Tuesday, February 21, 2012

Slower haulage growth

SHAH ALAM: The haulage industry expects to register a 5% volume growth this year – which is lower than last year – largely due to the eurozone crisis and the slowdown of the US economy.
Association of Malaysian Hauliers (AMH) president Datuk Che Azizuddin Che Ismail said this year was anticipated to be a challenging year as the situation in the West might show little improvement.
“But, things are a lot rosier in Asia, especially Asean. Countries like Malaysia and Singapore with good infrastructure are poised to take advantage of the situation,” he told StarBiz, adding that the industry’s volume was very much attached to the performance of the ports in the country.
Last year, according to Che Azizuddin, the haulage volume in Port Klang alone, the country’s biggest maritime gateway, increased by 8% compared with the same period in 2010.
Although the industry recorded growth last year, he said the current state of the industry could be better as it was still plagued by pockets of over-capacity and problems with container depot operators. “There are still too many players. A lot of forwarding agents now are also interested to operate smaller scale fleet of between five and 10 prime movers.
“Many of the new players also use reconstructed trucks, which are not reliable. People do not use these anymore, not even in Jakarta,” he said.
He added that it was difficult to act in a concerted effort when the industry was too fragmented.
“Many of these smaller players are not members of AMH and this has been a hurdle for the industry to tackle issues particularly with the Government,” he said.
In terms of capacity, members of AMH represent about 60% to 70% of the industry.
Che Azizuddin said the haulage business was not that easy due to high cost of entry. “First, it is capital intensive. A new good brand prime mover cost about RM300,000 each. It is not profitable to operate a fleet of five to 10 trucks as you need the economy of scale to sustain the business.”
“If a company has a large fleet with a good management system, it can easily enjoy a 5% to 10% margin,” he said.
Che Azizuddin said since the global economic crisis in 2008, the number of new players had reduced.
“Looking at the situation now in terms of capacity and demand – the water will find its level eventually,” he said.
On the depot issue, Che Azizuddin suggested that rather than having depots away from the port, the container depot should be placed inside the port area.
“It’s easier and cheaper if all containers go back to the port. It’s not productive to have container like 10km away from the port,” he said.
Although some of the ports in Malaysia, have on-dock-depot at the port, he said it was still not efficient as there was only one gate for the trucks to collect and send the containers.
Besides the location, Che Azizuddin said some container depot operators should improve on their efficiency.
“It is higher cost for us if we have to wait half a day to collect a container,” he said, adding that the matter had been brought up to the relevant authority but it had yet to react to the issue.
He said this inefficiency would take a toll on the country’s competitiveness to attract more multinationals into the country.
Going forward, Che Azizuddin said the association wanted to help its members in terms of business.
“We are planning to have a central purchasing centre where we can team up to buy spare parts such as tyres and lubricants at competitive prices.
AMH has also implemented a consolidated Puspakom and located it at Konsortium Logistik Bhd.
“These will save smaller players time and cost for their vehicle inspection as opposed to qeueing at centralised Puspakom centres,” Che Azizuddin said.
Source: BizStar

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