Sunday, November 2, 2008

Silver lining for Malaysian freight and logistics sector?

AS the saying goes, there are opportunities in every crisis.

Selangor Freight Forwarders & Logistics Association (SFFLA) president Abel Tan Ah Beng said local freight forwarders and logistics players that had already felt the impact of sluggish trade volume due to the global economic slump should be optimistic on other possible business ventures.

“As multinational logistics players in Malaysia are expected to go slow on their expansion, we should reposition ourselves to go into their market share.

“Now is the time to expand and explore the Asean market,” he told StarBiz.

In term of logistics infrastructure, Tan said Malaysia was in good position with readily available and world class infrastructure as well as professional workforce.

“As freight forwarders, we can make Malaysia Asean’s distribution hub via our free trade zone.

“We can still strive to grow our business as the country would not be as badly affected by the slowdown in trade as compared to Singapore.

“This is because we do not rely solely on transhipment as 30% to 40% of our trade are from import and export activities,” he said.

Tan, however, said Malaysia had to buck up on its free commercial zone (FCZ) policy to make it conducive in attracting foreign and local investors.

“Currently, although the setting up of business in the FCZ has been made easy, we still have to deal with the relevant Government agencies that slow down business process.

“Because the business in FCZ is mainly for value adding and transhipment, we expect less red tapes unless the goods are taken out of the FCZ for the Malaysian market.

“The Ministry of International Trade and Industry and Ministry of Transport Ministry should probe into these matters,” he said.

He added that the customs brokerage business should also be liberalised from the 51% bumiputra equity policy.

“This will enable the industry to grow and expand faster,” he said.

On the current freight forwarding industry market, Tan said the volume of export and import to and from Malaysia with the US, Europe and Australia had decreased significantly in the fourth quarter.

SFFLA vice-president Alvin Chua said the global credit crunch and economic instability had led to fluctuation of currencies that affected Malaysia’s import and export.

“The majority of importers have deferred their shipments from the US due to the 15% appreciation of the US dollar against the ringgit.

“Our exporters have also deferred their shipment to Australia due to a 30% depreciation of its currency against the ringgit.

“And this currency fluctuation problem is on top of the current lower demand from the US and Europe due to weakening consumer power there,” he said.

In general, Chua expected trade volume to be flat this year due to a 20% drop in trade volume including the Asia-Europe sector since October.

“We are experiencing a situation we have never faced before. Usually the last quarter of the year is the peak season with increased demand due to Hari Raya, Christmas and the Chinese New Year.

“But, this time around Port Klang has been very quiet with no port congestion and hauliers’ backlog,” he said.

A shipping agent said the current freight rates, especially the Asia-Europe route, had dropped tremendously against the same time last year due to an oversupply of space on vessels following the lower trade volume.

Source: Star Online

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