Rising bunker fuel prices are hurting shipping companies already hit by prolonged weak charter rates. According to Shin Yang Shipping Corporation Bhd (Syscorp) group financial controller Richard Ling, bunker diesel price had surged to more than US$100 per barrel from between US$90 and US$95 per barrel in the first half of last year.

"The bunker fuel cost has gone up too much and is now on the high side," he told The Star yesterday.

Industrial diesel is now priced around RM2.80 per litre.

He said fuel consumption made up 30% to 40% of the group's shipping operational cost.

Miri-based Syscorp group operates a fleet of some 300 vessels, including chemical tankers, container ships, tugs and barges, that serve domestic and international routes.

The group has operations in the Middle East.

Ling said freight rates for container cargo had been affected due to the stiff competition among the players to attract the cargo.

At current rates, he said, container shipping was not profitable although cargo volume had increased.

The group has reported a significant increase in containerised cargo volume last year, mainly contributed by outbound cargo from Sabah and Sarawak to Peninsular Malaysia.

Although the freight rates have somehow stabilised, he does not foresee an upward revision soon.

On the Middle East operations, Ling said on-going contracts had provided "comfortable" volume of cargo for the group to transport.

Most of the cargo comprise building materials, like quarry and aggregate, for island's housing and industrial infrastructural works in United Arab Emirates (UAE).

Ling said the group now deployed three crude palm oil (CPO) tankers that serve Malaysia-Southern China routes, and two CPO barges.

"The charter rates for CPO transportation are okay because of less competition in this sector. CPO transportation is profitable," he added.

Syscorp group's other key business is ship building and ship repair.

Ling said the ship building sector was seeing better prospects in view of the rising demand for new vessels to serve the offshore oil and gas sector as well as resource-based industry (mining).

Syscorp is focusing on building bigger vessels after its shipyards in Miri (three) and Bintulu (one) underwent major upgrading that have boosted capacity.

The group, among other contracts, is currently constructing a RM70mil offshore accommodation workboat for DESB Marine Services Sdn Bhd, a wholly-owned unit of Dayang Enterprise Holdings Bhd.

In the financial year to June 30, 2013, the group repaired some 390 vessels of various types.