Penang air freight forwarding dives

THE freight forwarding business in Penang experienced the most significant dip last month.

Penang Freight Forwarders Association (PAFFA) president Joachim Loo said December was the worst month in the past seven years for the air freight business.

“For the air-freight business, the inbound segment dropped by 52% in December to 2,838 tonnes from 5,850 a year earlier. The export segment declined by 32% in December to 4,971 tonnes from 7,505 previously,” he told StarBiz.

For the fourth quarter, imports and exports dropped by 35% and 23% respectively, compared with the corresponding quarter in 2007, he added.

Penang Port in operation. Ocean freight companies in the state expects business to shrinks by 15% this year.

PAFFA vice-president (air freight division) P. Kalimuthu said electronics and semi-conductor products comprised between 60% and 70% of the goods exported from Penang via air.

“The rest are products from the garment industry and other manufacturing concerns. This is why when the electronics and semiconductor industry overseas enters recession, we will be badly affected as well,” he said.

The freight forwarding business was also hurt by the extended festive holidays taken by the multinational companies, Kalimuthu said.

“Usually, the leave for the Christmas and New Year period is one week. This time, the holidays were extended to two to three weeks.

“Furthermore, their employees have been given two more days off on top of the four off-days per month,” he said.

Due to poor business, PAFFA members involved in air freight forwarding have implemented cost-cutting measures.

“These include doing away with overtime pay. If necessary, we will compensate the staff with another day off. We will not retrench workers yet although we expect the freight forwarding business to dive further in January and February. We hope business will not plunge to a point where we need to retrench,” Kalimuthu said.

He urged the Federal Government to lower fuel charges.

“Tenaga Nasional Bhd, as a government-linked company, should also reduce power charges. We also appeal to Malaysia Airport Holdings Bhd and MAS to lower rentals for PAFFA members.

“Likewise, we appeal to KL Airport Services Sdn Bhd to cut terminal charges to 10 sen per kg from the present 15 sen,” he said.

Meanwhile, PAFFA vice-president (ocean freight board division) Krishnan Chelliah said the ocean freight was not as badly affected as air freight.

“The volume of imported cargo coming through the Butterworth North Container Port dipped by about 10% to 568,000 20ft equivalent units (TEUs) last year from 628,000 in 2007.

“For exports, the volume of cargo declined by about 3% to 406,000 TEUs in 2008 from 420,000 in 2007.

“The reason is that the bulk of cargo shipped comprised largely wood and rubber-based products such furniture and rubber gloves, which are still not that badly hit by the global slowdown.

“The inbound cargo consisted of mainly raw materials used in the general industries,” he said.

Krishnan said PAFFA’s ocean freight members were expecting to face some 15% drop in their import and export business this year.

“We are also implementing cost-cutting measures such as halting overtime payments and not replacing outgoing employees,” he said.

The ocean freight business in the north employs some 5,000 people.

Source: Star Online