ASEAN Ports Association Malaysia (MAPA)

Accreditation by London Metal Exchange a big boost for port

LONDON: Port Klang is poised to become Asia’s leading distribution hub for the London Metal Exchange (LME) following its accreditation as the exchange’s Good Delivery Point.

The move will further enhance Malaysia’s image as a major regional logistics centre for LME trade, according to Port Klang Free Zone general manager Chia Kon Leong.

He said Port Klang’s listing was fast-tracked as it had always been LME-ready with its excellent port infrastructure, strong logistics support and sound operational systems.

Chia said the port was strategically located to capitalise on the burgeoning LME trade from producing countries like Australia and Europe to the vast consuming markets of South East Asia and China/Far East.

Datuk Seri Ong Tee Keat receiving the Letter of Accreditation from Martin Abbott (right) at the LME office in London. With them is Chia Kon Leong (left).

“We reckoned that Port Klang is targeting to receive 150,000 to 200,000 tonnes of metals within the next six months,” he said.

Chia had earlier witnessed the presentation of the Letter of Accreditation from the exchange’s CEO Martin Abbott to Transport Minister Datuk Seri Ong Tee Keat at the LME boardroom in London on Friday.

Established for over 130 years, the LME is the world’s premier non-ferrous metals market, offering futures and options contracts for aluminium and aluminium alloy, copper, nickel, tin, zinc, lead and plastics.

With a turnover in excess of US$3 trillion per annum, the LME also contributes to the UK’s invincible earnings to the tune of more than £250mil in overseas earnings each year.

Port Klang’s listing as a Good Delivery Point was approved by the LME on May 8, thereby allowing the port to receive LME-traded metals since June 10.

The accreditation is of immense significance to Malaysia as there are now only two other approved listed delivery locations in South East Asia, namely Pasir Gudang in Johor and Singapore.

LME delivery points are mainly in major ports around the world, which must meet strict criteria before they are approved for the handling of metals and plastics traded through the exchange.

Chia said Port Klang was strategically located at the crossroads of the world’s busiest shipping lane as well as being the world’s 15th busiest container port and one of Asia’s largest multi-purpose ports.

He said the port was centrally located in South East Asia, close to the huge consumer market in China which had no delivery points despite the enormous volumes of LME metals being shipped there.

“We’re close to consuming areas but away from major producers like those in Australia,” he said, citing BHP Billiton as one of the world’s largest mining companies.

Chia also said Port Klang was unique in a sense as within its free zone, there were companies which could consume such metals.

He said one firm, for instance, could actually get its copper supply from within the free zone, unlike other delivery points which were purely distribution areas.

He added that the listing had enhanced Port Klang’s resilience in facing the recessionary environment as metals needed to be stored due to lower consumption.

“We provide LME traders, warehouse companies and other users with highly competitive rates backed by cost-effective and efficient operations,” he added.

Ong said Port Klang was offering not just one port terminal but two and 405 ha of (Port Klang) free zone as a delivery location.

“And that free zone certainly has vast potentials that will suit the LME’s business purposes,” he noted.

Abbott said the LME appreciated the fact that Malaysia operated a fiscal regime that was encouraging to the international business community.

“With regards to Asia in general, as probably the biggest single growth area for the LME in the next 10 to 20 years, we’re very happy to have Malaysia and Port Klang as our strategic partners in our long-term business growth,” he added.

By CHOI TUCK WO

Johor Port Berhad (JPB) manages and operates Johor Port in Pasir Gudang, Johor.  In the late 1960’s, the Malaysian Government had responded to the increasing  demands for a port to be established independent of a foreign port.  Thus, Johore Port was established with facilities adequate for the handling of local cargo and managed by Federal Government.  As the industrial hinterland expanded Johor Port began to further develop its facilities and was gazetted as a Free Zone in the early 1980’s.  It was the first port in Malaysia gazetted as a Free Zone following the multiplying benefits to attract more cargo and businesses.

Johore Port handles all port-related activities including terminal management, cargo handling, storage and warehousing, logistics and marine operations.  JPB offers the facilities for multiple modes of cargo, including break bulk (general cargo), dry bulk, liquid bulk and containerised cargo.

Users benefits from value-added

While terminal management and cargo handling remains the Company’s primary business, Johor Port prides itself in offering and extensive range of non-traditional port activities and value-added services for its customers.  This includes the running of the Free Zone within which Johor Port is located.  Johor Port’s control of its Free Zone services allows it to extend its scope of business and further extend the range of services to its customers.

Minister of Transport Visits Johor Port

Furthermore, having met the stringent requirements such as good security, efficient Free Zone management and excellent multi-purpose facilities, Johor Port is currently one of only four ports in Asia listed on the London Metal Exchange (LME).  The LME is the world’s largest trading platform for non-ferrous metals, and Johor Port is a safe point of storage and distribution of seven such metals: zinc, copper, lead, tin, nickel, aluminium alloy and base aluminium.

The Port also handles all marine operations within its water limits, including pilotage to private jetties, ship-to-ship transfers, salvage operations and the like, Land-based logistics Sdn. Bhd. (JPL).  JPL also operates all intra-port cargo movement.  JPL itself is expanding its total logistics operations to achieve its aim of becoming a major regional logistics player.  Working in synergistically, JPB and JPL form a comprehensive package of services to supplement the users’ supply and distribution chains.

Fully integrated ICT for speedy processing

Johor Port’s operations are managed through various web-based computer applications that allow for speedy transactions between the user and JPB.  The Johor Port Container Terminal System (JCTS) was recently launched as the beginning of a multi-phase implementation of a fully integrated system that will cover the majority of operations at Johor Port.  This system will incorporate the existing Free Zone Information Processing  System (FZIPS) and Marine Services System (MSS) together with the upcoming Multi-Purpose Terminal System (MPTS), which will manage non-container operations, and Port Safety Management System (PSMS), which will manage safety and security at Johor Port.  The ultimate aim of the integrated system is to provide a paperless and streamlined working environment that will substantially reduce operating time and costs for both Johor Port and its users.

Latest Developments

As Ports globally are increasingly competitive, Johor Port in its quest for higher efficiency and productivity, has been undertaking some intense development work.  The development covers operations facilities, support facilities and infrastructure as well as overall aesthetics.

One of the main upgrades is the revamping of the main entrance control.  Previous Customs checkpoint was demolished and replace.  Johor Port’s own security checkpoints also replace with new, dedicated checkpoints for individual entry to Container Terminal and Breakbulk Terminal.  These checkpoints and equipped with CCTV and centralised communications as well as basic utilities.

Facilities for port safety were also upgraded, with the JPB Port Safety Department office being expanded and renovated to house the Fire & Rescue under one roof.  A new Security Service Centre is now available to provide pleasant and professional ambiance to cater for all security issues pertaining to entrance control.

Roads at the main entrance and key intersections were upgraded to durable, heavy-duty concrete pave.  The construction also involved creating maintenance trenches for communications cables and utilities to reduce the impact of future maintenance work on day-to-day operations at the port.  The completed the package, the landscaping in the area has also been revamped with walkways and new foliage appeasing to users and visitors of the Port, thus making the environment suitably convenient and conducive for businesses.

On the operations, JPB has procured several new cranes, some of which have already been deployed recently.  Three new Rubber Tyre Gantry Cranes (RTG’s) began operations at the Container Terminal in late 2005, with three more to come in 2007.  Also in early 2007, a new Post-Panamax Gantry Crane will be delivered for wharf operations in the Container Terminal, increasing the total number of wharf cranes at the terminal to eight in total.  A bulk-handling crane was also delivered in the middle of 2006 to improve productivity at the Bulk and Break Bulk terminal.  Warehouses are all fully upgraded and built in 2006, making the total covered storage area for Bulk and Break Bulk to 1.5 million square feet in total.

For the users and seafarers, the Port has conveniently provided place, a mariner centre to converge for meetings or pleasures.  With a bank, clinic, a meeting room, a recreational lounge, a gift shop, a restaurant and three cafes, the mariner centre will be a great place for the Port users to rest and relax as well as conduct important business discussions.  The mariner centre also houses JPB Training Centre and a private marine training centre.