26 Operations Review COSCO Corporation (Singapore) Limited <strong>Shipping</strong> Agency Costar <strong>Shipping</strong> Pte Ltd was established as the sole shipping agent of COSCO Corporation and its parent, the COSCO Group, in Singapore. Costar <strong>Shipping</strong> acts on behalf of the entire COSCO Group fleet, including all vessels owned and operated by the COSCO Group’s various subsidiaries.
27 Operations Review COSCO Corporation (Singapore) Limited Costar <strong>Shipping</strong> canvasses for cargo from both existing and potential clients to ensure that the COSCO Group’s vessels transiting through Singapore are loaded to maximum tonnage capacity. On average, about 80 percent of the total shipments handled by Costar <strong>Shipping</strong> are transshipment consignments. In addition to its key role in cargo brokerage on behalf of COSCO Group’s vessels, Costar <strong>Shipping</strong> provides a full suite of agency services for full container and break-bulks. Costar <strong>Shipping</strong>’s comprehensive range of services covers document preparation including bills of lading and delivery orders, collection of freight, cargo operation, vessel husbanding, customs declaration, port authority coordination, administration and settlement of cargo claims, transshipment management, bunkering services and container handling. The bulk of Costar <strong>Shipping</strong>’s business is the provision of containerisation services to COSCO Container Lines’ customers. The agency handles virtually any type of containers from OOG (out-of-gauge) containers and GP or general purpose units also called dry containers, to reefer containers and hazardous containers (for dangerous cargo). Together with COSCO’s partner vessels from other carrier companies, Costar <strong>Shipping</strong> provides containerisation services of about 100 to 110 vessels a month. In addition, Costar <strong>Shipping</strong> provides value-added services such as trucking, freight forwarding, stuffing, container depots, warehousing and storage. The year in review FY2004 was certainly a good year for Costar <strong>Shipping</strong>, with cargo demand outstripping supply globally, leading to rising freight rates. As a result, Costar <strong>Shipping</strong> achieved a 9% increase in profit to S$2.5 million in FY2004 from S$2.3 million in FY2003. Revenue remained steady at S$15.7 million in FY2004, compared to S$15.8 million in FY2003. Enhancing competitiveness with IT Costar <strong>Shipping</strong> always seeks to maintain its edge in a competitive market through the combined offering of attractive costs and high-quality, value-added services. In order to enhance its customer services, Costar <strong>Shipping</strong> launched a new e-commerce online platform during the year. This platform enables customers to track their cargo and access other customer-specific information online, at any time of the day, anywhere in the world. Outlook and prospects Costar <strong>Shipping</strong>’s business objectives are aligned with COSCO Corporation’s business strategies and corporate vision, and that of the parent COSCO Group. Bearing in mind that COSCO Group capacity in FY2004 was not enough to meet demand, revenue would have been even higher if the capacity was available. In order to capture this revenue growth, in addition to the planned expansion of COSCO Corporation’s dry bulk carrier fleet over the next two years, COSCO Group has also been gradually expanding its fleet of container ships by eight more 5,500 TEU vessels during the current year. These container ships will be phased in by second quarter 2005. Costar <strong>Shipping</strong> will therefore be ramping up its marketing efforts in FY2005 to canvass for more cargo to fill the new capacity. Currently, Costar <strong>Shipping</strong> maintains long-term and mutually beneficial business relationships with a stable of clients consisting of large, international corporations in key industries worldwide. The company will expand this client base through marketing and promotion efforts, and by leveraging its network of agents and industry partners worldwide. With demand for containerised and dry bulk cargo in the international shipping industry still on the rise, the prospects for FY2005 look very promising. Global demand for capacity is likely to outstrip supply for the foreseeable future, which means that the current strong freight rates are likely to remain firm. Combined with the scheduled capacity expansions by COSCO Corporation and COSCO Group, and the growing volume of trade with China, we expect another year of revenue and profit growth for Costar <strong>Shipping</strong> in 2005. Coslink (M) Sdn. Bhd. functions as the general shipping agent in Malaysia for the COSCO Group’s entire fleet of ships, and provides the same comprehensive range of services as Costar in Singapore. COSCO Corporation (Singapore) Limited Annual Report 2004
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