Wednesday, August 20, 2014

Malaysia Competition Commission (MyCC) published a Block Exemption Order for liner shipping agreements (BEO)

Cooperative agreements among liner shipping companies have existed in most trades for more than 100 years. Most major trading nations in Asia and the Pacific Rim have recognized the importance of these agreements to both the shipping industry and national economies. To the extent that these countries have competition laws that could restrict such agreements, many have found after careful study that these agreements should be afforded an exemption from those competition laws for economic, public policy and international comity reasons.
On July 7, 2014, the Malaysia Competition Commission (MyCC) published a Block Exemption Order for liner shipping agreements (BEO) in its Federal Government Gazette. This decision was based on an application by local carrier and port operator associations on behalf of the liner shipping industry serving Malaysia. Cozen O’Connor acted as a foreign law advisor to those associations while working with local legal counsel.
The BEO is valid and in force for three years, unless cancelled earlier by the MyCC. It broadly exempts liner Vessel Sharing Agreements (VSAs) and (to a more limited extent) Voluntary Discussion Agreements (VDAs) from certain prohibitions set forth in the Malaysia Competition Act of 2010.
The publication of the BEO is significant as it provides broad protection for VSAs. Of note, the liner industry is the first and thus far only industry to be formally exempted from provisions of Malaysia’s Competition Act, which was adopted in 2010. While this is positive news for the shipping industry, to the extent that a company participates in any VSA or VDA operating in the Malaysian ocean trades, there are certain compliance issues associated with the publication of the BEO. Some key points in the BEO and related compliance issues are summarized below.
General Provisions
  • The BEO exempts VSAs and VDAs from certain prohibitions in the Act against anti-competitive horizontal agreements, such as those involving market allocation. The BEO does not exempt entities from engaging in monopolistic conduct.
  • The BEO only applies to ocean transport services provided by liner operators. It does not apply to any inland carriage of goods that is part of through transport.
Provisions Relating to VSAs
  • The BEO defines Vessel Sharing Agreement broadly to include all operational agreements between ocean carriers involving direct calls to Malaysia (e.g., alliances, consortia/vessel sharing agreements, joint service agreements, space/slot charter agreements, and cooperative working agreements).
  • Copies of all VSAs and any amendments thereto must be filed with the MyCC within two weeks from the date of signing such agreement or amendment. All VSAs currently in effect are required to file their agreements with the MyCC by September 6, 2014.
  • There are other conditions placed on VSAs in the BEO, such as: (1) the VSA may not contain any element of price fixing or price recommendation, (2) the VSA may not require the disclosure of any confidential information, and (3) the VSA must allow lines to enter into any confidential contracts with their customers.
Provisions Relating to VDAs
  • VDAs are subject to similar conditions and the same filing requirements as VSAs, including the requirement to file all existing VDAs with the MyCC by September 6, 2014.
  • There is one important aspect of the BEO relating to VDAs that is more narrow than other countries’ VDA exemptions. The BEO permits “the sharing of information relating to the shipping industry,” including “market data, supply and demand forecasts, international trade flows, and industry trends.” It does not, however, exempt actions of VDAs “containing any element of price fixing, price recommendation, or tariff imposition.” VDAs serving the Malaysia trades should therefore consider whether changes to the VDA’s structure and/or activities are necessary in order to comply with the terms of the BEO.
The Malaysia action is an important one for members of VSAs and VDAs serving the Malaysia trades, but it will be important for carriers to review those agreements to ensure that they meet all of the conditions contained in the BEO. In addition, carriers should be mindful of the need to file their existing agreements with the MyCC by the deadline set forth in the BEO (September 6, 2014). 

Wednesday, June 26, 2013

Maritime sector needs reallignment

THE New Economic Mode (NEM) envisions transforming Malaysia’s economy into a developed nation status by 2020.
Such an economy will be propelled not just by capital but by productivity and high technology, featuring high income, value adding, innovation driven and knowledge based activities.
The maritime industry is unfortunately not among the first that comes to the mind of many in terms of its potential to generate such activities and to help transform the nation’s economy. It is probably a reflection of its understated importance and contribution to the nation’s economy.
Admittedly the maritime industry – which includes activities such as shipping, port operations, shipbuilding/repairing and offshore oil and gas exploration and production, among many others – is not as high profile or glamorous compared to say the aviation, banking or legal profession. The industry is also arguably not the first career choice of most young people.
However, this does not mean that the industry does not offer exciting earnings and career development potential. There are many sectors within this vast industry that present high-income prospects for those who care to look carefully and set aside stereotypical perception of the industry as being unappealing and characterised by hardship and unattractive remuneration.
Among such services are specialised services in offshore oil and gas exploration and production, integrated logistics services, maritime financing, supply chain management, shipyard services, advisory and consultancy, maritime education and training, shipyard activities, and producing solutions to reduce emissions from shipping.
These value-adding activities not only are capable of generating high -income to meet the goal of NEM but also lead to realising Malaysia’s ambition of becoming a globally competitive maritime nation.
Local companies which can offer value-adding products and services will be able to enlarge their market shares and compete globally. Such activities tend to yield high earnings to their companies and offer high income to their personnel.
Take shipping for example, whose competitive nature has become even more so amid the global recession and slump in the major shipping trades. As demand for shipping services fell, banks tighten financing to shipping, huge new tonnage keeps on entering the major shipping trades and oil prices hovering at high levels, shipping companies have faced very challenging market conditions. Many have gone out of business and hanging by thread amid the tough operating environment.
Those which are still surviving and thriving have done so by offering value-added services to their customers. Being in a very competitive market, shipping lines which can offer more than just transportation services are the ones least likely to run aground amid choppy waters in the industry. Such value-added services include specialised cargo transportation, logistics, ship management, ship brokerage and automated shipping status update.
By promoting such high-income generating activities in the maritime industry, Malaysia can also move to the “blue-ocean” side of the maritime industry and differentiate itself amid the crowded field. This will enhance their prospect of offering their services to the international market, which is crucial given the global nature of shipping and the small domestic market in Malaysia.
The importance of providing high-income, value-adding maritime related services becomes clear when one takes into account that competition in the maritime industry is increasing and Malaysia cannot out-compete countries which have advantages such as cheaper labour cost and economies of scale. To have a truly world-class maritime industry, Malaysia must break away from just offering “plain vanilla”, low-cost maritime services and start investing in developing and nurturing the manpower to cater to high-end, specialised and high-revenue generating activities to remain competitive.
For that to happen, Malaysia needs to re-align its maritime sector to develop the soft-side of the maritime sector. There must be in place a well-defined strategy, infrastructures, conducive environment to promote research and development or R&D, innovation, entrepreneurship and risk-taking, and strong leadership and public-private partnership. Above all, there must be a mindset and attitude change among local players in the maritime sector from relying on cheap labour and cost advantage to a strong desire to serve bigger customers and to compete on an international and global marketplace.
Malaysia’s maritime industry can no longer depend on a low-cost structure to remain competitive internationally. It cannot continue on the common path that it has been practising and hope to keep clinging on to the advantage of low cost as this can easily be replicated by other aspiring maritime nations. Even regional countries like Vietnam and Thailand, which have invested heavily in maritime infrastructures such as trade and shipyards, are fast catching up. They might even overtake Malaysia in certain aspects of the maritime industry, for example attracting main line operators and enlarging market share in handling transshipment cargos and intra-Asean trade, if Malaysia’s maritime industry does not continue to make progress.
A plan of action is also recommended to facilitate the promotion value-adding, high-income activities in the maritime sector. This includes developing a set of strategies and plan of action to align the maritime sector with NEM’s aspirations, offering a comprehensive set of incentives to local companies providing maritime support services, investing in skills and talents, inculcating and promote a strong R&D culture, and consolidating certain sectors to attain economies of scale.
A comprehensive approach in promoting value-adding, high-income activities in the maritime industry can lead to the enhancement of Malaysia’s competitiveness in the maritime industry and put the maritime industry on course to fulfill the aspirations of NEM.
It is high time Malaysian maritime industry players wake up to the fact that taking a myopic worldview of their business environment and continue with the status quo in their respective sectors would lead to a dead-end tunnel. They cannot be depending on the small domestic market and on government contract alone. They must branch out and develop a keen sense of where the business is and where new opportunities will emerge. They cannot just follow the leaders if they want to really excel and make a mark for themselves on the global stage in this ultra competitive industry.
Realising the ambitious targets set by NEM requires nothing short of the highest level of commitment to excellence, strong resolve and hard work, and major mindset transformation.
Only by doing so can the nation make the quantum leap required to attain high-income status and to generate knowledge-based, innovative-driven economy, as envisioned by the NEM. The motto pencapaian diutamakan must be used as a mantra for maritime industry players to adapt to the dynamics that will be unleashed by the NEM and to enhance Malaysia’s maritime competitiveness on the global stage.
Source: StarBiz

Tuesday, May 21, 2013

Kontena Nasional

A Kontena Nasional yard. The company incurred a loss of RM19.2mil in the last financial yearA Kontena Nasional yard. The company incurred a loss of RM19.2mil in the last financial year
SUBANG JAYA: Transport and logistics provider NCB Holdings Bhd will address the issue of escalating costs with a more efficient financial management system to turn around its haulage and logistics operation subsidiary Kontena Nasional Bhd.
Kontena Nasional incurred a loss of RM19.2mil in the last financial year ended Dec 31, mainly due to the lower margin contribution from new logistics activities caused by high initial start-up costs.
“The board of Kontena Nasional is addressing this issue at present.
“We want to strengthen the financial management system to stabilise cost so that we can obtain improved margins.
“We hope to see better results in the coming quarters,” NCB chairman Tun Ahmad Sarji Abdul Hamid told reporters after the company's AGM.
One of the core focuses of Kontena Nasional, according to Ahmad Sarji, would be operational cost management and bottom-line results.
<B>Ahmad Sarji:</B> ‘We want to strengthen the financial management system to stabilise cost.’Ahmad Sarji: ‘We want to strengthen the financial management system to stabilise cost.’
Nevertheless, Ahmad Sarji said the company's port operations, viaNorthport (M) Bhd, continued to be the main profit contributor.
In the last financial year, NCB posted a pre-tax profit of RM180.4mil, reflecting a marginal decrease of 5.1% over 2011.
This came on the back of an RM987.2mil revenue, a 6.4% increase against the previous year.
Northport's profit contribution was RM197.3mil.
Northport handled 3.1 million twenty-foot equivalent units (TEUs) last year, a decrease of 3.4% over the previous year.
Ahmad Sarji said the completion of container terminal four in August should boost the port's capacity and business.
On capital expenditure, Ahmad Sarji said the company had earmarked RM1bil for 2013 and utlised about RM700mil year-to-date, adding that future expansions might be financed via the issuance of sukuk.
He was also thankful to the Government for renewing the Northport lease by extending its present tenure by another 30 years to 2043 and another 21 years for Southpoint to 2034.
“The terms and conditions of this new lease are being negotiated and finalised, and slated for completion in the third quarter of this year,” he said. NCB paid out a dividend of 65.5 sen per share, involving a total payout of RM308mil, last year.
Source: StarBiz

Friday, March 1, 2013

Port Klang handled 100 million TEUs

PORT KLANG: From its humble beginning of container operations since the early 1970s, Port Klang recently celebrated the handling of the 100 million twenty-foot equivalent units (TEUs) at Northport (M) Bhd.
“We also began this year with a milestone achievement of surpassing the 10 millionth TEU mark. Northport handled 1.74 million TEUs or 47% of Port Klang’s indigenous volume and 1.35 million or 21% of the transhipment volume,” Port Klang Authority said in a statement.
In terms of development, Northport’s new container terminal 4 (CT4) is progressing on schedule. Wharf 8A, which forms part of CT4 is expected to be fully operational by July this year.
Upon completion in mid-2013 Northport will be able to handle 5.6 million TEUs. Northport is also investing in new equipment to further enhance the efficiency of its operations. Four super post-panamax quay cranes will arrive in the second quarter of 2013 to coincide with the completion of Wharf 8A.
Northport is acquiring 13 units of electric rubber-tryed gantry for its container handling operations.
Source: StarBiz

Tuesday, September 25, 2012

Regulate freight forwarding industry

The Federation of Malaysia Freight Forwarders wants the registration of freight forwarders be made mandatory to weed out fly-by-night operators

THE Federation of Malaysia Freight Forwarders (FMFF) has proposed that the Transport Ministry control the number of players in the market and make the registration of freight forwarders mandatory in order to weed out fly-by-night operators.

Selangor Freight Forwarders & Logistics Association (SFFLA) vice-president Chan Kong Yew said the freight forwarding industry is currently not regulated by any government body.

"The government should recognise the linkage between regulation, accreditation regimes, industry performances and quality standards," he told Business Times in an interview.

"On our part, FMFF is developing a framework where local freight forwarders can be regulated and benchmarked against international standards in terms of paid-up capital, operational capability, financial strength, ethical conduct, professional capacity and experience," he added.

FMFF also plans to upgrade the professionalism of the logistics industry through education and training.

"We recognise the importance of training and upgrading the skills of our members and employees, and have divided them into three focus groups," said FMFF president Alvin Chua Seng Wah.

Chua is also the newly-appointed president of SFFLA, following the demise of former president Abel Tan Ah Beng last month.

"The first group will comprise operational staff, who will undergo practical and vocational training, while the second group will focus on enhancing the knowledge of clerical and supervisory employees through a series of short courses.

"The third group will encompass executive staff, who can participate in the federation's foundation and certificate courses," he said.

In this regard, FMFF is working closely with the United Nations Economic and Social Commission for Asia and the Pacific and the International Federation of Freight Forwarders Associations (Fiata) in developing a series of logistics courses from foundation level to certificate, and eventually leading to a diploma in accordance with Fiata's syllabus, which is recognised by the world logistics industry.

"We are planning to introduce the diploma programme in Multimodal Transport Operation by the end of this year," Chua said, adding that FMFF is in discussions with Universiti Tunku Abdul Rahman to enter into a collaboration to offer the diploma course.

In another development, FMFF wants the government to lower the Bumiputera equity requirement for locally-registered licensed Customs brokers to 30 per cent from the current 51 per cent, to help them compete on a level playing field against their foreign counterparts.

"In 1976, the Customs Authority had imposed a requirement of 51 per cent Bumiputera equity share for all new and renew Customs brokerage licence. As a result, there is now a big percentage of Bumiputera portion that are normally decorative rather than actual contribution," said SFFLA deputy president Yeoh Kean Jin.

It is understood that the current 51 per cent Bumiputera equity requirement has prevented many non-Bumiputera Customs brokers from reinvesting their profits into growing their company over concerns that they do not have control over the company's operations.

To reduce their risk, the non-Bumiputera Customs brokers have spread their investments among many different companies.

"As the Customs brokers start to expand and diversify their businesses to offer integrated logistics services like warehousing and distribution, transportation, and value added services, they would normally form new companies and have different partners," said Yeoh.

This has resulted in many of them not being eligible for the Malaysian Industrial Development Authority (Mida) incentive for integrated logistics services (ILS), which requires the company or the group of companies to have the same shareholding structure.

"This problem is reflected in the number of local freight forwarders who have qualified for the ILS incentive. Of the 12,000-odd freight forwarders in the country, only 21 have qualified so far.

"As such, we call on the government to liberalise the Bumiputera equity requirement in the Customs brokerage business so that we can consolidate all our companies into one integrated logistics service provider and compete with the likes of Nippon Express, Geologistics and BAX Global," said Yeoh.

"This is also in line with the full liberalisation of freight services in Asean by 2010," he added.

Source: BTimes

Wednesday, May 2, 2012

Truck drivers protest at Northport over depot charges, delays

PORT KLANG: Container truck drivers who are unhappy with depot operators for allegedly exorbitant charges and causing delays, have taken their grouses to the streets.
Thousands protested at Bandar Sultan Sulaiman, outside Northport here Wednesday, from 10am, urging the Transport Ministry and Port Klang Authority (PKA) to help resolve this matter.
Several demonstrators were also seen hurling stones and empty bottles at trailers that refused to stop. The protest lasted for almost two hours. The drivers claimed they were acting on their own and were not from any group.
R. Pandian, 52, a container lorry driver for 30 years, said they resorted to a protest after depot operators raised handling fees.
"They used to charge RM5 and now it is between RM15 and RM20. We would not mind paying a standardised fee of RM20 if their services improved.
"But their services got from bad to worse and this has resulted in an average of one trip a day for all of us," he said, adding that drivers could previously make at least four trips, back and forth from the depots.
Meanwhile, PKA chairman Datuk Teh Kim Poo, when contacted, said the problem was beyond the authority's jurisdiction.
However, he said, he would see how he could handle this issue as Klang Barisan Nasional chief, by speaking to depot operators and truckers.

Source: BizStar

Klang ports facing a standstill

PORT KLANG: Trouble is looming at the ports here following a planned move by over 1,000 container truck drivers to stop transporting goods on Wednesday to protest against depot operators.
The drivers plan to hold a three-hour gathering from 9am outside Northport to express their frustrations over long-standing issues on delays and increases in depot gate charges, which they claim are affecting their earnings.
The planned demonstration is worrying Northport and West Port as their action may affect operations.
According to a driver who declined to be named, the service level at the depots had resulted in them having to wait for three to four hours to pick a box and transport it to the customer’s premises.
“We are only able to do one or two trips a day and this has reduced our earnings. Some of us are paid monthly wages of RM300 and our main income is from our daily trips. Some drivers are not paid monthly wages.
“We will be able to do six or more trips if the depot operators are more efficient,” he said, adding that previously it would only take them 45 minutes to pick a container.
A haulage company executive said the depot operators had introduced gate charges of between RM10 and RM16 per container so that they could invest in new equipment to improve service. Previously, it was RM5.
“But, until now, nothing has changed and it has severely impacted the livelihood of these much needed professional drivers,” he said, adding that attempts to resolve the issue had been unsuccessful.
Depot operators are paid by shipping lines to store their containers while haulage operators work on behalf of the shippers to move the containers.
An Association of Malaysian Hauliers official said he hoped that the drivers would not go ahead with the stop-work action because this would adversely affect the ports.
In an interview with StarBiz on Feb 20, association president Datuk Che Azizuddin Che Ismail had admitted that haulage operators were still having problems with container depot operators, suggesting that depots should be placed inside port areas rather than outside.
“It’s easier and cheaper if all containers go back to the port. It’s not productive to have a container 10km away from the port,” he said, adding that although some ports in Malaysia had on-dock depots, it was still not efficient as there was only one gate for trucks to collect and send the boxes.
Source: BizStar

Freight forwarders cry foul over exorbitant port charges

Thursday, 10 November 2011

Ten trade associations from various industries have collectively submitted a memorandum to the government, raising concern over exorbitant port charges that they claim are affecting profits and incurring unnecessary higher costs to their operations.

The associations collectively seek the urgent intervention of the Special Taskforce to Facilitate Business (Pemudah), Ministry of International Trade and Industry (MITI), Ministry of Transport, Ministry of Domestic Trade, Cooperatives & Consumerism, Port Klang Authority, Malaysian National Shippers Council and the relevant government agencies to issue clear, enforceable guidelines on the landside charges that shipping lines are allowed to charge.

As of press time yesterday, they had yet to get a response or reply to their memorandum from the government. "Since 2009, new bloated charges are being implemented and now such charges are becoming standard charges for all the ports in Malaysia, and this seriously affects freight forwarders businesses," Federation of Malaysian Freight Forwarders (FMFF) president Alvin Chua Seng Wah told The Malaysian Reserve in an interview.

The FMFF — together with the Malaysia Hardware, Machinery & Building Material Dealers’ Association, Associated Chinese Chambers of Commerce and Industry of Malaysia, Steel Wire Association of Malaysia, Building Materials Distributors Association of Malaysia, Malaysia Mould & Die Association, Federation of Malaysian Foundry & Engineering Industries Associations, Machinery and Equipment Manufacturers Association, Malaysian Indian Metal Traders and Recyclers Association, Malaysia Hardware Wholesaler Association and Metal Dealers’ Association Selangor & Kuala Lumpur — jointly submitted the memorandum to MITI and Pemudah, together with various other related agencies last month. The memorandum stressed that the situation has led to significant increase in shipping costs over the last few years and, if left unchecked, will severely affect the competitive edge of the local industries.

"Our main concerns are that over the recent years, shipping lines have been increasing and creating new landside charges which are dubious in nature and do not reflect the services they provide," said the memorandum.

"They are increasing our cost of doing business by merely creating charges without any input and we are perturbed with the fact that they are permitted to enforce all these charges based on what they deemed to be 'commercial arrangements'," it added.

According to Alvin, the charges are related to the services at the port terminals and are not connected to the freight charges which shippers pay directly to shipping lines or non-vessel operating common carrier operators.

"When Port Klang adjusted its container port charges in 2001, the actual container tariff of the port operator charges the shipping lines RM230 for a 20ft container (twenty-foot equivalent units or TEU), but the shipping lines in turn charge the shipper/consignee RM335 under the name of 'Terminal Handling Charges'. They explained that the difference of RM105 is to cover respositioning of empty containers after un-stuffing and cleaning of containers," said the memorandum.

"Based on our investigation, the repositioning cost is paid for by the shippers/consignees who are paying the local hauliers to undertake the haulage job," the memorandum specified.

The memorandum said shipping lines have also enforced the collection of "container deposits" of RM300 to RM1,000 per container and would deduct any charges incurred for washing and repairing of those containers.

Other grievences include a RM30 charge for "Electronic Data Interchange" on shippers and consignees for their mandatory submission of the shipping manifest, which the memorandum said was the shipping lines' responsibility to do so under the requirements of the Customs Act 1967.

Furthermore, it said the "Container Seal" charge was increased from RM10 to RM15 per unit when the norminal market cost is just RM1.20 per seal while depot gate charges, which are currently set at RM5 per container, are expected to be increased to RM30 per box soon.

The memorandum also stated that some shipping lines have recently introduced a new charge, "Container Yard Shifting", with a RM150 fee per container, which is "highly dubious" as the shipping lines are not involved in any container handling and movement at the terminal.

It said another new dubious charge is the "Container Maintenance" charge of RM30 per TEU that is being unfairly charged under the "Container Deposits" scheme currently being collected by shipping lines, in which there is no explanation and justification for this charge.

"About five million TEUs go through Port Klang every year, of which about 2.5 million TEUs are import containers.

"One such frivolous charge alone like the 'Container Shifting Charge' of RM150 per box, if left unregulated, will cost our domestic industries about RM375 million annually and the overall cost to our domestic industry is huge and it must be regulated before it gets out of control," the memorandum stressed.

Tuesday, February 21, 2012

Slower haulage growth

SHAH ALAM: The haulage industry expects to register a 5% volume growth this year – which is lower than last year – largely due to the eurozone crisis and the slowdown of the US economy.
Association of Malaysian Hauliers (AMH) president Datuk Che Azizuddin Che Ismail said this year was anticipated to be a challenging year as the situation in the West might show little improvement.
“But, things are a lot rosier in Asia, especially Asean. Countries like Malaysia and Singapore with good infrastructure are poised to take advantage of the situation,” he told StarBiz, adding that the industry’s volume was very much attached to the performance of the ports in the country.
Last year, according to Che Azizuddin, the haulage volume in Port Klang alone, the country’s biggest maritime gateway, increased by 8% compared with the same period in 2010.
Although the industry recorded growth last year, he said the current state of the industry could be better as it was still plagued by pockets of over-capacity and problems with container depot operators. “There are still too many players. A lot of forwarding agents now are also interested to operate smaller scale fleet of between five and 10 prime movers.
“Many of the new players also use reconstructed trucks, which are not reliable. People do not use these anymore, not even in Jakarta,” he said.
He added that it was difficult to act in a concerted effort when the industry was too fragmented.
“Many of these smaller players are not members of AMH and this has been a hurdle for the industry to tackle issues particularly with the Government,” he said.
In terms of capacity, members of AMH represent about 60% to 70% of the industry.
Che Azizuddin said the haulage business was not that easy due to high cost of entry. “First, it is capital intensive. A new good brand prime mover cost about RM300,000 each. It is not profitable to operate a fleet of five to 10 trucks as you need the economy of scale to sustain the business.”
“If a company has a large fleet with a good management system, it can easily enjoy a 5% to 10% margin,” he said.
Che Azizuddin said since the global economic crisis in 2008, the number of new players had reduced.
“Looking at the situation now in terms of capacity and demand – the water will find its level eventually,” he said.
On the depot issue, Che Azizuddin suggested that rather than having depots away from the port, the container depot should be placed inside the port area.
“It’s easier and cheaper if all containers go back to the port. It’s not productive to have container like 10km away from the port,” he said.
Although some of the ports in Malaysia, have on-dock-depot at the port, he said it was still not efficient as there was only one gate for the trucks to collect and send the containers.
Besides the location, Che Azizuddin said some container depot operators should improve on their efficiency.
“It is higher cost for us if we have to wait half a day to collect a container,” he said, adding that the matter had been brought up to the relevant authority but it had yet to react to the issue.
He said this inefficiency would take a toll on the country’s competitiveness to attract more multinationals into the country.
Going forward, Che Azizuddin said the association wanted to help its members in terms of business.
“We are planning to have a central purchasing centre where we can team up to buy spare parts such as tyres and lubricants at competitive prices.
AMH has also implemented a consolidated Puspakom and located it at Konsortium Logistik Bhd.
“These will save smaller players time and cost for their vehicle inspection as opposed to qeueing at centralised Puspakom centres,” Che Azizuddin said.
Source: BizStar

Sunday, October 30, 2011

Ports plan tariff hike

A number of major ports in Malaysia plan to increase port tariffs or introduce new tariff items going forward.
This is because the revision of some of the tariff items has been long overdue. The move is also to match the investments that have been made to expand the ports.
Port Klang Authority acting general manager Capt David Padman toldStarBiz that some of the new rates should be applicable by the first quarter of 2012 pending the Transport Ministry’s approval.
“The revision of a number of tariff items including conventional cargo and marine services for Port Klang has been mooted since three years ago.
“This is because a large section of the conventional tariff has not been revised for 45 years since the days when Port Klang was administered by the Malayan Railways.
“Also, terminal operators have many times requested charges to be increased in line with the investments in the facilities and services including the construction of new berths, purchase of new cargo handling equipment and subsequent maintenance of the facilities.”
He said terminal operators had also requested an increase in marine service charges as fuel prices had increased substantially since 2008.
After extensive examination of the proposals by the operators and subsequent consultation with the industry and port users, charges for conventional cargo handling such as stevedorage, wharf handling and storage would be increased, Padman said.
“On the other hand, certain charges such as wharf labour and third-shift surcharge have been withdrawn as they are no longer justified given the scope of current port operations.
“Marine service tariffs will see a slight increase while container handling will see new charges for containers of more than 40 ft long,” he said.
It was reported in StarBiz last month that Penang Port Sdn Bhd also planned to introduce new tariffs in the middle of next year.
Chief operating officer Obaid Mansor was quoted as saying that the proposal to raise port tariffs, comprising largely cargo-handling and ship charges, had been submitted to the Penang Port Commission.
Penang Port tariffs were last revised in 2003 and implemented in 2007, which saw a 30% increase in handling charges for container cargo to the present rate of RM182 for a 20-ft container and RM273 for 40-ft container.
About 80% of the cargo handled at Penang Port’s North Butterworth Container Terminal comprises full container load cargo, which is expected to generate 75% of Penang Port’s revenue this year compared with about 65% in 2010.
Meanwhile, ports in Johor namely Johor Port and Port of Tanjung Pelepas, (PTP) are also expected to introduce new tariffs of some sort.
Chairman for both ports, Datuk Mohd Sidik Shaik Osman said Johor Port had recently received approval for a small revision of its port tariff only after 24 years.
“The new port tariff at the Johor Port has been effectively implemented since August 2011.
“The previous revision in Johor Port’s tariff was in 1987,” he said.
As for PTP, Mohd Sidik said it was currently exploring with the Johor Port Authority on the possibility of introducing new tariff items which were not currently prescribed.
“However, the expected impact on port users will be very minimal,” he said.
As of last year, Port Klang, which comprises Northport and Westports, were ranked at 13th place in the global container ranking by volume at 8.87 million twenty-foot equivalent units (TEUs).
PTP came in at 16th place last year with a volume of 6.54 million TEUs,
It was reported that for the first five months of this year, Malaysian ports handled a total of 8.2 million TEUs, up 10.9% from the same period last year.
Sourced from here.

Extreme shipping

Sourced from here-

I WRITE from the pilot’s cabin of one of the world’s largest container ships, the Eleonora Maersk, moving almost imperceptibly through the South China Sea off the Vietnamese coast. Eight storeys up from the deck, my windows just about clear the top of the thousands of containers that are stacked in 22 rows across the vessel. This allows me a view to the ship’s forward navigation mast, a full 250 or so metres away. But the rain is coming in now, and it will soon disappear from sight.
The accommodation section, and above it the bridge, is a bit aft of amidships, so the stern is another 150 metres or so behind me. Or, put another way, the whole is about four football pitches long and half of one wide. Or again: about two-fifths the height of Scafell Pike, the highest peak in England. This is “economy of scale” made steel…and the reason why the retailer Primark will be able to sell me a Chinese-made T-shirt for just a pound or two on my local high-street in Britain, just inside a month.
The vessel is specifically designed to ply the world’s most important trade route, the Asia-Europe run: this is now (euro-area debt crisis notwithstanding) the main artery of globalisation. Having started its homeward-bound voyage in South Korea and having picked up most of its cargo in Shanghai, the Eleonora is due to dock in Rotterdam in a couple of weeks’ time. I joined the vessel on October 26th at the container terminal of Yantian, the port of Shenzhen, just inside mainland China north of Hong Kong. I will disembark on October 30th when we reach another massive port, on the southern tip of Malaysia, just north of Singapore. Even if I wanted to stay on board for the next leg, non-stop to Europe, I wouldn’t get very far. As was explained to me in “the citadel”, a secure room in the bowels of the ship where everyone has to gather in the event of a boarding by pirates, no guests or even family are allowed on Maersk vessels past Sri Lanka, because of the threat from Somalia. In truth however, this ship is just too big (and fast) for pirates to grapple with.
So, what are we carrying? This boat will be fully loaded after Malaysia, with about 7,500 containers (or 100,000 tonnes) of European Christmas presents, mostly—and a New Year treat. For we must be shipping much of the continent’s New Year celebrations as well: 1,850 tonnes of fireworks, including 30 tonnes of gunpowder, probably from Hunan province, where most of these things are made. Oh, and about 28 containers (290 tonnes’ worth) of plastic cigarette-lighters, destined for the Danes, Swedes and Poles.

To make it worth one’s while to ship cigarette-lighters and sparklers most of the way round the world, it is best, of course, to have a ship as big as the Eleonora Maersk. Only with such behemoths can shippers and retailers achieve the economies of scale that are necessary to make the Asia-Europe trade pay. Maersk lines, the world’s biggest container-shipping company, has eight such E-Class ships—and has just ordered 20 even (slightly) bigger ships from Korean yards. High oil prices are now forcing all the main container-shipping firms to order ever bigger ships. They might be awesomely expensive (Maersk’s new ones will cost almost $200m each), but with fuel costs making up such a large part of their bills, all the shipping lines are looking to reduce the cost per mile per container on the Asia-Europe run. The only feasible way to do that is pile more containers on one ship.
So almost everything about the Eleonora, which was built in the mid-2000s, is quite simply—The Biggest in the World, Ever. It is not just the biggest kind of container ship, but the biggest ship of any sort in service. To move its load through the water, it boasts the largest combustion engine ever built—generating horse power equivalent to 1,000 family-sized cars. The 14-cylinder engine turns the longest propeller shaft (130 metres) ever built, at the end of which is the largest propeller, weighing in at 130 tonnes. Yet so efficient is the engine, says the Danish chief engineer, that cruising at an average of 17 knots the ship consumes just 3 grams of fuel per tonne per nautical mile—which certainly sounds low. This sort of calculation, above all, makes a sophisticated laptop or iPad made in China affordable in Copenhagen.
Alarmingly, at least for a container-ship neophyte like myself, the world’s biggest ship seems to have a crew of only 19. But that’s a few too few, surely? In fact, the Danish captain explains that, strictly speaking, the boat is designed to be run by just 13 people; but he likes to have some more on board, for maintenance and repairs…Sensible chap. Together with some cadets, that brings the full complement to a gangway-shoving 24.
But then the ship is so automated that the captain appears to exercise full mastery over everything in sight with only the slightest touch to a half-ball, the size of one hand’s palm, which protrudes from a control panel. I can see all the traditional signalling flags neatly stowed on shelves on the bridge—so neatly, in fact, that I suspect that, along with the sextant and the flares, they might never have been used.

Monday, October 3, 2011

MIDF research downgrades ports sector to negative

MIDF Research had downgraded the ports sector from neutral to negative in face of weaker exports to the faltering US economy and Europe's sovereign debt crisis.

It said on Monday, Oct 3 that Malaysia's export slowed down as it posted a 7.1% year-on-year (y-o-y) growth in July 2011 from 9.6% y-o-y increase in June 2011.

In terms of sequential month, July's export was 2.2% month-on-month (m-o-m), lower than 5.1% m-o-m posted in the previous month, it said.

"We believe that this had led to the decline in Electrical and Electronics exports where it continued to decline for the fifth consecutive month," it said.

The research house said the declining exports would add pressure to seaports, especially container based ports given that rates are fiercely competitive.

Meanwhile, port traffic is seeing signs of easing as well as NCB HOLDINGS BHD []'s faltering port twenty-foot equivalent units (TEU) growth.

The group posted a decline of 3.4%y-o-y in its 1H11 port TEU while port revenue fell by 1%y-o-y. Also, port profit before tax margin declined by 5.8 percentage points, which suggest the company was facing margin squeeze and rates pressure.

However, the research house maintained its Neutral rating on NCB citing its defensive qualities as its dividend policy would moderate weaken sentiments.

Source: Edge

MIDF Research maintains negative on shipping sector

MIDF Research maintained its stance on the shipping sector due to persistent problems that are caused by depressing rates or moderation of upside potential.

It said on Monday, Oct 3 that while Baltic Dry Index (BDI) had recovered in 3QFY11 and may stabilise in 4QFY11, it expect the pressure to the rates will remain given that the overcapacity issues are not being addressed.

In addition, it said the current uncertain economic condition, coupled with the volatile market will likely to continue next year, thus further dampening growth and erode demand.

However, the research house maintained its neutral call on both Maybulk and MISC.

MIDF Research said that based on the median of economists' estimates compiled by Bloomberg, China would expand 8.7% y-o-y in 2012, compared with 9.3% y-o-y expected in 2011.

The consensus forecast suggests that breakeven rates for ship owners will not come until 2015, it said.

It said the BDI which reflect the cost to ship bulk products such as iron ore, coal and grains rebound to about 1,920 on Sep 23, 2011, representing 84.1% increase since Feb 4, 2011.

“This was surprising given the hanging overcapacity problem in the industry is still unresolved.

“We understand that the rally is continuing because more ships are being sought by the three top iron-ore producers, Vale SA, Rio Tinto Group and BHP Billiton Ltd., to export cargoes," it said

Meanwhile, MIDF Research said the Baltic Dirty Tanker Index (BDTI), which tracks the shipping rates for tanker had not broken 700 points since Aug 2011 and had only reached above 1,000 points in March this year.

"According to Baltic Exchange, very large crude carriers, or VLCCs, are losing US$ 2,251 a day on the benchmark route of Saudi Arabia to Japan, extending a run that began Aug 26, 2011.

“Rates are coming under downward pressure given that there are more offers for one cargo," it said.

Source: Edge