ASEAN Ports Association Malaysia (MAPA)

… due to bleak outlook

PORT KLANG: Port Klang, the national maritime gateway, projects a 10% fall in cargo volume due to the bleak outlook for the economy this year.

Port Klang Authority (PKA) general manager Lim Thean Shiang said both port operators, Northport and Westports, started to feel the contraction in volume last month with a 16% drop in cargo volume against the same month in 2008.

“In an effort to cultivate and sustain the port business this year, especially import and export activities, PKA has decided on a blanket waiver for those who have difficulties in adhering to the three-day container free storage period at the port,” he told a press conference yesterday.

Port Klang previously had a five-day free storage period but this was cut to three days effective Jan 1.

Lim said the continuation of the waiver would be reviewed in July based on the economic climate then.

Lim Thean Shiang

Lim Thean Shiang

“But, the Port Klang community must continue to upgrade their efficiencies to operate under the three-day free storage period when the economy revives,” he said.

Additionally, PKA will also continue the feeder incentive scheme by April but with a new pre-qualification criteria.

The feeder incentive is given to feeder operators that help bring cargo to Port Klang from other places in the region.

The incentive was frozen in October for PKA to re-study its contribution to the cargo growth at Port Klang.

A total sum of RM37mil in incentive had been given to feeder operators since 10 years ago.

On Port Klang’s performance, Lim said it had recorded a 12% increase in cargo volume to 7.97 million 20-ft equivalent units (TEUs) last year from 7.11 million TEUs in 2007.

“This achievement has propelled Port Klang to be ranked the 15th-busiest port of the world in terms of volume last year from number 16 the previous year,” he said.

By SHARIDAN M.ALI

AS the economy shifts to a lower gear, it may be the right time for the local port industry to focus on improving infrastructure and raising efficiency levels.

This will enable port operators to provide cost-effective services to customers in the near term while ensuring that when the world trade picks up, they are able to seize the opportunities in the longer term.

In recent years, major ports in Malaysia have utilised almost full capacity to cater to the booming business, which in turn has prompted them to embark on major expansions.

According to Malaysia’s Maritime Institute senior fellow Nazery Khalid, it is crucial for local ports to continually improve their infrastructure, efficiency, productivity and performance to offer customers value for money, especially in this climate that is proving to be extremely challenging for the shipping industry.

“Unlike Westports, Northport and Port of Tanjung Pelepas, which are on par with the world’s best container ports, there are some other local ports that can improve their services.

“The other local ports must benchmark themselves against regional heavyweights like the Singapore Port, Shanghai Port and Hong Kong Port which are among the world’s top five container ports in terms of volume.

“Malaysian ports can certainly improve on many fronts to enhance their competitiveness to attract more main-line operators (shipping companies) to call at their terminals,” he adds.

He suggests that port operators thoroughly assess their current positions and chart their next course of action to weather the global economic downturn.

“Amid the economic and seaborne trade slowdown, port operators must plan their resources meticulously and find ways to harness their strengths to place themselves on a stronger platform.

“Now is the time to identify areas of weaknesses which they may have overlooked during busier times,” Nazery says.

As the most cost-efficient mode of trade transport, where 90% of goods are transported via sea, the shipping industry is vulnerable to any slowdown in the world economies against a backdrop of declining trade volume.

On the flip side, it is also well positioned to benefit from the up-tick in economic activity.

By SHARIDAN M.ALI

PETALING JAYA: Three major ports in Malaysia are confident they will meet their volume targets this year but are bracing for slower growth next year due to the global economic downturn.

Ports that have been recording substantial growth over the years have not been spared the whiplash from the global economic crisis.

Datuk Basheer Hassan Abdul Kader

Northport (M) Bhd managing director and chief executive officer Datuk Basheer Hassan Abdul Kader told StarBiz the port would be able to achieve its volume target of slightly less than three million 20-foot equivalent units (TEUs) this year, up 4.9% from 2.86 million TEUs recorded last year.

“This is because we had done well in the first half of this year but the last quarter is a little bit slow,” he told reporters after delivering a talk the Selangor Freight Forwarders and Logistics Association in Port Klang recently.

Northport’s November volume stood at 261,251 TEUs, down 7.3% against the same month last year.

Going forward, Basheer said Northport would be very concerned about the country’s economy as it depended a lot on trade.

“If Malaysian trade is affected, of course it will have some impact on our business. But with low gearing of almost 0%, we are quite robust to withstand the onslaught,” he said, adding that Northport had survived the Asian financial crisis of 1997/98.

He added that Northport would continue to operate prudently and would look into postponing taking on less important costs, such as advertising, next year.

Echoing a similar oulook, Westports Malaysia Sdn Bhd will not be expecting the usual double-digit volume growth next year that it had been enjoying previously.

But the port is still expecting to post a 16.3% volume growth to five million TEUs this year.

Ruben Emir Gnanalingam

For the month of November, Westports still recorded a growth of 5.4% to 390,000 TEUs against November last year.

Executive director Ruben Emir Gnanalingam said the port industry would see some decline in volume next year.

“Looking at the current global economy and its prospects going forward into 2009, it will take a long time to recover, maybe until 2010,” he told StarBiz.

Malaysia’s leading transhipment terminal operator, Port of Tanjung Pelepas Sdn Bhd (PTP), is also on track to meet its volume target of 5.8 million TEUs this year, an increase of 6.2% against last year, although it has felt a slight volume contraction in the last quarter of this year.

PTP recorded a decrease of 2.5% to 449,000 TEUs in November compared to the same month last year.

The port expects to achieve commendable growth next although it has acknowledged that it would not be as robust as in previous years.

Alan Tan

Transways Logistics (M) Sdn Bhd, a logistics provider in Port Klang, expects the volume of exports to decrease further after the first quarter of next year.

Its managing director Alan Tan told StarBiz that based on the current situation where furniture and food exporters were facing shrinking demand, the export volume at Port Klang was expected to fall between 20% and 30% next year, especially after the first quarter.

“But local logistics companies such as Transways are currently experiencing a surge in demand from multinationals as they open more tenders to other players which ignite competitive pricing rather than depending on one or two logistics providers.

“This is in tandem with the cost cutting measures of the multinationals in this gloomy economy.

“Warehouse business is also doing well to store commodities that are currently having price downtrend such as scrap metal,” he said.

By SHARIDAN M. ALI

In June this year, the port community in Port Klang was surprised by the entry of little known Lim Thean Shiang as Port Klang Authority’s general manager.

Coming to a post that has traditionally been reserved for long-serving government employees, Lim was worried of only two things – the acceptance of PKA employees and the port community.

“They (PKA staff) were sceptical of me, because I was from the private sector and therefore had doubtful management skills,” Lim quipped.

He said direct and indirect feedback gathered has been very encouraging.

“I feel that they have taken to my management style. I believe in empowering the staff, have them chair meetings, make decisions… it’s a new culture for them.”

Lim was handpicked by Transport Minister Datuk Ong Tee Keat to head Port Klang Authority after the March general elections. The official appointment, how-ever, came two months later on June 6.

He put the two months to good use by visiting both Northport (M) Bhd and Westports Malaysia Sdn Bhd, as well as meet up with logistics players to get a better understanding of the industry.

The 37-year-old lawyer by training is not daunted by the mammoth task ahead of him though, as he points out that his task is to make sure that plans for Port Klang are on track.

“The plans for Port Klang still remain the same. The way I look at it… what is important is to put Port Klang back on the world map, to promote Port Klang and not the port operators.

“Both port operators must assist Port Klang in promoting us as Port Klang not as Northport or Westports,” Lim said

Besides continuing with the goal of making Port Klang the transshipment hub of the region, Lim plans to set out a 15-year strategic port development plan, which will map out the direction of both port operators in Port Klang and the kind of facilities and technology needed to develop both ports.

“I realise the efficiency of both ports are mainly reliant on the transportation infrastructure, especially the road infrastructure. So, we will put up the proposal to the Ministry of Transport, which will be most likely tabled in the 10th Malaysia Plan, to see how we can link up both ports,” Lim said.

He said the linkage would reduce internal transfer time as well as divert the movement of cargo trucks away from the public road system.

By : Presenna Nambiar

THE Port Klang Authority (PKA), the regulator of Northport and Westports, plans to review the tariff structure at both terminals to bring their rates on a par with their neighbours’.

“People perceive that cheap tariff is the main reason why a shipping line calls at a port. I think that is the least of the reasons, but rather it’s about the efficiency and cost-effectiveness,” PKA general manager Lim Thean Shiang told Business Times in an interview.

He said Port Klang’s tariffs on most of the services it provides have remained unchanged since 1965.

It was reported that current handling charges for a 20-foot and a 40-foot container are RM230 and RM345 respectively. For transhipment, it costs RM140 for a 20-foot box and RM210 for a 40-footer.

“It is not about making more profit, but about helping port operators improve their infrastructure and facilities.

“If they don’t get higher tariffs, it is difficult for them to reinvest (in new equipment and facilities); and, if they don’t reinvest, we will never catch up with other (international) ports,” Lim said.

Citing Hamburg as an example, he said that 70 per cent of its operations is automated. Its port charges are about five to six times higher than those at Port Klang.

He has asked that the PKA’s research and development team collect tariff rates of ports in the region, which has several world-class ports, as a benchmark.

Once a review is done, a proposal will be sent to the Minister of Transport for approval.

On another matter, Lim said the port authority had put the dredging of the north channel on hold. It will study the viability of expanding the south channel instead.

The initial plan was to dredge the north channel in two stages to a depth of 15 metres, from 11.3m.

Work to deepen the channel to 13.3m has been completed, but further dredging to 15 metres is pending approval.

Expansion of the south channel waterway from 365m to 500m will allow for two-way traffic.

Lim said the final decision on which project to proceed with will consider the economic and safety benefits to be derived.

While both projects will need about the same amount of capital outlay, further dredging of the north channel would be more costly owing to the maintenance dredging needed to upkeep the depth at 15m.

“I am from the private sector, and it’s all about dollars and cents. All decisions should be based on commercial gain,” Lim said.

By : Presenna Nambiar