Philippine listed marine service provider Harbor Star Shipping Services, Inc. (HSSI) is allocating around P220 million for capital expenditure this year as it seeks to strengthen domestic operations and expand its service offerings.
The budget will be used mainly to acquire additional tugboats, construct a new office building, and build a joint-venture shipyard in Luzon, Harbor Star corporate planning manager Dany Cleo Uson told PortCalls on the sidelines of the company’s annual stockholders’ meeting on June 29.
Chief executive officer Geronimo Bella, Jr. said the company will be focusing mainly on domestic operations this year, particularly on Subic and Cebu, as well as its marine diving and marine maintenance business.
A new tugboat arrived recently for its Subic operations, which start this month, Bella said. Last year, Harbor Star opened a wholly owned subsidiary, Harbor Star Subic Corporation, to provide marine-related ancillary services in the area. Bella said the new venture, a response to requests from clients in Manila, is expected to bring in double-digit revenues.
In September last year, Harbor Star created a diving and marine maintenance unit to further develop and strengthen its business line, which Bella said “appears promising.”
“In fact, our diving and marine engineering personnel have been in project sites since the beginning of the year,” Bella noted.
Harbor Star this year also signed an agreement with Guam Industrial Services, Inc. to establish a joint venture company (JVC) that will operate several floating dry-dock facilities in the Philippines. The location has not been finalized, but Bella said they are looking at either Subic or Bataan and hope to start operations by the middle of 2017.
He noted that partner Guam Shipyards has been providing services to the U.S. Navy and “our intention is to bring that expertise to the Philippines.” Bella said that aside from the U.S. Navy, they will also be offering their services to international vessels and the local market.
He added that while shipyards abound in the Philippines, only a small number provide the kind of service they intend to operate.
Aside from operating in the north, Harbor Star is setting its sights on expanding to the south and has opened a Cebu office in response to clients’ requests. Part of this year’s budget will go to the acquisition of tugboats to support expansion plans in the Visayas, Uson said, but declined to divulge the exact area.
The marine service provider also purchased a waterfront property in Batangas to serve as its future marine base where its vessels can go for parking and repair. A marine base of its own will cut operational costs for the company since they no longer have to queue in other ports to load crane, among others. The marine base will be open to other operators as well, Bella noted.
Although concentrated on local operations, Bella said they are slowly but continuously normalizing operations at their Malaysian venture, Peak Flag Sdn Bhd. The subsidiary officially began operating in February last year with two tugboats, M/T Hamal and M/T Mirzam, serving Malaysia’s major ports North Port and Kuantan Port.
Bella said that despite the change in administration, Harbor Star sees the year bringing growth for its operations, as he expressed hope of better private sector coordination with the government and proper implementation of the recently signed implementing rules and regulations of the Competition Act. He also wishes for more government support for tug operators that invest in new and standardized vessels.
Last year, Harbor Star generated a net income of P67.7 million, 45.2% lower than the P123.6 million realized in 2014. Net income in the first quarter of 2016, however, improved 4% to P23.269 million from P22.355 million in the same period in 2015, due to positive performances from the company’s harbor assistance, tug, and other marine services.
The company manages a fleet of 37 domestically and internationally classed tug boats, five barges, a cargo vessel, an oil-spill response vessel, and an anchor-handling tug supply vessel. It operates in 69 ports within the Philippines, of which 14 are base or hub ports. – Roumina Pablo