Swift Haulage sees warehousing revenue contribution increasing to 25% in next three years

PORT KLANG, February 20, 2024 -- Swift Haulage Bhd is expecting its warehousing business to grow further to contribute up to 25% of its total revenue in the next three to five years, from 15% currently, as the country’s largest haulage operator expands its warehousing capacity on the back of strong demand for such services.

This was evident following supply chain disruptions during the Covid-19 pandemic, to the more recent Red Sea crisis, said Swift Haulage group chief executive officer Loo Yong Hui.

“In the coming years, we are going to expand our warehousing capacity. We still have a lot of land banks, vacant land. Just this land here [in Westports], is about 50 acres, and we’ve only used less than 10 acres for this new warehouse, so there are available lands to expand. We [also] have land banks throughout Malaysia, including in Penang and Johor,” Loo told the press after the launch of the group’s latest warehouse and haulage office here.

“So, we hope in the next three to five years to build up our warehousing business, to possibly contribute up to 25% of [the group] revenue,” Loo said.

According to Loo, the group is targeting to build one warehouse per year. The capex to construct a warehouse ranges between RM30 million and RM40 million, depending on the size of the warehouse, which could vary between 150,000 sq ft to 200,000 sq ft.

The group currently has a total of 1.6 million sq ft of combined warehousing space.

The haulage division is the group’s largest revenue contributor at present, making up 75% of its total revenue. The remaining 10% of group revenue comes from the freight forwarding segment.

On the expansion of the service tax scope to include logistics services, albeit at a lower 6% rate and not the 8% proposed for most other sectors, Loo said the additional costs will likely be passed on to customers, pending final clarity from the government on the implementation of the tax.  

The government had announced during last October’s tabling of Budget 2024 that the service tax would be raised to 8% from 6%, and the tax scope would be expanded to cover logistics, brokerages and karaoke services.

Some lawmakers, however, have raised concerns that the tax hike and the inclusion of the logistics services, in particular, would burden consumers with increased costs of goods.

Subsequently, Prime Minister Datuk Seri Anwar Ibrahim clarified in November that the inclusion of the logistics sector under the service tax scope would be refined, and that the tax rate for the logistics services would be 6%. At the time, he also said the government had not ruled out the possibility of granting exemptions to certain sub-sectors if it is found to directly affect the public’s interest.

For the nine months ended Sept 30, 2023 (9MFY2023), Swift Haulage’s net profit rose 23.02% to RM48.25 million from RM39.22 million in 9MFY2022, as revenue rose 3.8% to RM497.9 million against RM479.67 million in the same period last year.

At 3.35pm, the share price of Swift Haulage was down half a sen or 0.9% to 55 sen, bringing the group a market capitalisation of RM490 million.

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