Wednesday, June 26, 2013

Maritime sector needs reallignment

THE New Economic Mode (NEM) envisions transforming Malaysia’s economy into a developed nation status by 2020.
Such an economy will be propelled not just by capital but by productivity and high technology, featuring high income, value adding, innovation driven and knowledge based activities.
The maritime industry is unfortunately not among the first that comes to the mind of many in terms of its potential to generate such activities and to help transform the nation’s economy. It is probably a reflection of its understated importance and contribution to the nation’s economy.
Admittedly the maritime industry – which includes activities such as shipping, port operations, shipbuilding/repairing and offshore oil and gas exploration and production, among many others – is not as high profile or glamorous compared to say the aviation, banking or legal profession. The industry is also arguably not the first career choice of most young people.
However, this does not mean that the industry does not offer exciting earnings and career development potential. There are many sectors within this vast industry that present high-income prospects for those who care to look carefully and set aside stereotypical perception of the industry as being unappealing and characterised by hardship and unattractive remuneration.
Among such services are specialised services in offshore oil and gas exploration and production, integrated logistics services, maritime financing, supply chain management, shipyard services, advisory and consultancy, maritime education and training, shipyard activities, and producing solutions to reduce emissions from shipping.
These value-adding activities not only are capable of generating high -income to meet the goal of NEM but also lead to realising Malaysia’s ambition of becoming a globally competitive maritime nation.
Local companies which can offer value-adding products and services will be able to enlarge their market shares and compete globally. Such activities tend to yield high earnings to their companies and offer high income to their personnel.
Take shipping for example, whose competitive nature has become even more so amid the global recession and slump in the major shipping trades. As demand for shipping services fell, banks tighten financing to shipping, huge new tonnage keeps on entering the major shipping trades and oil prices hovering at high levels, shipping companies have faced very challenging market conditions. Many have gone out of business and hanging by thread amid the tough operating environment.
Those which are still surviving and thriving have done so by offering value-added services to their customers. Being in a very competitive market, shipping lines which can offer more than just transportation services are the ones least likely to run aground amid choppy waters in the industry. Such value-added services include specialised cargo transportation, logistics, ship management, ship brokerage and automated shipping status update.
By promoting such high-income generating activities in the maritime industry, Malaysia can also move to the “blue-ocean” side of the maritime industry and differentiate itself amid the crowded field. This will enhance their prospect of offering their services to the international market, which is crucial given the global nature of shipping and the small domestic market in Malaysia.
The importance of providing high-income, value-adding maritime related services becomes clear when one takes into account that competition in the maritime industry is increasing and Malaysia cannot out-compete countries which have advantages such as cheaper labour cost and economies of scale. To have a truly world-class maritime industry, Malaysia must break away from just offering “plain vanilla”, low-cost maritime services and start investing in developing and nurturing the manpower to cater to high-end, specialised and high-revenue generating activities to remain competitive.
For that to happen, Malaysia needs to re-align its maritime sector to develop the soft-side of the maritime sector. There must be in place a well-defined strategy, infrastructures, conducive environment to promote research and development or R&D, innovation, entrepreneurship and risk-taking, and strong leadership and public-private partnership. Above all, there must be a mindset and attitude change among local players in the maritime sector from relying on cheap labour and cost advantage to a strong desire to serve bigger customers and to compete on an international and global marketplace.
Malaysia’s maritime industry can no longer depend on a low-cost structure to remain competitive internationally. It cannot continue on the common path that it has been practising and hope to keep clinging on to the advantage of low cost as this can easily be replicated by other aspiring maritime nations. Even regional countries like Vietnam and Thailand, which have invested heavily in maritime infrastructures such as trade and shipyards, are fast catching up. They might even overtake Malaysia in certain aspects of the maritime industry, for example attracting main line operators and enlarging market share in handling transshipment cargos and intra-Asean trade, if Malaysia’s maritime industry does not continue to make progress.
A plan of action is also recommended to facilitate the promotion value-adding, high-income activities in the maritime sector. This includes developing a set of strategies and plan of action to align the maritime sector with NEM’s aspirations, offering a comprehensive set of incentives to local companies providing maritime support services, investing in skills and talents, inculcating and promote a strong R&D culture, and consolidating certain sectors to attain economies of scale.
A comprehensive approach in promoting value-adding, high-income activities in the maritime industry can lead to the enhancement of Malaysia’s competitiveness in the maritime industry and put the maritime industry on course to fulfill the aspirations of NEM.
It is high time Malaysian maritime industry players wake up to the fact that taking a myopic worldview of their business environment and continue with the status quo in their respective sectors would lead to a dead-end tunnel. They cannot be depending on the small domestic market and on government contract alone. They must branch out and develop a keen sense of where the business is and where new opportunities will emerge. They cannot just follow the leaders if they want to really excel and make a mark for themselves on the global stage in this ultra competitive industry.
Realising the ambitious targets set by NEM requires nothing short of the highest level of commitment to excellence, strong resolve and hard work, and major mindset transformation.
Only by doing so can the nation make the quantum leap required to attain high-income status and to generate knowledge-based, innovative-driven economy, as envisioned by the NEM. The motto pencapaian diutamakan must be used as a mantra for maritime industry players to adapt to the dynamics that will be unleashed by the NEM and to enhance Malaysia’s maritime competitiveness on the global stage.
Source: StarBiz

Tuesday, May 21, 2013

Kontena Nasional

A Kontena Nasional yard. The company incurred a loss of RM19.2mil in the last financial yearA Kontena Nasional yard. The company incurred a loss of RM19.2mil in the last financial year
SUBANG JAYA: Transport and logistics provider NCB Holdings Bhd will address the issue of escalating costs with a more efficient financial management system to turn around its haulage and logistics operation subsidiary Kontena Nasional Bhd.
Kontena Nasional incurred a loss of RM19.2mil in the last financial year ended Dec 31, mainly due to the lower margin contribution from new logistics activities caused by high initial start-up costs.
“The board of Kontena Nasional is addressing this issue at present.
“We want to strengthen the financial management system to stabilise cost so that we can obtain improved margins.
“We hope to see better results in the coming quarters,” NCB chairman Tun Ahmad Sarji Abdul Hamid told reporters after the company's AGM.
One of the core focuses of Kontena Nasional, according to Ahmad Sarji, would be operational cost management and bottom-line results.
<B>Ahmad Sarji:</B> ‘We want to strengthen the financial management system to stabilise cost.’Ahmad Sarji: ‘We want to strengthen the financial management system to stabilise cost.’
Nevertheless, Ahmad Sarji said the company's port operations, viaNorthport (M) Bhd, continued to be the main profit contributor.
In the last financial year, NCB posted a pre-tax profit of RM180.4mil, reflecting a marginal decrease of 5.1% over 2011.
This came on the back of an RM987.2mil revenue, a 6.4% increase against the previous year.
Northport's profit contribution was RM197.3mil.
Northport handled 3.1 million twenty-foot equivalent units (TEUs) last year, a decrease of 3.4% over the previous year.
Ahmad Sarji said the completion of container terminal four in August should boost the port's capacity and business.
On capital expenditure, Ahmad Sarji said the company had earmarked RM1bil for 2013 and utlised about RM700mil year-to-date, adding that future expansions might be financed via the issuance of sukuk.
He was also thankful to the Government for renewing the Northport lease by extending its present tenure by another 30 years to 2043 and another 21 years for Southpoint to 2034.
“The terms and conditions of this new lease are being negotiated and finalised, and slated for completion in the third quarter of this year,” he said. NCB paid out a dividend of 65.5 sen per share, involving a total payout of RM308mil, last year.
Source: StarBiz

Friday, March 1, 2013

Port Klang handled 100 million TEUs

PORT KLANG: From its humble beginning of container operations since the early 1970s, Port Klang recently celebrated the handling of the 100 million twenty-foot equivalent units (TEUs) at Northport (M) Bhd.
“We also began this year with a milestone achievement of surpassing the 10 millionth TEU mark. Northport handled 1.74 million TEUs or 47% of Port Klang’s indigenous volume and 1.35 million or 21% of the transhipment volume,” Port Klang Authority said in a statement.
In terms of development, Northport’s new container terminal 4 (CT4) is progressing on schedule. Wharf 8A, which forms part of CT4 is expected to be fully operational by July this year.
Upon completion in mid-2013 Northport will be able to handle 5.6 million TEUs. Northport is also investing in new equipment to further enhance the efficiency of its operations. Four super post-panamax quay cranes will arrive in the second quarter of 2013 to coincide with the completion of Wharf 8A.
Northport is acquiring 13 units of electric rubber-tryed gantry for its container handling operations.
Source: StarBiz