Philippine liner Lorenzo Shipping Corp. (LSC) reported a net loss of P171.796 million in 2017, down 53% from the P365.301 million loss in 2016, adding that plans for a turnaround are starting to bear fruit.
Freight revenues, however, dropped 3.1% in 2017 to P2.182 billion from P2.253 billion in 2016, as vessel capacity put pressure on the freight base, LSC said in a disclosure to the Philippine Stock Exchange.
To compensate for the losses in average freight revenue, LSC said it focused on regaining old accounts and developing new ones, especially for northbound cargoes.
LSC said it also continued to improve vessel reliability and operational efficiencies which resulted in savings of P100 million in direct costs. Vessel performance likewise improved with the various maintenance and crew-related initiatives done in the past year.
LSC said efforts were also made to maximize vessel utilization and reduce fixed costs, as evidenced by the 9% increase in volumes despite the retirement of M/L Lorcon Visayas in October 2017.
LSC has been implementing measures to swing to profit in the wake of net losses since 2015.
With its turnaround plans “already starting to reap benefits,” LSC said it will continue to execute the same plans this year.
These include improving vessel and service reliability, and enhancing partnership with selected carriers for utmost flexibility, especially in cases of excess volumes or service disruptions.
LSC will also continue to emphasize maximizing vessel capacity, especially for northbound volumes, through a more competitive pricing scheme.
Significant reduction in operating costs such as trucking, terminal, and cargo handling costs will still be given priority by maintaining a focused and flexible organizational structure and applying appropriate technology.
LSC will also continue to control profit leakage through a focus on reducing claims and improving the billing and collection cycle.
Depending on market conditions, LSC will drop any excess capacity and non-profitable routes to minimize losses.
As of December 2017, LSC has five vessels deployed to key ports in Manila, Visayas, and Mindanao. It also has various equipment and facilities for handling customers’ cargoes, including land-based equipment such as forklifts, top lifts and trucks, as well as container yards and warehouses at its branches and agencies.
