Philippine carrier Lorenzo Shipping Corporation (LSC) has reported a net loss of P64.38 million in the first quarter of 2017, slightly lower than the P67.32 million in net loss posted in the same period last year despite higher volumes handled.
For the first quarter of this year, LSC handled 13% more volume, tallying 22,654 twenty-foot equivalent units (TEUs), up from 19,950 TEUs in the same period in 2016. LSC said the improvement was propelled by efforts to recapture lost accounts and acquire fresh ones.
But in spite of higher volumes, LSC said overall revenue fell 4% to P542 million from P566 million in the first quarter of 2016, affected by the lower revenue per TEU.
Average freight rate per TEU was dragged down by the continued increase in TEU supply and the number of vessels servicing domestic freight, said the carrier.
Direct costs amounted to P556 million, an increase of 3% from P540 million reported in the same period in 2016. The carrier said this is due to higher terminal costs, primarily container yard rental caused by new port authority regulations on dock storage space, and materials and supplies used for the repair and maintenance of containers and machinery and equipment. With the higher cost and lower revenue, gross profit was under pressure, resulting in a negative P13 million ]loss?[ for the period.
In a bid to return to profit, LSC, which has been reporting losses since 2015, said it is now executing a major turnaround project to address bottom line concerns.
Major initiatives being undertaken include the constant review of vessel and service combinations to ensure the right one for a particular route given changing market conditions.
A flexible and situational pricing scheme is also being adopted without necessarily having to distort market levels. Efforts are likewise being done to renegotiate the terms of contracts of big-volume accounts.
The company is also working on significantly reducing operating costs like those on trucking, terminal, lift-on, lift-off, and container van rental through a more focused and agile organization and the use of appropriate technology.
Emphasis is being given as well to substantially bringing down repositioning costs through intensified marketing and sales efforts northbound. Fuel and lube oil consumption is being managed, too, through constant engine performance analysis along with adjusting vessels’ speed where necessary.
At the same time, LSC is implementing a profit leak management program which seeks to reduce claims and improve the billing and collection cycle. It also continues to sell excess assets.
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