KUALA LUMPUR (April 18): ACE Market-bound Sin-Kung Logistics Bhd, which launched its initial public offering (IPO) on Thursday, said that demand for trucking services remains intact amid higher logistics costs and economic uncertainty.
The company plans to pass on costs increases to its customers if higher oil prices persist and diesel subsidy rationalisation is implemented, Sin-Kung managing director Alan Ong said at a press conference following the prospectus launch.
“As far as we are concerned, currently there is no rise in diesel prices,” Ong said. “As in the future, if this has come, we have to pass [on the cost increase] to customers.”
Malaysia is planning to withdraw subsidies for fuel and other non-essential items widely panned by economists for being wasteful as part of a broader effort to rein in its long-running fiscal deficit that stretches back to the 1998 Asian Financial Crisis.
The government currently caps the prices of diesel and RON95, the most widely-used petrol variant, while the higher grade RON97 is based on market prices.
Despite the threat of higher costs, Sin-Kung is confident that the company will continue to ride on continuous demand from its customers willing to pay a premium for its service, Ong said.
“Our customers want very demanding services, so they are willing to pay [us] more,” he said.
Sin-Kung currently provides trucking services with a focus on airport-to-airport road feeder services covering airports across Peninsular Malaysia, Singapore and Thailand.
Its major customers include airlines, sales agents of airlines, local and international freight forwarders, manufacturers and online retailers.
Boost from Red Sea crisis
Ong noted that any disruption to ocean shipping, such as the Red Sea crisis sparked by attacks by Houthi militants, may boost the company's services as most of its customers opt for air cargo due to delays in sea freight.
Most customers and shippers will then "have to use air freight instead of sea freight for faster services”, he said. “Most of our customers, like the airlines, benefit from this,” he said.
En route to go public on May 15, Sin-Kung expects growth of the electrical and electronics (E&E) industry to support the air freight industry as E&E products are generally high-value items commonly transported through air freight.
“This will in turn create demand for trucking services, including airport-to-airport road feeder services and point-to-point trucking services, to facilitate the movement of E&E products between, and to or from, airports,” he added.
The company plans to acquire an office and expand its warehouse that will add an additional annual capacity of 192,000 pallets when operations begin by the end of 2026, using its IPO proceeds.