SME segment to drive Damco revenue growth

In 2009, the freight forwarder will focus on growing contribution from short haul, especially as Intra-Asia trade volume is much larger than transpacific trade, says Damco general manager

DAMCO Malaysia Sdn Bhd, an international freight forwarder, expects to grow revenue by 20 per cent this year, driven by the small-and medium-sized enterprise segment, such as manufacturing and fast-moving-consumer-goods.

Damco Malaysia general manager Paul Lui also said that the company sees growth opportunities in industrial manufacturing as well as the out-of-gauge segment of the oil and gas industry.

Damco Malaysia's growth was mostly propelled by increased business activities with local SMEs last year, which made up 60 per cent of its business.

"Being a low asset operator, our contracts with various service providers allow us to give customers the flexibility they need for their shipments," Lui said.

Last year Damco handled 621,000 twenty-foot equivalent units worldwide.

In its first year of operations Damco worldwide recorded a turnover of US$2.9 billion (RM9.4 billion) in 2007.

Revenue for its Malaysia operations was not disclosed.

Damco was formed with the merger of Dutch freight forwarding company Damco Sea & Air and the forwarding activities of Denmark-based DSL Star Express.

Lui said with the slowdown in the economies of US and Europe, trade is growing in Intra-Asia, especially India and China .

"Now that our long haul operations are affected by the economic slow down there, we see big opportunities in Intra-Asia," Lui said.

He said Damco has always been focused on long haul routes because of the higher freight rates that it commands, offering better margins.

"Intra-Asia trade is short haul and in 2009 we will be focusing on growing contribution from short haul especially as Intra-Asia trade volume is much larger than transpacific trade," Lui said.

The target is for Intra-Asia trade to contribute 35 per cent to revenue next year. Currently, its contribution is negligible.

Lui said globally there will be a slow down of growth for the freight forwarding industry because of lagging US and Europe economies, but higher consumer demands in Asian markets will be able to mitigate its effects.

Damco has over 200 offices across more than 100 countries, with a global workforce of 3,900 people.