Shipping Corp faces 21% profit decline amid charter fee downturn

The Bangladesh Shipping Corporation (BSC), a government-owned entity overseeing ocean-going vessels, experienced a more than 21% decrease in profitability during the first half of the 2023-24 fiscal year due to the global charter fee downturn and other reasons. 

As per the half-yearly unaudited financials, the net profit of BSC fell from Tk128 crore in the July-December period of FY23 to Tk100 crore in the same period of FY24.

During this period, its revenue witnessed a decrease of 8%, dropping to Tk226.36 crore from Tk246.30 crore recorded in the initial half-year of FY23.

BSC officials said the international charter fees — fees paid by charterers to shipowners for the use of their ships — for ocean-going vessels experienced a notable decline during this period. This is the primary reason for the decrease in revenue, although it saw an increase in income from lighterage ships.

However, in the last two fiscal years, the BSC reported a record growth in revenue and profit owing to a significant increase in charter fees internationally amid the pandemic and the Russia-Ukraine war.

In addition to the stated reason, officials highlighted another factor contributing to the decline in revenue during this period: One of its vessels undergoing repairs was placed in a dry dock, resulting in no earnings from the ship.

Every five years, a vessel must undergo dry docking, incurring a cost of approximately Tk5-7 crore. The vessel remains in the dock for approximately one month during this process.

Out of the six vessels owned by BSC, one named Banglar Samriddhi suffered damage from a missile attack at Olivia Port in Ukraine in March 2022. Since the vessel was insured, the BSC relinquished ownership after receiving a $22.48 million insurance claim. 

The BSC currently possesses five vessels in its fleet along with two lighterage ships.

BSC's revenue from the two segments — freight and services revenue — declined in the first half of FY24 compared to the same period of FY23.

However, in the freight revenue, its lighterage income increased by 17% to Tk44.90 crore, but time charter revenue, which comes from six vessels, declined by 14% to Tk146.43 crore during the first half of FY24.

In a statement, the BSC said, the freight revenue from time charter has decreased due to a decrease in the freight rate. Its revenue from services, including rent from the BSC building, also fell by 5% to Tk35.02 crore.