PKA plans new formula on feeder incentives

PORT Klang Authority (PKA) has decided to withdraw its scheme to provide incentives to feeder operators linking Port Klang to regional ports, with effect from this year. It will, however, still pay out the monetary incentives due to operators for the year 2007.

For the year 2008, though, feeder incentives will be based on a new formula for qualified operators. The new formula was not specified in the statement released to the press.

The feeder incentive scheme was developed and introduced by the PKA in 2000 as part of an overall strategy to further strengthen Port Klang as a national load centre and a regional hub port.

Selected local and regional feeder operators and landbridge operators enjoy a rebate of RM20 for a 20-ft container and RM35 for 40-ft container sent through Port Klang as well as a 10 per cent discount on marine charges such as pilotage and tug boat services by the respective terminals, Northport and Westports, under the old feeder incentive scheme.

While the idea had been mooted that the costs of incentivising feeder operators be transferred to terminal operators, Northport and Westports, a PKA official told Business Times, that feeder and terminal operators have instead, been left to negotiate their respective terms.

"It is not a matter of transferring the costs to the terminal operators, up to the two parties to come to an arrangement," the official said.

In a statement released on September 17, PKA recommended that Northport (M) Bhd and Westports Malaysia Sdn Bhd play a more active role in encouraging feeder operations in Port Klang.

The feeder incentive scheme has been suspended since 2008.

Source: Business Times

Global pirate attacks more frequent, violent

Global pirate attacks so far this year have already exceeded the number recorded in 2008, and attackers are much more likely to use firearms, a maritime watchdog said last Wednesday.

"The increase in attacks is directly attributed to heightened piracy activity off the Somali Coast ... and in the Gulf of Aden," the International Maritime Bureau (IMB) said in a report.

Incidents off the coast of lawless Somalia rose to 47 during the first nine months of 2009 from 12 in the same period a year ago, while in the Gulf of Aden there were 100 attacks compared to 51.

Globally, there were 306 incidents reported to the IMB's piracy reporting centre in Kuala Lumpur for the first nine months of 2009, compared with 293 for the same period last year, and just below the record of 344 set in 2003.

However, the IMB said the rate of successful hijackings had dropped substantially this year, to an average of one in nine vessels targeted by pirates compared with one in 6.4 last year.

"In 2008 there were a lot of successful hijackings but in 2009, because of increased naval patrols, although the number of attacks has increased their success in getting the ships has decreased," said reporting centre chief Noel Choong.

However, the report showed that the number of incidents in which guns were used had risen by more than 200 per cent so far this year, indicating that attackers were more determined than ever.

The IMB said Somali pirates have also extended their reach, "threatening not only the Gulf of Aden and the East Coast of Somalia but also the southern region of the Red Sea, the Bab el Mandab Straits and the East Coast of Oman".

Since last year a flotilla of foreign warships has been patrolling the Gulf of Aden, one of the busiest maritime trade routes on the globe, which has been plagued by piracy in recent years.

"The naval vessels operating off the coast of Somalia continue to play a critical role in containing the piracy threat," said IMB director Pottengal Mukundan.

"It is vital that regions in Somalia such as Puntland continue to take firm action in investigating and prosecuting the pirates. This will be a far better deterrent against Somali pirates than prosecution and punishment in a foreign country," he added.

Elsewhere, the IMB said, Nigeria remains an "area of high concern" and that while 20 attacks had been recorded so far this year, the real figure was likely to be twice as high.

Chittagong port in Bangladesh has also seen a rise in attacks, with 12 this year compared with nine last year.

Also, "the South China Sea has once again proven to be an area of concern and enhanced risk, with 10 incidents reported so far in 2009. This is the highest recorded number of incidents in the corresponding period over the last five years," the IMB said.

The watchdog said that globally, 114 vessels were boarded and 34 hijacked during the first nine months of 2009. A total of 661 crew members were taken hostage, six were killed and eight are missing.

Source: Business Times

FMM proposes Double Tax Deduction on Freight Charges

The Federation of Malaysian Manufacturers have made certain recommendations to the Government for Budget 2010. Below is an extract of the part of FMM's recommendations that relates to the logistics industry:

Over 80% of Malaysian exports are currently exporting Free On Board (FOB) due to highfreight rates and various ancillary charges imposed by shipping lines. However foreign buyers prefer to be quoted Cost, Insurance and Freight (CIF) as an all inclusive price.

Exporting on FOB basis reduces the competitiveness of Malaysian manufactured products and restricts access into the global markets. Currently, a double tax deduction on freight charges is given to the following sectors:

a. All manufacturers who ship their goods from Sabah and Sarawak to Peninsular Malaysia provided they use the ports in Peninsular Malaysia; and

b. Manufacturers who export rattan and wood-based products (excluding sawn timber and veneer) qualify for double deduction on freight charges.

Ship freight charges for all other sectors are allowed single tax deduction.

FMM’s Recommendation:
To increase market and trading potentials and encourage exports on CIF basis, double tax deduction on freight charges should be given to all manufacturers who ship their goods from Malaysian ports to international markets.

Read the rest of FMM's Budget 2010 recommendations here.

Northport well positioned to tap global halal market

NORTHPORT (Malaysia) Bhd, is banking on its halal tag to help exporters and shipping lines tap into the US$500 billion (RM1.6 billion) global halal industry market.

The port hopes to further strengthen its global market reach now that it has become the first Malaysian port to be awarded the halal certification by the Halal Industry Development Corp.

As a Syariah-compliant port, it expects to become a key component in the logistics and transportation chain and logistical integration.

"Northport, served by 123 shipping lines and connected to more than 300 ports worldwide, is particularly well positioned to exploit the vast potential in the expanding halal consumer product market," said Northport managing director and chief executive officer Datuk Basheer Hassan Abdul Kader.

He said the port has extensive dedicated facilities and services to ensure strict compliance with the Syariah requirements and standards.

The port offers designated areas for packing and unpacking of inbound and outbound products, as well as dedicated cold facilities.

Northport's halal ambitions are also supported by MISC Bhd's Halal Express Services that provides extensive link to the global halal markets including Europe and the Middle East.

MISC's Halal Express Services was launched in 2006 and following positive responses from the trade, the weekly service is now served with six 4,250 TEU (20-ft equivalent unit) container ships.

The service now calls at Pelabuhan Tanjung Pelepas, Northport, Karachi, Jebel Ali, Bandar Abas, Nhava Sheva, Colombo, Singapore, Shanghai, and more recently Pipava, India.

Yesterday MISC launched its second service loop named Halal Express Service 2 with direct services to the Far East.

"With more shipping lines beginning to tap into the growing specialised demand for transportation and logistics services for halal products, we view the trend positively and are committed to further providing a wider range of services to meet the specific requirements of trade," Basheer said at the launch of the MISC Halal Express Service 2 in Northport yesterday.

Northport aims to use its link with several other leading global shipping lines such as Maersk, Hapag Lloyd and Nippon Yusen Kaisha as a platform to other Muslim dominated consumer markets via key ports such as Rotterdam, Dubai and Marseille.

Source: Business Times

Low demand hurting container haulage firms

The outlook for container haulage services is expected to be bearish in the current quarter.

Association of Malaysian Hauliers (AMH) president Datuk Ahmad Shalimin Shaffie said the demand for haulage services was down by 30% in the first quarter year-on-year but picked up in the second and third quarters.

“Nevertheless, it slowed down at the end of the third quarter and we are hopeful it would be better in the current quarter though we are not that bullish,” he told StarBiz.

Datuk Ahmad Shalimin Shaffi e ... ‘We are hopeful the demand would be better in the current quarter though we are not that bullish.’

He said there was a small percentage of companies that had to cease operations due to the drop in demand but, overall, the industry was still “surviving”.

Ahmad Shalimin said the fall in demand due to the global economic downturn had also added an overcapacity problem to the local haulage industry.

“Thus, we reiterate our stand that haulage licences should only be given to genuine operators as some companies rent out their licences,” he said.

Ahmad Shalimin also said the association was hopeful that the Road Transport Department would revise road haulage weight limitation regulations.

The current regulations on load limitation for road haulage are 30 years old while trucks have evolved to bear heavier cargo.

“It has been more than a year since we requested the revision and we hope to see the outcome soon,” he said.

The AMH, which represents some 70 members, controls 80% of the local haulage market. Its members include major hauliers such as Konsortium Logistik Bhd and Kontena Nasional Bhd (a subsidiary of NCB Holdings Bhd).

Haulage operator Taipanco Sdn Bhd executive director Nazari Akhbar said it would be quite difficult to forecast future demand as it had been erratic so far this year.

“We expect to record lesser volume this year against last year,” he said.

For three cumulative quarters so far this year, Taipanco transported 1,571,315 twenty-foot equivalent units (TEUs) while the company handled a total of 2,417,594 TEUs last year.

The fall in demand due to the global economic downturn has added an overcapacity problem to the local haulage industry

In the current quarter, Nazari expected import volume to pick up but not exports. Taipanco currently owns 130 prime movers.

On the brighter side, Volvo Malaysia Sdn Bhd managing director Eric Leblanc said although the year started rather slowly, business was now beginning to move.

“Truck utilisation is improving and we see increasing activities at our service centres. The overall market is definitely improving with increasing orders,” he said.

Leblanc said that in Malaysia, Volvo was the leader in the prime mover segment with 23% market share.

Source: StarBiz

Masa seeks Govt aid for shippers with distressed assets

The Malaysia Shipowners Association (Masa) has sought Government intervention to help local shipping companies in distress to tide over the global economic downturn.

It said it had submitted a memorandum to the Government to highlight the impact of the downturn on the shipping industry since the stimulus packages did not specifically address the problems faced by the industry.

“Masa has suggested the need for a shipping fund to assist companies with distressed assets, along the line of previously-initiated Danaharta by the Government.

“The proposed fund will assist shipping companies, especially those that have ordered new ships and are now faced with difficulties in pursuing contractual obligations with shipyards and banks,” it said in a statement.

Masa said the fund would be used to provide a bridging finance to shipowners who were required by banks to “top up” the difference in the decline in loan-to-value ratio of the ship.

“Such a move will not only help the shipowners with their immediate problem but also avert a possible collateral damage on banks, shipyards and marine equipment suppliers as well as on the macro level of the economy arising from contractual defaults.”

Masa said it was hopeful that its concerns for the industry and the economy would be addressed at the forthcoming Budget 2010, adding that it intended to stress that the problems faced by the industry would not go away immediately with a recovery of the economy.

“This is because, first, the recovery of the economy is expected to be very slow and a much lower rate of growth is expected in 2010 and in the next couple of years.

“Second, the industry will be faced with excess capacity for quite some time and it is unlikely that the freight rates will firm up because the supply will still exceed demand,” it said.

Masa said shipowners might continue to face weak revenue streams or very low yields for some time to come.

“Although there are some signs of recovery in certain sectors of shipping, these are sporadic and not firm.

“A sustained recovery in shipping may not be expected till end of 2010 after the market rebalances itself to the supply and demand equilibrum,” it said.

In its memorandum to the Government, Masa said it had pointed out the need to extend the current tax exemption for shipping companies available under Section 54A of the Income Tax Act 1967 to include “other commercial vessels and craft”.

“MASA proposed the income tax exemption to be made available to offshore supply vessels, dredgers, barges and tugs (excluding harbour tugs) as well.

“The latest statistics show that of the 500 vessels in the OSV (offshore supply vessel) sectors, only about 30% are Malaysian vessels, reflecting large opportunities for Malaysian-registered OSVs,” it said.

Source: StarBiz

Port Klang Authority working to diversify income stream

PORT Klang Authority (PKA) is working towards diversifying its income stream in an effort to bear the costs of running both Port Klang Free Zone (PKFZ) and its own operations.

"Of course, now we are currently self-sufficient, but with the PKFZ loan to the service, we will have to come up with more revenue streams to generate income," PKA general manager Kee Lian Yong told Business Times recently.

He was appointed in June to replace Lim Thean Shiang, who resigned earlier amid reports of a fallout with Transport Minister Datuk Seri Ong Tee Keat over the handling of the PKFZ controversy.

Lim was handpicked to take over the running of the port by the Transport Minister.

Kee, like Lim, was a member of the corporate sector, having headed listed companies such as Metroplex and Anglo-Eastern Plantations Plc.

He said the port authority is studying all options, but is mindful of its main role as trade facilitator.

"We believe there are a lot of opportunities. I would like to do more. As a man from the property sector, I can see that we have a lot of land here, and we have to look at how we can maximise the returns on that land," Lee said.

He said rather than just concentrating on growing its bottomline, the port authority has to also consider initiatives that will enable the industry to grow.

Kee declined to reveal the amount of cash that PKA has in its coffers, claiming that its cash reserves did not correctly reflect the financial health of the regulator, considering its huge debts, because of PKFZ.

In 2008, it was reported that PKA's main income comes from leasing of land under the port authority. The then general manager Datin O C Phang, had said that it made RM100 million per year.

Expenses on maintaining the port area, however, were said to come up to about RM80 million per year.

On his ambition for the port, Kee said he wants to create an equitable playing field for all players in the port industry.

"I don't want to sideline any party. In fact I hope that we can build a supply chain that benefits everybody, and also promote the growth of the port industry," Kee said. Source: Business Times

MISC vessels set charter milestone

MISC Bhd's latest liquefied natural gas (LNG) vessels, Seri Balqis and Seri Balhaf, have joined the fleet of world-class vessels delivering LNG for the Yemen LNG Project.

The protocol of delivery and acceptance of the two vessels by MISC and Yemen LNG Co Ltd was signed on Tuesday in Argentina.

The signing marks the delivery of both Seri Balhaf and Seri Balqis to the Yemen LNG project and, thus, the start of a long-term charter party between MISC and Yemen LNG.

The chartering of the two ships to Yemen LNG also marks MISC's first long-term third-party LNG shipping contract.
It is a significant milestone in the company's plan to grow its third-party LNG shipping business and increase its LNG operations beyond its traditional core Asia-Pacific routes.

The two vessels will deliver LNG to Total Gas & Power Ltd from Yemen to the US, Mexico and major LNG terminals worldwide.

The contract, signed in December 2005, will see the two vessels being chartered to service Yemen LNG for a period of 20 years, with options for a further 11 years.

The two vessels are scheduled to make their maiden call to the Balhaf LNG terminal in Yemen at the year-end.

Both vessels, with a capacity of 157,000 cubic metres, were built and delivered by Japan's Mitsubishi Heavy Industries.

Source: Business Times

Baltic Dry Index set to surge

The Baltic Dry Index (BDI) may hit 4,000 points in the current quarter, propelled by increasing demand for iron ore and grains from China, analysts say.

The BDI, a measure of shipping costs for commodities, rose 5.6% to 2,284 points on Oct 1 from 2,163 on Sept 24.

The highest level it reached this year was 4,291 points on June 3.

An analyst with a local research house told StarBiz that he expected the BDI to jump to more than 4,000 points in the current quarter as iron-ore demand from China was forecast to increase due to a pick-up in construction activities there.

“This was because most construction works were slow in the third quarter owing to hot weather, which is quite common especially in southern China,” he said. “Now, the weather has cooled which is more conducive for construction works to resume.”

The analyst added that the cold weather also prompted more coal to be exported to China.

Bloomberg reported China Ocean Shipping (Group) Co as saying the BDI might surge more than 80% by the year-end on increased demand from China.

And a report posted on www.business-standard.com said China’s steel makers were buying more iron ore as the government had implemented a US$586bil stimulus package to revive growth.

“China’s economy is forecast to expand 8.2% this year, compared with the March estimate of 7%,” it said.

Iron ore is the largest dry-bulk cargo moved by sea and China is a major consumer of the commodity.

Furthermore, the analyst said bumper crop harvesting such as wheat and corn in the United States would also contribute to the rise in the index.

“This is because the bumper harvesting will drive grain prices down where it is expected to create demand,” he said.

The positive BDI outlook augur well for Malaysian Bulk Carriers Bhd (Maybulk), Kenanga Research said, noting that the shipper had agreed to acquire a 3½-year vessel of 32,000 deadweight tonne, Ikan Juara, for US$23.75mil.

“The group’s current fleet will expand to 13 after the addition of Ikan Juara,” the brokerage said in an update report.

Source: StarOnline

Malaysia counts in global piracy war

Royal Malaysian Navy chief Admiral Abdul Aziz Jaafar will be among the world’s naval leaders who will convene in Newport, Rhode Island, next week to discuss the challenges of combating piracy and other common maritime security issues.

He has been invited to lead a panel discussion at the three-day biennial 19th International Seapower S

ymposium, which begins on Oct 7, considered one of the largest gatherings of maritime leaders in history.

To date 106 nations have confirmed participation in the event, which celebrates the 40^thanniversary of the gathering.

US Chief of Naval Operations Admiral Gary Roughead told Bernama Wednesday that Abdul Aziz had accepted the invitation to attend the symposium.

Roughead said Malaysia, Singapore, Indonesia and Thailand had successfully worked together to combat piracy in the Straits of Malacca and in the rest of the region by sharing information and naval cooperation in fighting piracy, leading to a dramatic drop in incidents.

Tracking piracy worldwide

He added that both the US na

val intelligence and the International Maritime Bureau in Kuala Lumpur, which tracks piracy worldwide, reported a decline in sea robbery as navies and coast guards had gone on the offensive.

“Malaysia has provided significant contribution in the fight against piracy off Somalia, and the lessons and experiences, and the successful collaborative efforts in Africa would be shared at the upcoming meeting,” Roughead said.

Malaysia is part of an international patrol contingent of some two dozen warships from several countries, including the US, Russia and members of the European Union, in anti-piracy efforts in the Gulf of Aden.

Russia and Vietnam are sending senior officers as delegates at the upcoming event, compared with just sending naval attaches in previous years.

Noticeably absent is China. "No, China will not attend," Roughead said.

Source: Malaysian Mirror