Sunday, October 19, 2008

Malaysian logistics players unfazed by crisis

Major Malaysian logistics players expect business to remain resilient despite sluggish trade activities especially in terms of exports to the US and Europe due to the global economic slowdown.

This is due to their diversified business portfolios that do not depend solely on the two major markets and bright prospects for intra-Asia trade which is still on the uptrend.

Nevertheless, industry players do not refute the fact that it is only a matter of time before the waves hit local shores.

This is strongly supported by the fact that Malaysia is an export driven country and the US is its major trading partner.

According to the International Trade and Industry Ministry, exports to the US dropped to 12% in August from 15% in the same month last year.

Export value to the US also fell to RM6.95bil in August from RM8.2bil a year ago due to a decline in exports of electrical and electronic products.

Nevertheless, Malaysia’s total exports has risen 11% to RM60bil to-date versus the same period last year. This is partly contributed by the country’s exports to Japan and South Korea that jumped 27% and 43% respectively in August as compared with the same month last year.

Asean accounted for RM16bil or 27% of Malaysia’s total exports in August, an increase of 23% from a year ago.

Century Logistics Holdings Bhd does not expect to suffer a drastic dent in its business from the onslaught of a worsening global economy.

Deputy managing director Dr Mohamed Amin Kassim told Starbiz that this was due to the company’s wide array of customers from varied industries thus minimising the impact of a slowdown in trade.

“We have strong alliances with strategic partners who are able to provide the resources such as trucks, handling equipment, vessels and warehouses to help us mitigate the volatility in demand.

“Our focus on Asian trade has also insulated us against the impact of a slowdown in trade with the West,” he said.

Nevertheless, Mohamed Amin said the company remained cautious as a new crisis might suddenly erupt and affect business.

“As an example, runaway inflation in certain countries may prevent us from investing in infrastructure,” he said.

Despite the global economic meltdown, he said, Malaysia should stay focused on improving its supply chain and ensuring that its multi-modal connections remained efficient.

“Our delivery systems and productivity must be further upgraded.

“The cost of doing business in our country must be competitive if we harbour any hopes of enhancing our position as a choice for value-added regional distribution hubs.

“The Government should review our policy and grant more favourable incentives to more logistics companies,” he said.

DHL, an international express and logistics company, manages to mitigate the impact of the sluggish economy via its strong presence in the Asia Pacific region where intra-Asia trade has remained healthy.

According to DHL Express (Malaysia and Brunei) country manager Sam Leong, the company’s portfolio of 42 countries in the region has enabled them to balance the shifting business cycles to a certain extent.

DHL Global Forwarding Management (Asia Pacific) chief executive officer (South Asia Pacific) Amadou Diallo said the Asia Pacific region had accounted for about 50% of its global forwarding unit’s total annual revenue in recent years with revenue continuing to grow at a rapid pace.

“DHL Global Forwarding’s new regional focus on South Asia Pacific covering the South East Asian region, South Asia (including India) and the South Pacific clearly earmarks Malaysia as an integral component of this new trade landscape.

“Hence having identified the new structure, DHL Global Forwarding will enhance customer service, accommodate future growth and focus more on distinct regional priorities, particularly in Malaysia,” he said.

He added that as markets in North America and Europe cooled off, customers in Malaysia could rely on DHL to help them increase their intra-regional trade.

“This can be done through the expansion and development of new trade lanes within Asean, and connecting Asean with other high growth markets €“ particularly in South Asia and beyond,” he said.

Infinity Logistics and Transport Sdn Bhd has not experienced any direct effects of the economic slowdown.

Managing director Chan Kong Yew said this could be due to the company’s business which handled a lot of shipments to South East Asia, the Middle East, India and China.

“However, Malaysian logistics company will feel the pinch of the slowdown sooner or later but I hope that the impact will be minimal,” he said.

In anticipation of the impact, Chan said Infinity’s strategy is to cut down its credit exposure and concentrate on businesses that provided direct payment even if the returns were low.

“Concurrently, we have to slow down our expansion to avoid an oversupply in the market place.

“But, we encourage high operational efficiency that includes the disposal of non efficient vehicles and multi-tasking among our employees,” he said. Source: Star Online

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