Swift Haulage Earnings Driven By Warehouse And Land Transport Segments

MIDF Research reported that Swift Haulage Bhd has fully completed its cost pass-through exercise in quarter four of the financial year 2022 under findings of weakening exports to Europe, notably for furniture and white goods, was the main contributor to the decline in its container volume. Fortunately, this was partly offset by the high volume of cargo at Port Klang for China-based paper manufacturing businesses.
Swift Haulage Bhd (Swift) (533234-V) is principally involved in the provision of integrated logistics services comprising container haulage, land transportation, warehousing and container depot, freight forwarding agency services in Malaysia and Thailand, and investment holding.
Meanwhile, land transportation services are still high in demand given that Swift’s major customers operate in the consumer staples industry.
Apart from its fleet expansion (+50 prime movers in the financial year 2022), this segment should benefit from the higher number of trips from the Pengerang Integrated Petroleum Complex warehouse that it manages and the newly acquired Watt Wah Petroleum Haulage, which made its maiden contribution to the group in Dec 2022.
Moreover, normalising freight rates is not a big concern for Swift as about 80% of this segment’s revenue comes from local customs clearance jobs, which explains the high margin that it fetches. The remaining 20% is mainly derived from ocean freight forwarding jobs for the East/West Malaysia route, which has not seen a drastic drop in rates.
Interestingly, container depot facilities are high in demand due to the off-hiring of containers by the shipping lines. Malaysia in particular is favoured due to the relatively cheaper container storage charges (being one of the lowest in the region).
To cater for the demand, Swift expects its extended Westport On Dock Depot (+4,000 twenty-foot equivalent units) to begin operating in quarter two of financial year 2023. The management anticipates further rate hikes for this segment, with the depot gate charges having been raised by about +20% recently.

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