Aitken Spence aims wider horizons as principals merge

Aitken Spence PLC is looking towards wider markets in logistics with the mergers of their principals taking place in the global sphere.

“The merger of our principal Hapag-Lloyd with CompañíaSud Americana de Vapores (CSAV) to become the world’s fourth largest ocean carrier will open new markets for us especially in South America,” Aitken Spence Group Managing Director J. M. S. Brito said.

Many international shipping lines are consolidating to make the most of their resources and create new competition.

According to the company, the increasing availability of large capacity ships, shipping lines directly approaching customers, and the clients demanding high service levels as low rates has deteriorated profit margins of the industry, despite an increase in volume.

Meanwhile courier giant TNT Express, for which Aitken Spence is the local agent, is currently contemplating a merger with market leader FedEx.
“We are closely watching developments that may impact us in the proposed global merger between TNT and FedEx,” Brito said.

The local freight forwarding and courier operations of Aitken Spence had moderated last year due to price competition and shifting business dimensions.
Total maritime and logistics revenue of Aitken Spence grew by just 4.3 percent in the past financial year to Rs. 7.52 billion, compared to a growth of 14.5 percent in the previous year.



Mulls disposing remaining thermal power plant

Aitken Spence PLC is contemplating the disposal of its final thermal power plant Ace Power Embilipitiya during the current financial year, due to the expiration of the power purchase agreement with the Ceylon Electricity Board.

“If we are not successful in reaching mutually agreeable terms for an extension, the Group will be taking steps to dispose of the plant during the coming year,” Aitken Spence Group Managing Director J. M. S. Brito said.

Discussions are ongoing after the CEB forwarded a letter of intent.
“In response to a formal letter of intent from the Ceylon Electricity Board, the Company submitted a proposal for an extension of the PPA. The outcome of the sought extension is uncertain,” the annual report said.

The previous power purchase agreement was signed in 2003. Ace Power Embilipitiya is valued at around US$60 million.
Aitken Spence previously owned and operated 2 thermal power plants in Horana and Matara which were sold last year following the expiration of their power purchase agreements.