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T Samudra Indonesia (SMDR), a company providing end-to-end cargo and logistics transportation services, suffered a net loss of US$3.2 million in the first quarter of the year as rising operating costs ate up the company'€™s revenues.

The loss rose from $2.32 million in the January-March period, 2012.

Masli Mulia, the president director of Samudera Indonesia, said that the shipping industry was going through a '€œchallenging'€ period. '€œThe market demand for freight is currently low. On top of that, the global fuel prices have gone up,'€ he said.

Anwarsyah Batubara, the chief financial officer of Samudera Indonesia, attributed the loss partly to the rise in the cost of fuel. '€œRoughly 20-30 percent of our costs of services is fuel related,'€ he said.

In the first quarter of the year, the company spent $122.2 million on costs of services, 40 percent of which was related to shipping and vessel expenses.

The cost of services, in addition to the $10 million general and administrative expense, $3.4 million financial costs and $2 million income tax expense, wiped out the $133 million service revenue the company booked in the first quarter.

Anwarsyah added that to cut losses in the next half of the year, the company would cut losses on business activities that generated low profits.

'€œWe will be more efficient with our costs and improve the utilization of our assets,'€ he said, adding that this included increasing the shipment load within their vessels.

'€œThis will enable us to increase our earnings while using the same volume of fuel,'€ he said.

He further said that the company would put more focus on domestic-oriented business activities encompassing terminals and logistics.

'€œThis is because the domestic economy has been picking up,'€ he said.

Samudera Indonesia provides services including regional and domestic container shipping, project logistics, container depot, inland logistics, third party logistics, terminals, warehousing, as well as bulk carrier, offshore and
tanker.

As much as 76.5 percent of revenues come from shipping and agency, with another 24.8 percent from logistics and terminals.

He added that capital expenditure this year would focus on terminals and logistics. However, considering their financial condition, the company would decrease capital spending.

'€œWe are spending $15 million this year. In 2012, we spent $41 million,'€ he said.