After posting losses in 2015, Philippine carrier Lorenzo Shipping Corporation (LSC) hopes to engineer a turnaround to profit this year through strategic measures such as route rationalization.
The company reported a net loss of P231 million last year from a net income of P44 million in 2014, hampered by fewer vessel trips with four of its seven vessels on dry dock.
In a speech during the stockholders’ meeting on June 23, LSC president Roberto Umali said a review of strategic plans was conducted to put the company back on the profit path.
Umali said the company is looking to implement cost-reduction programs by improving operational and financial processes, including cost monitoring and accounting.
He noted overcapacity was still an industry issue “with competitors bringing in additional ships with bigger capacities.”
Thus, the need for LSC to improve quality of service and maximize utilization of assets, Umali said.
This year, LSC’s capex budget is around P400 million, to be spent on vessel repair and maintenance, acquisition of brand-new container handling equipment, upgrade of equipment and yard facilities, and vessel and land-crew trainings.
LSC has also started a route rationalization plan with affiliate carrier NMC Container Lines, Inc.
With the synergies, Umali said they will be able to connect their customers to each other’s networks.
“We look forward to reaping the benefits of increased yield and load factor per voyage to all our vessels,” Umali said. Part of the route rationalization is stopping services on unprofitable routes.
He added that the company is continuously exploring synergies in operations, system enhancement, and other support services, which are all centered on improving customer experience.
LSC is consolidating its container yards in Manila while instituting new systems and procedures in managing these facilities. Last year, the organization added yard facilities in Laguna and Bulacan, where the carrier’s customer production areas are located.
Last year, too, it replaced its 21-year-old vessel MV Lorcon Cebu with 11-year-old MV Lorcon Iloilo. This year, Umali said they plan to purchase one vessel to bring back up to seven its current fleet of six ships.
The fleet ranges in capacity from 200 twenty-foot equivalent units to 426 TEUs and is deployed in key ports across the country. LSC also carries rolling cargoes such as heavy equipment, trucks, and vehicles as well as uncontainerized cargoes such as steel products and bridging materials. Livestock cargoes are likewise part of its transport services, carried in special vans.
