on ship entering the portsin the region, reducing their margins.

However, unlike some shipping lines which pulled out of the region,Sutrajaya Shipping’s ships continued to serve the market, a commitmentwhich no doubt served to enhance its self-esteem in one of the mostimportant export destinations for Malaysian palm oil.

Sutrajaya Shipping time-charters about a dozen vessels yearly as well asspot-charters about 15 vessels monthly to supplement its own tonnage.

In addition, it also enters into contract of affreightment with reputableshipowners for carriage of Felda cargo to specific destinations.

The line serves regularly key palm oil markets in Pakistan, India, China,Europe and West Asia.

Pakistan is its largest market, accounting for almost 50 per cent of theoff-take by the country transported in Sutrayaja Shipping’s bottoms.

Nasaruddin said an average of two sailings are mounted to Pakistanmonthly, where Sutrajaya Shipping, like Felda, has become hallmark forquality.

The company has secured ISO 9001:2000 to establish its standards inquality.

In addition to India, which buys Malaysian palm oil both C&F and FOB terms(unlike Pakistan which buys on C&F terms), China is becoming an importantmarket to Sutrajaya Shipping.

It is not just in the carriage of palm oil that Sutrajaya Shipping hasmade the grade — the shipping line has secured contracts for the carriageof chemicals from a number of oil majors, a reputation no doubt the linewants to build upon.

The widening of the support for its shipping services has given theshipping line the confidence to acquire its own tonnage.

Judging from the number of vessels time-chartered and post-charteredregularly, there is certainly scope for the shipping line to acquire moretonnages.

“We are always looking at such option,” said Nasaruddin, who while did notspecify any specified number of acquisitions planned, or even itstime-frame, gave a hint of things to come when he said the company hasjust increased its paid-up capital to RM100 million.

With the kind of capital base, Sutrajaya is bigger than most of theshipping companies listed on the main and second boards of the KualaLumpur Stock Exchange, excepting MISC.

With proven track record, a strong cargo base and with tremendousprospects ahead, opportunities are plenty for Sutrajaya Shipping,including to seek listing of its shares on the local bourse in the not toodistant future. — Ports World

(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)