Domestic liner Lorenzo Shipping Corporation (LSC) posted a wider net loss for the first nine months of 2016 to P249 million from a P183 million net loss in the same period last year despite handling higher volumes.
Revenue for the period slightly improved 0.4% to P1.672 billion from P1.665 billion in the same period last year, the carrier said in a disclosure to the Philippine Stock Exchange.
LSC said it handled 4% more cargoes for the period, carrying 59,204 twenty-foot equivalent units (TEUs) from 57,096 TEUs in the same period last year as a result of gaining new accounts and reclaiming lost ones.
However, the carrier said that “the overcapacity in the market, aggressive pricing by competitors, new entrants in the domestic liner market and the extended drought that affected agricultural products at Mindanao pulled down the average freight rate in the current period.”
Turnaround project
LSC said it is in the midst of executing a major turnaround project in order to address declining profitability as well as tackle issues with service reliability and increasing costs.
Part of its strategic programs is restoring the reliability of LSC by having well-maintained vessels and offshore equipment and ensuring highly motivated sea-based and land based-staff. The carrier is also optimizing the use of vessels on profitable routes.
Moreover, it is implementing cost rationalization programs by improving operational efficiencies, tightening financial controls including rigorous monitoring and customer profitability reviews, as well as leveraging automation of critical processes.
Former LSC president Roberto Umali said this year’s capital expenditure is around P400 million, allocated vessel repair and maintenance, acquisition of brand-new container-handling equipment and yard facilities, and vessel- and land-based crew training. LSC has also started a route rationalization plan with affiliate carrier NMC Container Lines, Inc. that includes stopping services on unprofitable routes.
Umali said they hope to engineer a turnaround to profit this year after posting losses in 2015.
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