Big shipping firm sees volume drop

Home-grown shipping firm Pacific International Lines (PIL) saw its export volume from China drop by several percentage points last year as China's economy slowed. About half of all shipping lines' business comes from China, says managing director Teo Siong Seng.

"Accordingly, all of us, PIL included, are affected by the slowdown (in China)."

PIL is one of the largest shipowners and operators in South-east Asia, and it has a Hong Kong-listed subsidiary that operates 11 container-making factories in China.

While the volume of exports from China dipped, PIL's business covers hundreds of locations worldwide, so the overall impact is not so bad, says Mr Teo, who declined to give specific figures.

Despite the "new normal" of single-digit growth in China, Mr Teo still believes in the China story, saying: "I think the market should recover - the weaker yuan will help and the Chinese government could roll out some loosening policies (to bolster the economy)."

As PIL's income is in US dollars, the yuan's weakening has helped lower its business costs in China.

Mr Teo is hopeful that the weak yuan will boost the competitiveness of Chinese products, which will lead to higher business volume, saying: "This will be good for the shipping business."

As China makes the structural shift from being reliant on exports, PIL is also looking to diversify its shipping and container-making business in the country.

For the past two years, it has set up several related companies in China to look at opportunities to trade domestically, as well as to work with Chinese firms overseas.

"China is changing at a very fast speed. We need to grasp the situation and adjust accordingly."

Chong Koh Ping

A version of this article appeared in the print edition of The Sunday Times on January 17, 2016, with the headline 'Big shipping firm sees volume drop'. Print Edition | Subscribe