Monday, March 29, 2010

Northport Expects Cargo Volume To Increase 10-15 Per Cent

NCB Holdings Bhd's direct subsidiary, Northport (Malaysia) Bhd, is expected to register an increased cargo volume of between 10 per cent and 15 per cent this year.

Northport Managing Director and Chief Executive Officer, Datuk Basheer Hassan said the company sees an increase in both the container and cargo business segments amid an improving economy.

"Northport registered a total volume of 2.858 million TEUs in 2009, a decrease of five per cent compared to 3.006 million previously," Basheer told reporters after NCB Holdings' annual general meeting (AGM), here Monday.

He said the container mix at Northport stood at 50 per cent for both import and export containers.

Transshipment containers made up 38.6 per cent of the total volumed handled by Northport.

Under the conventional cargo business, Northport handled a combined volume of 6.53 million freight weight tonnes (FWT) last year.

Meanwhile, NCB Holdings Group's chairman, Tun Ahmad Sarji Abdul Hamid said Northport continued to be the leading gateway for indigenous trade, handling 58.6 per cent of the country's import and export volume passing through Port Klang.

He said the total volume of containers under all classes handled through Port Klang during 2009 was 7,309,779 TEUs, reflecting a decline of 8.3 per cent compared with 7,973,579 TEUs recorded in 2008.

On the planned construction of Wharf 8A, Ahmad Sarji said the group remained ready to re-activate the plan.

It would be to meet its customers' demand for enhanced capacity to service their growth in business.

"Given the current growth, we are quite optimistic that we need to expand the capacity. This was held back in 2009 in the last quarter because of economic downturn."

With the indication of growth now, it would be sustainable to invest, said Basheer.

He said Northport will call for tender in one or two weeks for building of the wharf.

The size of the wharf will be 300 meters in length and 17 meters in depth.

This will allow ships to berth at any one time there, he added.

Sunday, March 21, 2010

Century Logistics charts growth strategy

Century Logistics Holdings Bhd (7117), a supply chain management and logistics provider, is reviewing its business model in Thailand, after charting some RM2 million in losses there.

"We want to go slow in Thailand and not put too much hope there. The risk is too big," its managing director Steven Teow Choo Hing told Business Times in an interview.

The group has invested some RM35 million in the country since 2004.

Last year, the group through its subsidiary, Century Logistics Sdn Bhd, completed a RM30 million warehouse-cum-distribution centre in Rojana Industrial Area, 70km off Bangkok.

The initial plan was for the facility to cater to multinational corporations (MNCs) with operations in the vicinity.
Besides Thailand, the group also has a presence in China and India.

While Vietnam was another target market for expansion for its total logistics and supply chain management division, Teow said the group has held off its plans to enter the market in view of the inflationary issues there.

In China, the group is head hunting for a country manager to lead its operations there.

"We want to focus on growth areas that are heavily populated like Shanghai and Beijing," he said.

In India, Century Logistics provides contract logistics services to the MNCs in Chennai and Bangalore.

Teow said, however, the business in India is challenging because of the different duty structures that each state applies.

On its procurement and assembly services, Teow said the company is also looking at replicating its assembly unit success with Syria in Ghana, Africa.

He also said there are plans to expand its oil and gas division to include ancillary logistics operations.

Currently Century Logistics offers only bunker supply services.

Overseas operations contribute about 10 per cent to the group's revenue.

Century Logistics registered a net profit of RM20.9 million on revenue of RM210.9 million for the financial year ended December 31 2009.

Source: Business Times

Sunday, March 14, 2010

Maersk aims to sail into 'modest' profit

COPENHAGEN: Danish shipping and oil group AP Moller-Maersk said it would return to a "modest" profit in 2010 after weak global trade knocked freight rates and dragged it to a deeper loss than expected for 2009.

Chief executive Nils Smedegaard Andersen said the container shipping business would remain in the red this year though other operations - from oil and gas to offshore services, port terminals and supermarkets - would continue to perform well.

"We hope that 2009 will be an exception," Andersen said. "Priority No. 1 is to return to profit. We are not guaranteeing that we will be back in the black in 2010, but at the moment it is our strong ambition and expectation to deliver a profit this year.

"We do not expect the container line to be back in profits in 2010," he said. "Rates have improved but they are still not at a level where they can give acceptable profitability."

Net losses at the company, which owns the world's biggest container shipping company, Maersk Line, amounted to 5.49 billion Danish crowns, or US$1.01 billion (US$1 = RM3.37), in 2009 after a profit of 17.53 billion in 2008.

The result was weaker than the average estimate of a net loss of 5.11 billion crowns in a Reuters poll of 13 analysts, whose estimates ranged from losses of 1.56 billion to 7.37 billion crowns.

The result was in line with the company's own guidance for a loss of around US$1 billion.

"The main factors driving (results) down of course were low rates in containers and in tankers as well as a significant drop in the oil price - these were really the negatives of last year," Andersen said.

Despite the loss, Andersen said that the group could be satisfied with its achievement of reducing costs by about US$2 billion in 2009 which left it with cashflow from operations of US$4.7 billion, which he called "pretty strong".

Maersk would continue to focus on costs and efficiency this year, though the cost-reduction effect would be lower than in 2009, he said.

Shipping markets were hit hard last year by the global economic downturn, which reduced freight volumes and rates.

Freight rates for the group's container activities were 28 per cent lower than in 2008, Maersk said in a statement.

Andersen said that the most negative effect in 2009 came from the shipping industry's "willingness and capacity to take rates down below cash operating levels".

Looking ahead to the current year, the company said: "Overall, the AP Moller-Maersk Group is expected to post a modest profit. Cash flow from operating activities is expected to be well above the 2009 level."

Asked to quantify "modest", Andersen said:

"We are talking black but probably small numbers.

"The 2010 guidance is very disappointing, with management expecting a modest positive result," Jyske Bank said in a note, comparing that with market consensus of a 2010 profit of 9.1 billion crowns.

The container shipping division incurred an operating loss of 10.06 billion crowns, while Maersk's oil and gas business made an operating profit of 25.33 billion crowns.

The container shipping loss was bigger than analysts' average forecast of a loss of 9.22 billion crowns, and the oil and gas profit below their average estimate of 26.11 billion in the Reuters poll. -

Tuesday, March 9, 2010

Tg Agas industrial park infrastructure on track

INFRASTRUCTURE works for the RM8 billion Tanjong Agas Oil & Gas and Logistics Industrial Park in Pekan, Pahang, is expected to be completed by 2012.

Tanjong Agas Supply Base & Marine Services Sdn Bhd (TASBMS) managing director Mohd Faidzal Ahmad Mahidin said it is completing the road access, groundworks and necessary infrastructure to enable companies to move in soon.

"We expect to see companies moving in and constructing manufacturing facilities at their respective plots of land by the middle of this year," he told Business Times in Kuala Lumpur last week.

At least 200 companies are expected to support operations at the industrial park's shipyard.

Mohd Faidzal said TASBMS has also secured the support of several players, both foreign and local, to operate at the industrial park.

"We expect to see more companies coming on board soon," he said, noting that the project will be hastened and its economic impact felt within the year.

It was reported previously that among the companies that planned to invest in the industrial park include Core Competence Sdn Bhd, Competent Selection Sdn Bhd, Vantech Dockyard (M) Sdn Bhd, Tec-Steel Manufacturing Sdn Bhd, Usatech Marine (M) Sdn Bhd, Bitari Abadi Sdn Bhd and Damini Corp Sdn Bhd, with total investments worth RM6 billion.

Facilities to be available at the 1,699.68ha Tanjong Agas Oil & Gas and Logistics Industrial Park include a shipyard, fabrication yard, dredger yard, bulk terminal, petroleum terminal and warehouses, factories and commercial and residential development.

"Besides land for the industrial park, we have allocated 607ha for commercial which will house among others headquarters of respective companies operating in the industrial park and other supporting companies," Mohd Faidzal said.

The area is being developed concurrently with the industrial park.
Upon completion, the Tanjong Agas industrial park will be a modern one-stop service centre and offshore base and is expected to create over 30,000 jobs within 10 years with the first 5,000 jobs to be generated within the first three years of operation.

Pahang state government's investment arm, Perbadanan Kemajuan Negeri Pahang, holds a 30 per cent stake in the industrial park, and the rest by TASBMS.

Friday, March 5, 2010

Trade eyes alternate routes, oil buffers over Malacca risk

Oil traders are concerned about supply disruptions via the Malacca Strait after the Singapore Navy warned of possible attacks on tankers, but said alternate routes could be used that add slightly to costs while stocks on landed and floating storages offer ample buffer.

However, they cautioned that the more than 30 tankers crowding the waters off Singapore, Malaysia and Indonesia used as storage tanks for distillates, fuel oil and crude could also be targets.

Malaysia and Indonesia are bolstering security in the Strait of Malacca, through which flows at least 15 million barrels of oil each day, while Singapore also raised alert levels and beefed up security at its airport and new casino resorts after the navy’s warning.

“Of course, we are concerned. But there’s nothing more that we can do on our part as the cargo owners to prevent this from happening,” a senior Singapore-based Asian trader said today.

“The alternatives are easy enough. The diversion around Indonesia adds two to three days to sailing time and costs a little bit more, but that’s OK.”

The trader said in the event of an attack on a tanker, the loss of a single cargo might be a problem for the owner, “but it’s an opportunity for everyone else to sell at higher prices”.

If the strait was blocked after an attack, tankers could sail further south along the western coast of Indonesia’s Sumatra via the Sunda Strait and head north to Singapore, adding two to three days of sailing time. Ships moving to North Asia could sail towards East Java via the Lombok Strait or Banda Strait.

For example, this would add US$20,000-US$30,000 (RM68,000-RM102,000) per day to the cost of carrying diesel or kerosene on an 80,000-tonne tanker.

Traders said the loss of a single cargo, even if it was on board a Very Large Crude Carrier (VLCC), would have minimal impact on the market’s demand-supply dynamics because for distillates alone, some 14 million barrels were being stored on tankers in international waters around Southeast Asia.

“It could be disruptive to oil trades, but it would be not catastrophic,” said David Kirsch, PFC Energy’s Director of Market Intelligence Service.

“It would also raise insurance rates, but typically the price of oil rises in conjunction with these insurance rates, so the impact is on the consumers, not the transit trade.”

Shipping and industry groups have advised shippers to take extra care when passing through the Malacca Strait and have increased vigilance on their vessels.

Traders also said there were about 4 million to 5 million tonnes of fuel oil and crude on board converted VLCCs anchored off Malaysia’s southern ports of Tanjong Pelepas and Pasir Gudang.

While these provide a comfortable cushion to the market if an attack triggers serious disruptions, they also face risks.

“They are as vulnerable as any tanker sailing along the Strait. But maybe less of a risk, because they are in closer proximity with each other and help can be rendered more readily,” said a trader, who has cargoes on floating storages.

“Also, it’s probably less dangerous because fuel oil and distillates are less flammable. But I don’t think these crazy guys are going to have the intelligence to check what’s on board before they decide to go after a ship.”

Carl Larry, president of Oil Outlooks and Opinions LLC said a global market struggling with oversupply would view disruptions such as a closing of the Malacca Strait or the refinery damage in Chile as supportive factors.

“As with Chile, the refined products that are in great oversupply are already water-borne and easy enough to move around the Strait,” he said, pointing to recent moves to send diesel to the quake-hit Latin American country, which have sent gas oil cracks to 11-month highs near US$10 a barrel.

“I think there is the shock and hype factor about the delay for ships to get through, but the supply that so many are desperately looking to move gets a chance to ease.”

Still, most traders welcomed the heightened security in the Strait, which has been plagued by piracy, adding that this would help deter attacks and ease their worries.

“I would expect the Strait to be very heavily patrolled, and the likelihood of any attack materialising is quite low — you have all that security on standby to prevent it from happening,” said a distillates trader with a European firm.

Source: Malaysian Insider

Thursday, March 4, 2010

Terror threat in Malacca, Singapore Straits

Authorities have said that a terrorist group may be planning attacks on ships in the Straits of Malacca and the Singapore Straits.

International Maritime Bureau piracy reporting centre head of Asian region Noel Chung said the organisation was alerted by a foreign agency to this threat and has passed on the alert to the relevant regional authorities in Malaysia, Singapore and Indonesia.

He said that while threats of piracy were common in both straits, a terror threat against ships was new to the waters.

“This alert was not issued by us, so we cannot tell you what level or how serious the threat is,” he told The Star.

Chung advised ships plying both straits to be extra vigilant and conduct radar lookouts.

“Usually, ships keep a lookout after dark to thwart pirate attacks. We are advising them to keep a 24-hour watch,” he said.

International news agency AFP reported that an unidentified terrorist group is planning attacks against oil tankers in the Malacca Straits, one of the world’s busiest shipping lanes, quoting the Singapore Navy and a shipping association on Thursday.

The Singapore Shipping Association said it had received an advisory from the Singapore Navy Information Fusion Centre about “an indication that a terrorist group is planning attacks on oil tankers in the Malacca Straits.”

It said “this does not preclude possible attacks on other large vessels with dangerous cargo.”

“The terrorists’ intent is probably to achieve widespread publicity and showcase that it remains a viable group,” the Singapore Navy said in its advisory.

It reminded shipping operators that the militants could use smaller vessels such as dinghies and speedboats to attack oil tankers and urged them to take precautions.

Pirates and robbers have also used small fishing vessels to board ships during previous attacks in the Malacca Straits, it noted.

Security analysts have said that the Malacca Straits, bordered by Singapore, Malaysia and Indonesia, is a prime target because more than 30% of global trade and half the world’s oil shipments pass through the narrow waterway.

“If the Singapore Navy is providing this information, it should be taken very seriously,” said John Harrison, a maritime security expert at the S. Rajaratnam School of International Studies in Singapore.

He said that on the threat level scale, an “indication” is lower than a “warning”, but precautions should still be taken.

A “warning” refers to a credible threat that an attack is likely to be carried out against a target over a specific time frame, while an “indication” is gathered from a series of suspicious activities in a certain area.

“Certainly, we do know that there has been a long-term concern about terrorism in the Malacca Straits but the threat level remains fairly low,” Harrison told AFP.

“That said, it was very prudent for the Singapore Navy to pass this warning along because it keeps the threat level where it is.”

While the Singapore Navy did not name any group, Harrison said the South-East Asia-based Jemaah Islamiyah (JI) militant group or al-Qaeda itself could not be ruled out.

“JI could certainly be one of the groups. We have not seen any public evidence indicating they have the capability to operate but that does not mean they are not developing them,” he said.

In its advisory, the Singapore Navy recommended that ships should “strengthen their onboard security measures and to adopt community reporting to increase awareness and strengthen the safety of all seafarers,” according to the shipping association.

Singapore, one of Asia’s most affluent cities and a regional base for thousands of multinational companies, is a prime target for attacks by militant groups, officials have said.

One of the plots foiled by Singapore authorities was a plan by Islamic militants to hijack an airliner in Bangkok and crash it into Changi airport in 2001 following the September 11 attacks that year in the United States.

Singapore has also arrested several militants involved in a plot to bomb the US embassy and other targets in the city-state.

Source: The Star