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Executive Chairman's Message

Dear all,

Executive Chairman Message : 31 Dec 2018

2018 has been a period of exciting development and change at PIL.

Our company and its business activities are well-positioned and remain optimistic to face the challenges moving ahead. We had redeemed in full the balance of the S$130 million Notes in November.

In April this year, I was appointed Executive Chairman of PIL in addition to my role as Managing Director after Mr YC Chang decided to step down as Chairman. We are pleased that Mr Y C Chang agreed to continue to provide strategic guidance to the PIL Board as Chairman Emeritus.

We had made structural changes to merge the functions of the Technical Division into the Fleet Division in order to improve on co-ordination and team-work. We have also streamlined and restructured our work processes in the Finance Division. All these efforts are already starting to yield positive results.

PIL Group 1st Half 2018 results were unsatisfactory with a loss of US$141 million, due largely to low freight rates arising from a very competitive market condition and high fuel cost. The Group recorded EBITDA of US$79 million while turnover increased by 19% year-on-year, driven by higher shipping volume and new container sales.

We implemented additional bunker surcharge and rationalized capacity in June to mitigate rising bunker prices. We also implemented cost efficiency measures to tackle the challenges in the marketplace. Our Global Fleet Monitoring Centre (GFMC) in India will continue to have real-time monitoring of all our ships on a round-the-clock basis to ensure optimal fuel efficiency during the voyages and to reduce the carbon footprint at the same time.

From December, PIL will offer an upgraded service from Asia to East Coast South America. PIL's SSA (Sino South America Service) will add port calls to Qingdao & Sepetiba. We will also provide an additional string linking Asia and East Coast South America - SA2 (South America Service 2). With the upgraded services, PIL’s customers will stand to benefit from a more comprehensive coverage and faster transit at both Asia and East South America. This has also further reduced our system costs.

PIL’s fleet capacity will reach half a million TEUs by the end of the year. This is due to the addition of 12 new container ships to our current fleet of about 180. We are now ranked 9th amongst the top containership operators in the world.

We are alliance-neutral but continue to work closely with all major carriers to serve the market. This independence allows us to respond quickly to align our service network to meet our customers’ needs.

PIL has been very active in various initiatives aimed at improving trade flow and efficiency of the transport and logistics sectors in Asia and around the world. PIL has been capitalising on the business opportunities that have arisen from various projects related to China’s Belt and Road Initiative (BRI) and the China-Singapore (Chongqing) Demonstrative Initiative on Strategic Connectivity (CCI).

For instance, the CCI-Southern Transport Corridor (CCI-STC) project that was launched in 2017, aims to enhance multi-modal connectivity between Western China, and Southeast Asia / the rest of the world. President Xi Jinping has positioned CCI-STC as the international land and sea trade corridor that connects the overland Silk Road Economic Belt with the 21st Century Maritime Silk Road.

Singapore Minister for Trade and Industry Mr Chan Chun Sing in Parliament earlier this year, highlighted that PIL and PSA are working together to create more seamless rail-sea connectivity that will also help Singapore’s transhipment flows and services, for trade between Western China and Southeast Asia.

At the same time, PIL has signed a cooperation framework agreement to develop the Singapore-Guangxi Integrated Logistics Park (SGILP) in Nanning. SGILP will position Guangxi as a logistics base to distribute goods and services to Southeast Asia, which is in line with the objective of BRI.

PIL continues to forge ahead with the smart application of various technology initiatives across different platforms and business activities to improve our performance and that of the industry. In February, PIL, PSA and IBM concluded a successful blockchain trial on intermodal transportation from Chongqing to Singapore via the Southern Transport Corridor.

We are looking into another collaboration with IBM to design and create an electronic bill of lading which is compatible with the intermodal transport logistics ecosystem. PIL and IBM are taking the lead in this project with the support of government agencies such as MPA, IMDA, Singapore Customs etc.

These structural changes and development in 2018 reflect our aim of being more responsive to the markets we serve. PIL will continue to play an active role in these initiatives as we move into 2019. Together, we can achieve higher efficiency, better transparency, and greater cost savings for our customers and all stake holders.

Taking this opportunity, I wish all of you and your families a Happy and Successful New Year.

 

Regards,

S. S. Teo