SINGAPORE-LISTED shipowner Samudera Shipping Line Ltd, a subsidiary of Jakarta-listed Samudera Indonesia, has witnessed a significant downturn in its financial performance for the latter half of 2023, culminating in a 77 per cent plunge in net profit to US$34.6 million from the previous year's US$150.3 million.

The decline, alongside a 46.1 per cent reduction in revenue to $277 million, underscores the challenges faced by the container shipping sector, largely due to diminishing freight rates despite a slight uptick in container volumes, reports Hong Kong's BNN Breaking.

For the full year ending December 31, 2023, Samudera Shipping's net profit took a 68.6 per cent hit, dropping to $101.2 million from the prior year's robust figure of $322.04 million.

Revenue fell by 41.2 per cent to $582.9 million. The company attributes these downfalls to the container shipping segment's lower freight rates, which have receded from the pandemic-induced highs.

The Indonesia-based shipping line attributed the lower numbers to "significantly lower freight rates specifically in the container shipping segment."

In its earnings commentary, Samudera Shipping warns that the operating conditions in the container shipping industry are expected to remain challenging, amid disruptions to vessel availability and port congestions wrought by the Red Sea conflict.

"The group thus expects freight rates and vessel charter rates to be volatile in the near term," says Samudera Shipping.

"Meanwhile, stronger demand for bunker fuel as vessels reroute to bypass the conflict is expected to put upward pressure on bunker costs," the company said.