Trade and Logistics Malaysia

Ports plan tariff hike

2011-10-30T22:23:00.000-07:00

A number of major ports in Malaysia plan to increase port tariffs or introduce new tariff items going forward.

This is because the revision of some of the tariff items has been long overdue. The move is also to match the investments that have been made to expand the ports.

Port Klang Authority acting general manager Capt David Padman toldStarBiz that some of the new rates should be applicable by the first quarter of 2012 pending the Transport Ministry’s approval.

“The revision of a number of tariff items including conventional cargo and marine services for Port Klang has been mooted since three years ago.

“This is because a large section of the conventional tariff has not been revised for 45 years since the days when Port Klang was administered by the Malayan Railways.

“Also, terminal operators have many times requested charges to be increased in line with the investments in the facilities and services including the construction of new berths, purchase of new cargo handling equipment and subsequent maintenance of the facilities.”

He said terminal operators had also requested an increase in marine service charges as fuel prices had increased substantially since 2008.

After extensive examination of the proposals by the operators and subsequent consultation with the industry and port users, charges for conventional cargo handling such as stevedorage, wharf handling and storage would be increased, Padman said.

“On the other hand, certain charges such as wharf labour and third-shift surcharge have been withdrawn as they are no longer justified given the scope of current port operations.

“Marine service tariffs will see a slight increase while container handling will see new charges for containers of more than 40 ft long,” he said.

It was reported in StarBiz last month that Penang Port Sdn Bhd also planned to introduce new tariffs in the middle of next year.

Chief operating officer Obaid Mansor was quoted as saying that the proposal to raise port tariffs, comprising largely cargo-handling and ship charges, had been submitted to the Penang Port Commission.

Penang Port tariffs were last revised in 2003 and implemented in 2007, which saw a 30% increase in handling charges for container cargo to the present rate of RM182 for a 20-ft container and RM273 for 40-ft container.

About 80% of the cargo handled at Penang Port’s North Butterworth Container Terminal comprises full container load cargo, which is expected to generate 75% of Penang Port’s revenue this year compared with about 65% in 2010.

Meanwhile, ports in Johor namely Johor Port and Port of Tanjung Pelepas, (PTP) are also expected to introduce new tariffs of some sort.

Chairman for both ports, Datuk Mohd Sidik Shaik Osman said Johor Port had recently received approval for a small revision of its port tariff only after 24 years.

“The new port tariff at the Johor Port has been effectively implemented since August 2011.

“The previous revision in Johor Port’s tariff was in 1987,” he said.

As for PTP, Mohd Sidik said it was currently exploring with the Johor Port Authority on the possibility of introducing new tariff items which were not currently prescribed.

“However, the expected impact on port users will be very minimal,” he said.

As of last year, Port Klang, which comprises Northport and Westports, were ranked at 13th place in the global container ranking by volume at 8.87 million twenty-foot equivalent units (TEUs).

PTP came in at 16th place last year with a volume of 6.54 million TEUs,

It was reported that for the first five months of this year, Malaysian ports handled a total of 8.2 million TEUs, up 10.9% from the same period last year.

Sourced from here.

Extreme shipping

2011-10-30T16:54:00.000-07:00

Sourced from here-

I WRITE from the pilot’s cabin of one of the world’s largest container ships, the Eleonora Maersk, moving almost imperceptibly through the South China Sea off the Vietnamese coast. Eight storeys up from the deck, my windows just about clear the top of the thousands of containers that are stacked in 22 rows across the vessel. This allows me a view to the ship’s forward navigation mast, a full 250 or so metres away. But the rain is coming in now, and it will soon disappear from sight.

The accommodation section, and above it the bridge, is a bit aft of amidships, so the stern is another 150 metres or so behind me. Or, put another way, the whole is about four football pitches long and half of one wide. Or again: about two-fifths the height of Scafell Pike, the highest peak in England. This is “economy of scale” made steel…and the reason why the retailer Primark will be able to sell me a Chinese-made T-shirt for just a pound or two on my local high-street in Britain, just inside a month.

The vessel is specifically designed to ply the world’s most important trade route, the Asia-Europe run: this is now (euro-area debt crisis notwithstanding) the main artery of globalisation. Having started its homeward-bound voyage in South Korea and having picked up most of its cargo in Shanghai, the Eleonora is due to dock in Rotterdam in a couple of weeks’ time. I joined the vessel on October 26th at the container terminal of Yantian, the port of Shenzhen, just inside mainland China north of Hong Kong. I will disembark on October 30th when we reach another massive port, on the southern tip of Malaysia, just north of Singapore. Even if I wanted to stay on board for the next leg, non-stop to Europe, I wouldn’t get very far. As was explained to me in “the citadel”, a secure room in the bowels of the ship where everyone has to gather in the event of a boarding by pirates, no guests or even family are allowed on Maersk vessels past Sri Lanka, because of the threat from Somalia. In truth however, this ship is just too big (and fast) for pirates to grapple with.

So, what are we carrying? This boat will be fully loaded after Malaysia, with about 7,500 containers (or 100,000 tonnes) of European Christmas presents, mostly—and a New Year treat. For we must be shipping much of the continent’s New Year celebrations as well: 1,850 tonnes of fireworks, including 30 tonnes of gunpowder, probably from Hunan province, where most of these things are made. Oh, and about 28 containers (290 tonnes’ worth) of plastic cigarette-lighters, destined for the Danes, Swedes and Poles.

To make it worth one’s while to ship cigarette-lighters and sparklers most of the way round the world, it is best, of course, to have a ship as big as the Eleonora Maersk. Only with such behemoths can shippers and retailers achieve the economies of scale that are necessary to make the Asia-Europe trade pay. Maersk lines, the world’s biggest container-shipping company, has eight such E-Class ships—and has just ordered 20 even (slightly) bigger ships from Korean yards. High oil prices are now forcing all the main container-shipping firms to order ever bigger ships. They might be awesomely expensive (Maersk’s new ones will cost almost $200m each), but with fuel costs making up such a large part of their bills, all the shipping lines are looking to reduce the cost per mile per container on the Asia-Europe run. The only feasible way to do that is pile more containers on one ship.

So almost everything about the Eleonora, which was built in the mid-2000s, is quite simply—The Biggest in the World, Ever. It is not just the biggest kind of container ship, but the biggest ship of any sort in service. To move its load through the water, it boasts the largest combustion engine ever built—generating horse power equivalent to 1,000 family-sized cars. The 14-cylinder engine turns the longest propeller shaft (130 metres) ever built, at the end of which is the largest propeller, weighing in at 130 tonnes. Yet so efficient is the engine, says the Danish chief engineer, that cruising at an average of 17 knots the ship consumes just 3 grams of fuel per tonne per nautical mile—which certainly sounds low. This sort of calculation, above all, makes a sophisticated laptop or iPad made in China affordable in Copenhagen.

Alarmingly, at least for a container-ship neophyte like myself, the world’s biggest ship seems to have a crew of only 19. But that’s a few too few, surely? In fact, the Danish captain explains that, strictly speaking, the boat is designed to be run by just 13 people; but he likes to have some more on board, for maintenance and repairs…Sensible chap. Together with some cadets, that brings the full complement to a gangway-shoving 24.

But then the ship is so automated that the captain appears to exercise full mastery over everything in sight with only the slightest touch to a half-ball, the size of one hand’s palm, which protrudes from a control panel. I can see all the traditional signalling flags neatly stowed on shelves on the bridge—so neatly, in fact, that I suspect that, along with the sextant and the flares, they might never have been used.

MIDF research downgrades ports sector to negative

2011-10-03T03:06:00.000-07:00

MIDF Research had downgraded the ports sector from neutral to negative in face of weaker exports to the faltering US economy and Europe's sovereign debt crisis.

It said on Monday, Oct 3 that Malaysia's export slowed down as it posted a 7.1% year-on-year (y-o-y) growth in July 2011 from 9.6% y-o-y increase in June 2011.

In terms of sequential month, July's export was 2.2% month-on-month (m-o-m), lower than 5.1% m-o-m posted in the previous month, it said.

"We believe that this had led to the decline in Electrical and Electronics exports where it continued to decline for the fifth consecutive month," it said.

The research house said the declining exports would add pressure to seaports, especially container based ports given that rates are fiercely competitive.

Meanwhile, port traffic is seeing signs of easing as well as NCB HOLDINGS BHD []'s faltering port twenty-foot equivalent units (TEU) growth.

The group posted a decline of 3.4%y-o-y in its 1H11 port TEU while port revenue fell by 1%y-o-y. Also, port profit before tax margin declined by 5.8 percentage points, which suggest the company was facing margin squeeze and rates pressure.

However, the research house maintained its Neutral rating on NCB citing its defensive qualities as its dividend policy would moderate weaken sentiments.

Source: Edge

MIDF Research maintains negative on shipping sector

2011-10-03T03:03:00.000-07:00

MIDF Research maintained its stance on the shipping sector due to persistent problems that are caused by depressing rates or moderation of upside potential.

It said on Monday, Oct 3 that while Baltic Dry Index (BDI) had recovered in 3QFY11 and may stabilise in 4QFY11, it expect the pressure to the rates will remain given that the overcapacity issues are not being addressed.

In addition, it said the current uncertain economic condition, coupled with the volatile market will likely to continue next year, thus further dampening growth and erode demand.

However, the research house maintained its neutral call on both Maybulk and MISC.

MIDF Research said that based on the median of economists' estimates compiled by Bloomberg, China would expand 8.7% y-o-y in 2012, compared with 9.3% y-o-y expected in 2011.

The consensus forecast suggests that breakeven rates for ship owners will not come until 2015, it said.

It said the BDI which reflect the cost to ship bulk products such as iron ore, coal and grains rebound to about 1,920 on Sep 23, 2011, representing 84.1% increase since Feb 4, 2011.

“This was surprising given the hanging overcapacity problem in the industry is still unresolved.

“We understand that the rally is continuing because more ships are being sought by the three top iron-ore producers, Vale SA, Rio Tinto Group and BHP Billiton Ltd., to export cargoes," it said

Meanwhile, MIDF Research said the Baltic Dirty Tanker Index (BDTI), which tracks the shipping rates for tanker had not broken 700 points since Aug 2011 and had only reached above 1,000 points in March this year.

"According to Baltic Exchange, very large crude carriers, or VLCCs, are losing US$ 2,251 a day on the benchmark route of Saudi Arabia to Japan, extending a run that began Aug 26, 2011.

“Rates are coming under downward pressure given that there are more offers for one cargo," it said.

Source: Edge

Logistics roadmap will benefit the region

2011-08-21T17:01:00.000-07:00

Malaysia’s Roadmap for Development of the Logistics Services Industry will see a flourish of trade opportunities in the Pan-Beibu Gulf Economic Cooperation (PBGEC) member countries, according to Deputy Transport Minister Jelaing Mersat.

He said the roadmap commissioned by the Malaysian Logistics Council and the EPU of the Prime Minister’s Department contained recommendations on improving performance of ports, shipping, land transport and freight transportation.

He said the Transport Ministry would play an active role in the roll-out of the plan which would include strategic initiatives to strengthen capital capacity and also to review and revamp regulatory and intuitional framework.

“The ministry will also look into legislations and international conventions involving shipping, liability regimes, air and surface transport to strengthen our governance, regulatory functions and ensure international compliance,” he told Bernama on Saturday.

“With the roadmap, the transportation networks will be connected within the Asean and PBG countries. This will further develop investment, trade and economic cooperation in the region and form cluster of industries, accelerate economic growth in the PBGEC.” – Bernama

Jelaing attended the 6th PBGEC Forum, which concluded here on Friday.

He said Malaysia would play its role in transportation infrastructure to improve the connectivity between Asean and China.

“We are doing everything that we can to speed up the connection, such as the Singapore-Kunming Rail Link.”

The roadmap for the Development of the Logistics Services Industry is an Asean economic blueprint signed by all Asean leader at the Asean Summit, which was attended by former prime minister Tun Abdullah Ahmad Badawi in 2007.

Meanwhile, Jelaing said the Transport Ministry would evaluate and implement relevant strategic initiatives under the roadmap which whould envision the development of world class freight logistics system, including strengthening the role of ports and shipping to support the country’s economic growth and development.

“We will liaise and consult with various stakeholders in the industry through the focus in moving the agenda on freight logistics forward,” he said.

On maritime cooperation, Jelaing said China-Asean Maritime Consultation Mechanism is in the midst of exploring cooperative opportunities.

Under the mechanism, he said both countries conducted numerous activities, including the meeting on Tide, Current, and Wind Measurement Project of Malacca and Singapore Straits (March and April) and the Workshop on Port Facility Security in July.

Source: BizStar

Economic fears deepen dry bulk shipping woes

2011-08-08T02:08:00.000-07:00

Growing fears for the world economy signal more pain and even bankruptcies among dry bulk ship owners who are getting rock-bottom rates to carry cargoes like coal and now face a glut of new vessels ordered when times were good.

The tougher climate has hit the sector hard this year and confidence is at a record low. Korea Line, South Korea's debt-stricken second largest dry bulk shipping line, is among the casualties. The firm, under court receivership, has filed a restructuring plan to the court. While cheaper rates could benefit buyers of commodities, the weak economic prospects are set to hit more ship owners. "Smaller companies tend to have less access to capital, especially in weak markets. High financial leverage and weak earnings could force covenant breaches or defaults in the sector," Deutsche Bank analyst Justin Yagerman said.

The Baltic Exchange's main sea freight index, which track rates to ship raw materials, has already declined nearly 30 per cent since the start of the year as ship supply has outpaced demand to transport strategic commodities including coal, iron ore and grains.

"A recession or recession like situation will actually prolong the period with poor freight markets," said Sverre Svenning, a director with broker Fearnley Consultants."In normal circumstances, governments - especially in Europe - would try and stimulate the economy through infrastructure and construction work but there is no government in Europe that has money for that now and the US government definitely does not have money."

Investors worry that fiscal cutbacks due to Western credit softness and stagnating output are holding back global recovery.Weak US services sector data and poor manufacturing data this week have compounded the fragile outlook.

Former US Treasury Secretary Lawrence Summers wrote in a Reuters column this week that there is a one in three chance of a US recession.

"If there were to be a double dip recession in both the US and Europe, then it would feel like the mother of all recessions for the dry bulk market," said Khalid Hashim, managing director of the Thai-listed group Precious Shipping .

"It would probably take us to the bad old days of the mid 1980s when the BDI was barely above its all-time low of 557 points." Khalid said that in such tougher economic conditions, he would not be surprised to see the BDI fall below the 1,000 point level and remain depressed for four to six quarters.

The index was seen by investors in 2008 as an indicator of the global contagion from the financial crisis, highlighting the fall-off in demand for raw materials. During the boom times, the index posted a record high in May 2008 of 11,793 points.

The financial crisis drove it as low as 663 points in December 2008. It reached 1,268 points on Thursday, having hit its lowest in more than three months early this week.

"A further a slowdown from here would be very bad news for the freight market," said Georgi Slavov, head of dry research and structured products at broker ICAP Shipping. "I really hope this is a short lived seasonal slowdown in the West."

Read more: Economic fears deepen dry bulk shipping woes http://www.btimes.com.my/Current_News/BTIMES/articles/brulk/Article/#ixzz1UQVnlIYi

Professional body CILTM recognises varsity’s logistics programme

2011-08-01T08:03:00.000-07:00

A memorandum of agreement (MoA) signed between Chartered Institute of Logistics and Transport Malaysia (CILTM) and Universiti Utara Malaysia (UUM) recently will act as a springboard for the latter’s graduates in logistics studies to enter the industry.

CILTM president Datuk Abdul Radzak Abdul Malek said the MoA allowed for a greater and mutually beneficial cooperation between academia and the industry.

“Areas like exchange of knowledge from the industry to the academic through invited guest lectures by industry professionals can be made possible with this MoA.

“Others like joint research activities that has high application value to the industry, student-led out-of-classroom experiential learning activities and leadership camp for young professionals will add value to this MoA,” he said at the agreement singing.

The MoA entailed accreditation by CILTM to the Bachelor of Business Administration in Logistics and Transport (BBLT) programme currently offered by UUM.

“With this, the degree will not only be recognised globally but also has better marketability,” said Abdul Radzak.

The Chartered Institute of Logistics and Transport (CILT) is the international professional body for all sectors of the transport industry.

Founded in the United Kingdom in 1919 and granted a Royal Charter in 1926, it was formed to promote knowledge of the science and arts of logistics and transport and to provide a source of authoritative views for communication to government, industry and the community.

Abdul Radzak said the MoA was timely as Malaysia was now undertaking a huge step in the logistics and transport industry.

He said the formation of Land Public Transport Commission, the development of mass rapid transit system in the Klang Valley and the creation of Southern Logistics Hub in Iskandar Malaysia were just a few examples of the Government’s seriousness in developing the industry.

He said all these economic and infrastructure development activities spelt the need for qualified logistics and transportation professionals.

“The fact that UUM has its BBLT programme recognised by CILTM as a professional degree is just like a stamp of endorsement that the graduates of this degree from UUM are not only qualified academically but also equipped with skills that the industry needs.

“This endorsement is further amplified when the graduates are conferred the Member of The CILT (MILT) immediately upon their graduation. This will put them in a better position to compete in the job market,” he said.

UUM vice-chancellor Professor Datuk Dr Mohamed Mustafa Ishak said the university had been offering the BBLT since 1993 and so far, 431 graduates had completed their studies.

“At present, we have about 453 undergraduate students enrolled in the programme of which about 15% are from countries like Nigeria, Chad, Sudan, Somalia, Thailand, China, Indonesia and Saudi Arabia.

“Through this smart collaboration, our graduates are better positioned to face challenging careers as qualified professionals in logistics and transportation either in the Government or private sector,” he said.

Source: BizStar

Bright outlook for ports

2011-07-03T22:50:00.000-07:00

Almost all Malaysian container ports are poised to record good growth this year, based on current statistics of containers throughput and stable economic activities.

But the rosy outlook is not without any pockets of concern, with the slowing down of the country’s economy due to external influence a worry.

The Malaysian economy grew 4.6% in the first quarter, marginally missing the 4.8% forecast by most economists.

The Transport Ministry reported last Tuesday that Malaysian ports had handled a total of 8.2 million TEUs (twenty-foot equivalent units) for the first five months this year, up 10.9% from the same period last year.

Transport Minister Datuk Seri Kong Cho Ha said among the notable ports that registered positive growth were Port Klang and Port of Tanjung Pelepas (PTP).

Port Klang and PTP retained its position as the world’s top 20 container ports last year at number 13 and 17 respectively.

The Maritime Institute of Malaysia senior fellow Nazery Khalid told StarBizthat the increase in throughput was not only a reflection of an improving global economy and rebound in international trade, but also stood as testimony to the efficiency and productivity of the ports in attracting cargoes even in leaner times.

“One can say Malaysia is blessed with strategic location, being at the heart of the world’s busiest shipping lanes. However, we also have to be mindful that there are many ports in these areas with equally good infrastructures and services like Malaysian ports, if not better.

“Competition to attract cargo is stiff, and for Malaysia to have recorded impressive throughput growth in the first five months of 2011 is a commendable performance that says much about the competitiveness,” he said.

Nazery partly attributed the growth to growing intra-Asean trade and transshipment trade, the latter thanks to the relentless momentum of China’s economic growth.

“At this rate, and if the global economy continues its slow but steady recovery, our ports should exceed the volumes handled in 2010.

“However, competition for cargo is ferocious. Our ports not only have to compete with one another for a not-too-large slice of domestic cargo but also with up-and-coming ports in Vietnam, Thailand and Indonesia.

“Then, there is also competition with other transport modes in vying for cargo. With the double-track railway in the picture, I foresee rail giving our local ports a run for their money,” he said.

An analyst from a local brokerage said ports in the country would most probably sustain or increase its growth momentum based on the export targets of RM700bil this year from RM639.4bil last year according to the International Trade and Industry Ministry.

Import value was at RM529.2bil last year, up 21.8% from 2009.

But the analyst also cautioned that despite the positive outlook, the momentum of economic growth was expected to slow down in the second quarter due to the impact of the devastating earthquake in Japan and social uprising in the Middle East and North Africa.

This positive development in the port industry contradicted the dilemma faced by most shipping companies as freight rates continue to be battered by an excess of supply.

According to CIMB Research, despite the gloomy rate environment, containership newbuilding orders have zoomed ahead, with over a million TEUs ordered year-to-date from about 700,000 TEUs last year.

“This has tilted the equilibrium negatively and supply is now expected to grow faster than demand in 2012 and 2013, it said in a recent report.

Last year, according to axs-alphaliner.com, the worldwide reference in liner shipping, global container throughput hit a new record of 560 million TEUs.

“The highest growth was posted by Chinese ports which grew by 17.9% last year, followed by South American ports which grew by 17.6%

“Forty-eight of the top 50 ports registered volume gains in 2010, with only two suffering minor losses. An average growth of 15% was recorded by these main ports,” it said.

Going forward, axs-alphaliner.com said that for this year, growth was expected to moderate to 8.4% as volumes returned to more sustainable levels, with Chinese ports again expected to lead the gains this year.

Source; BizStar

Container freight continues to be battered by excess supply

2011-06-13T09:59:00.000-07:00

Container shipping freight rates, which have shown signs of recovery at the beginning of the year, are now back sailing on choppy waters as rates continue to be battered by excess supply.

According to CIMB Research, despite the gloomy rate environment, containership newbuilding orders have zoomed ahead, with over a million twenty-foot equivalent units (TEUs) ordered year-to-date from about 700,000 TEUs last year.

“This has tilted the equilibrium negatively and supply is now expected to grow faster than demand in 2012 and 2013.” it said.

The research house said it was bullish on the sector at the start of the year based on a modest pace of newbuilding orders, but the dramatic surge of orders had taken it by surprise.

Excess supply: Maersk and MSC have already deferred proposed rate increases from June to July on weak ship utilisation.

“We are worried that liners are repeating the mistakes of the past,” it said in a recent sector report.

It said freight rates continued to be battered by excess supply, and base rates for Asia to Europe are probably close to zero.

“Rates between China and Europe have declined 60% to US$874 per TEU, from a peak of US$2,164 per TEU in March 2010, and are now close to zero after deducting the bunker adjustment factor of around US$750 per TEU.

“Spot rates have declined despite higher bunker prices, exacerbating the squeeze on margins,” said the research house.

CIMB Research expected rates could plummet below bunker costs over the next month or two.

“Maersk and MSC have already deferred proposed rate increases from June to July on weak ship utilisation, which could prevent a sustained rise in rates even during the coming peak season.

It said the present situation was much worse than its expectation at the start of the year.

According to Alphaliner, weekly Asia-Europe (AE) shipping capacity was 21% higher year-on-year (y-o-y) in May, substantially ahead of the 4% y-o-y rise in head-haul trade volume in April.

“Also, economic indicators in Europe appear to be weakening, with a flattish composite leading indicator for the big four European economies, weak retail sales, and rising retail stock levels.

The weekly expects carriers to begin cancelling services, redeploy capacity to other trades, or lay up ships if the situation continues.

Sharing the negative sentiment, according to CIMB Research, is Transpacific rates, which had resumed its downtrend after making tentative upward moves in April and early May.

“The Transpacific Stabilisation Agreement, a research and discussion group of 15 major container shipping lines had recommended US$400 per forty-foot-equivalent-unit increase in contract rates from May, but carriers likely lowered rates instead.

“According to Alphaliner, Transpacific capacity was 19% higher y-o-y in May against a 7% to 8% annual demand growth,” it said.

Source: BizStar

Kontena unveils logistics package for SMEs

2011-06-06T23:11:00.000-07:00

Third party logistics provider Kontena Nasional Bhd will launch a warehouse and transportation package deal for small- and medium-sized enterprises (SMEs) today, which may make it viable for your favourite Penang halal "tao sah piah" manufacturer to bring it to a store near you.

The launch is in conjunction with Smidex Exhibition 2011.

SMEs have always been limited geographically due to high transportation costs. Starting out small, SMEs do not have the necessary volume to negotiate competitive rates with transportation providers.

"Our strategy is if we are able to cater, not to a single SME, but a group of SMEs in a single platform, in a single location, then we will be able to reduce the cost significantly, bearing in mind that once they grow they will be able to add volume to this produce of theirs," Kontena Nasional chief executive officer Hood Osman said in an interview here recently.

About 95 per cent of total businesses in Malaysia are SMEs.

Called 1 KN 1 Rate, Kontena Nasional's latest offering is customised to meet individual SMEs needs. It includes role consulting, planning, transport rates and warehouse rates.

Hood said the last six to eight months have been about bringing Kontena Nasional to a state of readiness to offer the services.

"We have applied halal certification and increased our fleet to multi-vehicle services. We used to be wholly in prime movers and hauliers, and have expanded our warehouses. These are all significant contributors to the whole infrastructure that will help facilitate the growth of SMEs," he said.

Kontena Nasional currently has about 15 warehouses nationwide, and is expected to add another three by the end of the year.

"We have used the past six months to make sure that we can cater to individual requirements, to do a bit of study, to see where SMEs are and how to go about servicing them," Hood said.

He said its studies have shown that SMEs generally do irregular deliveries, make sporadic requests and require too small a space in warehouses for retention.

Kontena Nasional expects to bring in between RM7 million and RM8 million in sales from the venture.

The second phase will be the introduction of its product to SMEs in Sabah and Sarawak.

Source: Business Times

More investments needed

2011-05-23T08:26:00.000-07:00

Logistics sector should be able to meet expected increase in demand

SHAH ALAM: The logistics sector must further invest in technology, capacity and talent to offer more value-added services in line with the uptrend in trade volume.

SME Corp Malaysia chairman Datuk Dr Mohamed Al Amin Abdul Majid said the logistics sector capacity should meet the expected increase in demand in view of the growth of the global economy.

Datuk Dr Mohamed Al Amin

“This is the time where the logistics sector must take advantage because as trade grows, the services offered by the logistics sector are much needed to ensure seamless transportation, storing and distribution of goods.

“For Malaysia, the main challenges are to further improve the services offered towards total logistics services and multi-modal transportation.

“To date, there are about 31,168 companies involved in the logistics sector in the country with 30,766 belonging to the small and medium-size entreprises (SMEs) category,” he said in his speech to officiate the Bumiputra Logistics Entrepreneurs Association AGM last week.

Mohamed Al Amin said as the logistics sector remained as one of the strong pillars of the country’s trade growth and competitiveness while the Government had acted as an “enabler” via its support and various incentives.

The private sector specifically the transportation, storage, and communication industry contributed about 8% to the country’s gross national product last year.

“This year, there are about 219 programmes with financial commitment of RM5.9bil to be implemented via various ministries and agencies.

“For SME Corp, we have launched two programmes early this year namely Business Accelerator and Enrichment & Enhancement Programme to support the SME industry and players.

“PPLB members who are interested in this programme are welcome to join and application can be made online.

“We have also collaborated with a prominent logistics player, Kontena Nasional Bhd, to widen the scope of the logistics sector market via talks, site visits and business-to-business sessions,” he said.

Source: BizStar

In anti-trust law we trust

2011-05-23T08:24:00.000-07:00

COMMENT

By NAZERY KHALID

IT was reported recently that the big boys in the container shipping industry were among the companies that were raided by the European Union (EU) anti-trust officials over a possible collusion. This has sparked an interest to re-visit the subject of EU anti-trust law in the liner shipping industry, which was implemented in October 2008.

Last week, Bloomberg reported that AP Moller-Maersk A/S, CMA CGM SA and Hapag-Lloyd AG were among companies raided by EU anti-trust officials. The companies were reported to give full cooperation to the officials to carry out the probe.

EU regulators said they had “reason to believe” that the companies might have breached EU cartel or monopoly-abuse rules. The raid doesn’t mean that the companies are guilty of anti-competitive behaviour, according to the European Commission.

The raid came in the midst of investigation into how container shipping freight rates rose in 2009, although demand dropped sharply amid the global recession and industry capacity swelled owing to delivery of huge new tonnage in the box trade.

Since the implementation of the anti-trust law, liner shipping companies have lost their privileged status under EU competition law with the withdrawal of the liner conference block exemption, which authorised horizontal price-fixing and similar agreements.

In areas where the liner consortia block exemption does not apply, all cooperative arrangements are carefully and individually vetted under the competition provisions of the European Council Treaty.

The competition regime, while lauded by importers and exporters, in the EU liner shipping context is not without problems, though.

Several legal questions have been raised over the introduction of the competition law in EU, in areas such as cooperation between liner shipping companies and the benefit of cooperative arrangement between liner shipping companies over the negative impact on competition. The strategies of these companies that may lead to an abuse of a dominant position have also been put under scrutiny.

Liner shipping companies have had to reconfigure their discussion agreements and business strategies to accommodate the abolishment of the block exemption so generously accorded to them before the enactment of the EU competition law.

This has led to greater competition among them in the EU trade, which is lauded by shippers.

It was reported that Hong Kong’s OOCL, a powerful player in the liner shipping trade, cautioned against implementing anti-trust laws that prevent shipping lines from developing solutions and rationalisation exercises to deal with capacity overhang. While stopping short at endorsing price-fixing conferences, OOCL lamented that anti-trust laws have restricted liner companies from collectively discussing issues affecting the liner trade.

That coming from the world’s 11th largest container shipping operator (based on 2010 ranking) is noteworthy. OOCL’s grouse echoes that of many other liner companies which fear that the onslaught of open competition will adversely affect their business.

This anxiety is echoed by the recent recommendation of Singapore Competition Commission for the Singapore government to extend the block exemption to allow liner conferences to continue their trade until December 2015, with minor changes. This was made on grounds that anti-trust exemptions remain the norm for the global liner trade and most of Singapore’s trading partners.

Also getting into the act are Australia and Japan, which are also looking to apply competition rules on liner shipping.

To this end, the recent announcement by the Joint Global Shippers Forum (JGSF) to promote anti-trust laws in Asia should make governments sit up and take note. Countries, especially trade dependent ones, which ignore the call by this powerful forum do so at their own peril and run the risk of being bypassed by shippers.

Best business behaviour

With the Competition Act slated for enforcement in Malaysia on Jan 1, 2012, companies in the maritime sector are expected to make a major leap forward in their business conduct and be at their “best business behaviours.”

Operating in a borderless theater and ultra-competitive environment, the local maritime sector, which facilitates 95% of the nation’s trade, is expected to take the front in realising the targets of the Act, in line with the aspiration to make Malaysia a regional shipping and logistics hub and a globally competitive maritime nation. Being an open but small economy, Malaysia must put in place an institutional framework that will not only lure investors and businesses but also to align local companies with international best practices to enable them to compete globally.

Even skeptics of anything good introduced by the Government would be hard-pressed to argue against the virtues of the Competition Act.

However, those who will be affected by the Act need to keep to the letter and the spirit of the Act, which must be strictly enforced without fear or favour, to ensure its optimal effectiveness and the attainment of its objectives.

The dynamism generated in the marketplace by the injection of greater competition and innovation through the Act can only be good for a country that is racing against time to become a fully developed nation by 2020. Sharp focus will be trained on the maritime sector to help fulfill this lofty ambition.

● Nazery Khalid is a senior fellow at Maritime Institute of Malaysia.

Source: BizStar

Haulage charges set to go up

2011-05-10T17:34:00.000-07:00

The Association of Malaysian Hauliers (AMH) will raise its haulage tariff guidelines by 20 per cent, effective June 1.

The AMH Tariff Guideline is used in the market by both customers and hauliers as a benchmark to negotiate rates.

The final negotiated rates differ customer to customer, depending on the services required, volume of businesses, destinations and other operational factors unique to each customer and their preferred haulier.

In a statement, AMH president Datuk Ahmad Shalimin Ahmad Shaffie blamed the rise on escalating operating costs and operational inefficiencies.

"Shortage of drivers, higher wages, increased costs for spare parts and tyres are some examples of factors driving up operating costs.

"Customers' demand for better services has also resulted in record-high investment in Information Technology as well as Glo-bal Positioning System (GPS)," he said

The statement said that long delays at container depots have badly affected the productivity of haulage operators.

The current productivity rate is estimated to average two to 2.5 trips per day compared to the previous three to five trips per day for each truck.

The association estimates that each truck wastes up to RM20 per trip due to these delays, not to mention the loss in productivity and foregone revenues.

There are more than 200 container haulage operators in the country.

AMH also announced that the collection of trailer detention charges will be outsourced toan external third party come June 1.

"The constant monitoring of trailers and collection of detention charges from customers are tedious and costly, which sometimes lead to contentious arguments with customers."

"As such, members of AMH collectively agreed to outsource the monitoring and collection task to a third party agent so that they may focus on their core competency of transportation," Shalimin said.

Source: Business Times

Hauliers association says sector needs to improve

2011-05-02T19:54:00.000-07:00

Cost hikes, inefficiencies prompt upward revision of tariff guidelines

PETALING JAYA: The Association of Malaysian Hauliers reiterates that the upward revision of haulage tariff guidelines effective June 1 reflects that the industry needs to improve on productivity and efficiency.

AMH said the continued escalation of operating costs and operational inefficiencies prompted the upward revision of the haulage tariff guidelines.

The revised tariff recommends the rates to be up by 20% over the current tariff.

“However, the AMH tariff guidelines are used in the market by both customers and hauliers as only a benchmark to negotiate for rates.

“The final negotiated rates differ customer to customer, depending on the services required, volume of business, destinations and other operational factors unique to each customer and their preferred haulier,” said AMH president Datuk Ahmad Shalimin Ahmad Shaffie.

According to AMH, the liberalisation of the haulage industry had seen an increase in container haulage operators to more than 200 companies throughout the country.

However, in recent time these operators, most of them members of AMH, found that productivity and efficiency has suffered due to various problems and bottle necks in the industry which are beyond their control.

AMH said the shortage of drivers, higher wages, increased costs for spare parts and tires as some examples of factors driving up operating costs. Customers’ demand for better services further resulted in record high investment in IT as well as GPS systems. “Long delays at container depots have badly affected the productivity of the haulage operators.

“This problem is not anticipated to be resolved in the near future. The current productivity is estimated to average two to 2.5 trips per day compared to previous three to five trips per day for each truck. The association estimated that each truck wastes up to RM20 per trip due to these delays not to mention the loss in productivity and foregone revenues for each trip lost.

“Based on these factors, the AMH believes that a 20% increase in rates is reasonable and fair,” said AMH.

Alongside the announcement of the AMH tariff revision, the association also announced that the collection of trailer detention charges will be outsourced to an external third party. This new collection method also comes into effect June 1.

AMH said the prime mover to trailer ratio in Malaysia was one to seven, whereas the norm for this trade in all other countries was one to 1.5 at the most. The requirement for such a ratio is due to customers’ behavior unique to Malaysia, particularly in the detention of trailers beyond the norm of two to four hours to load or unload a container.

“The constant monitoring of trailers and collection of detention charges from customers is tedious and costly which sometimes lead to contentious arguments with customers.

“As such, members of the AMH collectively agreed to outsource the monitoring and collection task to a third party agent so that they may focus on their core competency of transportation.

“Forwarders, shippers and consignees are recommended to quickly get in touch with their respective hauliers for further details,” said AMH.

Source: BizStar

Shipping consolidation

2011-04-17T20:57:00.000-07:00

The global container market is poised to consolidate in the next few years as AP Moller Maersk and other major shippers roll out bigger vessels, potentially forcing smaller rivals to drop out of an already oversupplied market.

Medium-sized container firms warn that a move by the majors to flood the market with mega ships could spark a “rate war” similar to 2009 when the market plummeted and most firms fell into the red in one of the industry’s worst downturns.

“We believe that ... the largest shipping companies will continue to expand the scale of economies of the industry,” said Thomas Knudsen, Maersk Line’s chief executive for Asia-Pacific region, at an industry conference in Singapore. “As we drive these scales of economy, it will be difficult for the smaller carriers in these industries to compete. That will drive consolidation.”

Maersk, the world’s top container shipper which holds a 15% share of the container market, is expanding its fleet by around 8% annually to keep up with economic growth.

“We are not doing this aiming at taking market share,” Maersk chief executive Nils Andersen told reporters at an industry event. He agreed that consolidation would be the most likely outcome.

One of Maersk Line’s container ships.

Industry leaders in the container markets have placed multi-billion dollar orders for the world’s biggest vessels to meet growing demand in Europe and the United States for Chinese manufactured goods.

Maersk in February ordered 10 of the world’s largest container ships for US$1.9bil and took options on 20 more vessels of a similar size to capitalise on expected growth on the benchmark Asia-Europe route.

Due for delivery from 2013, Maersk’s 18,000 twenty-foot equivalent unit (TEU) container vessels would surpass the current largest box ship of 15,000 TEUs, also owned by the company. Switzerland-based Mediterranean Shipping Company and French privately held CMA-CGM, which are the next two biggest container shippers after Maersk, are also looking to expand their fleet with ships above 10,000 TEUs, according to analysts.

About 50 mega container ships with 10,000 TEU capacity or more are expected to be delivered this year, making up nearly half of the total new capacity of 1.35 million TEUs due for 2011, according to the leading industry consultancy group Alphaliner. The orderbook showed 59 mega ships for 2012.

“Bigger is better if you can fill the ship,” said Randy Chen, special assistant to the president at Taiwan-based Wan Hai Lines . “If your ships are not full, you need to put the vessels away for the short period of time to make sure the revenue covers the costs.”

But major shippers were unlikely to idle new ships, placing the burden of plummeting freight rates on smaller rivals. Spot rates on the Asia-Europe container route have tumbled by about half in the last nine months, trading last week at around US$978 per TEU from more than US$1,800 in July 2010. Although the market was expected to rebound slightly in the second half, the battle for survival has already become too difficult for some container firms.

Norway-based The Containership Company has announced it will suspend its container shipping operations on poor cargo volumes and excessive competition, industry group Alphaliner said. Others are poised to follow.

US-based container shipper Horizon Lines warned last month it could also be forced to seek bankruptcy protection for not being able to comply with its debt agreements.

“In container ships, a lot of companies are not making money right now,” said Janet Lewis, shipping analyst at Macquarie Securities, adding that Chilean CSAV was also under pressure.

Last month, Standard & Poor’s cut its outlook on CSAV’s corporate credit rating to “negative” from “positive” to reflect its view of the container shipping company’s weak business risk profile and aggressive financial risk profile.

Vulnerable container companies are likely to be allowed to fall into bankruptcy instead of being saved by a larger firm through an acquisition, experts said.

“I doubt if operators have any interest in taking over an organisation. They are more interested in buying fleets, just buying the ships and hardware,” Harald Serck-Hanssen, head of global shipping for DnB Nor, told Reuters.

Industry executives said smaller companies could turn to shorter niche routes. — Reuters

“I don’t fully support the notion bigger size is necessarily better. It depends on your shipping network,” said Eng Aik Meng, president of APL container shipping line, a unit of Singapore’s Neptune Orient Lines .

“Shipping lines are quite flexible. There are many other trades in the world, not just Asia-Europe and transpacific, but also Latin American and intra-Asia trades.”

Industry officials, however, pointed out that the smaller players would not be easily pushed out of the market as many are family-owned or subsidised by governments.

“In a rate war, no single line can be the winner,” said Kenichi Kuroya, chief executive of Japan’s third largest shipping firm Kawasaki Kisen Kaisha . “What 2009 showed ... is that any rates quoted by the leading lines can be matched by others in one week’s time. The rate war will continue until the bottom line is where no single liner can bear.”

Source: BizStar

Northport’s RM300m expansion depends on lease renewal

2011-03-28T21:13:00.000-07:00

The implementation of the RM300mil expansion plan ofNorthport (M) Bhd, a port- operating subsidiary of NCB Holdings Bhd, will have to depend on the prospects of the lease renewal for the port.

NCB chairman Tun Ahmad Sarji Abdul Hamid said it had submitted the lease renewal application to the Government last week and was hoping for a favourable reply.

“Our application for renewal is done professionally where we have engaged a consultant for the input.

“We have been this business for more than two decades and possess the know-how of the business.

“The renewal of lease is crucial for us as it will determine our prospects.

“We are all geared up for expansion, and we hope that our early submission, site visits and discussion with the Government would accelerate the decision-making process.

“Assurance from the Government is a crucial factor in our expansion plan roll-out,” he told reporters after NCB's AGM yesterday.

Northport's 21-year lease agreement will expire in 2013. It has spent more than RM1.5bil on development since its privatisation about 25 years ago.

Nevertheless, Ahmad Sarji did not deny the fact that there could be other contenders eyeing the lease agreement for the port operation as well.

“I am always inclined to be prudent and cautious.

“There may be other contenders but at this juncture I don't know if there are any or who they are,” he said.

On the RM300mil expansion, Ahmad Sarji said Northport needed to expand its capacity due to increased demand and had initiated the development of wharf 8A into container terminal four.

The construction is planned to start in the second half of this year and expected to be completed in 2013.

This is part of Northport's RM580mil three-year expansion plan that was launched in 2008 but had been postponed due to the global economic downturn.

Ahmad Sarji also explained that the development of Southpoint, a terminal at Northport dedicated for the handling of non-containerised or conventional goods, would depend on the business review of Southpoint before a budget was allocated for its expansion.

Recently, concerns were raised by users of Southpoint, especially exporters of palm oil, on expanding and improving its storage installations and distribution facilities.

On its key performance indicators this year, Ahmad Sarji expects container volume at Northport to increase by 5% to about 3.5 million twenty-foot equivalent units (TEUs) in line with the country's manufacturing and gross domestic production prospects. Last year Northport recorded a 15.6% increase in container volume.

“For Kontena Nasional Bhd (NCB's haulage arm subsidiary), we are embarking on halal logistics business and cold-chain warehousing services.

“Of equal importance, especially for Kontena Nasional, is the cost cutting measures via the introduction of a tracking system that would improve the turnaround time and management of its assets,” he said.

NCB reported a net profit of RM137.4mil for the financial year ended Dec 31, 2010, down 2.5% from a year ago.

Its revenue for the period surged to RM887.9mil from RM831.4mil in 2009.

For the year under review, NCB's proposal for a final and special dividend of 30 sen per share less 25% tax was approved at the AGM.

This will see a payout of RM105.8mil on May 6.

Incorporating the interim dividend of 7 sen per share that was paid in last October, the total payout would accumulate to RM130.5mil.

“This is equivalent to about 95% distribution of our profits. NCB dividend policy complies with Perbadanan Nasional Bhd's of about 75% profits distribution,” he said.

Source: BizStar

Northport expects more traffic in 2011

2011-03-28T04:42:00.000-07:00

Northport (Malaysia) Bhd, the port operating subsidiary of NCB Holdings Bhd, expects to handle 3.5 million twenty-foot-equivalent units (TEUs) this year against 3.3 million TEUs recorded last year.

NCB Holdings Chairman Tun Ahmad Sarji Abdul Hamid said the group was optimistic of achieving the target based on improved global trade and the country's manufacturing output.

The group will spend RM300 million for the expansion of Northport's terminal facility in response to increased demand, he told reporters after NCB Holdings annual general meeting here today.

The new facility, to be constructed in the second-half of the year and completed by 2013, would increase Northport's capacity towards the vicinity of 5.5 million TEUs.

Meanwhile, Ahmad Sarji said the NCB group has submitted a proposal to the government to renew Northport's licence which was due to expire in 2013.

"We submitted this proposal and would like the authority to see how we operate. We hope the early submission of this proposal and with the authorities coming over to see our facilities will help accelerate the decision making process and thereby give us a good lead time for expansion," he added.

He also said the RM300 million facility expansion was indicative of the group's earnest to pursue its business.

"We hope this thing (investment) will add to our merit in persuading the authority to consider us favourably for the renewal of our lease," he said

Source: Business Times

Baltic Dry Index sheds 1.8% a week after Japan quake

2011-03-23T05:04:00.001-07:00

A week after the tsunami disaster in Japan, the Baltic Dry Index (BDI), the benchmark index for commodity shipping, slid by 1.8% to 1,533 points on Thursday.

This was an indication that the reconstruction efforts by Japan had done little to boost dry bulk shipping freight rates that have been on a downtrend year-to-date.

So far this year, the BDI peaked at 1,693 points on Jan 4 and the lowest was at 1,043 points on Feb 4.

Dry bulk vessels carry global commodities such as coal, finished steel, grain, sand or gravel which are vital construction materials.

Dry bulk rates were under pressure from last year to the first quarter of this year due to the flooding in Queensland, Australia since there were fewer coal shipments to be exported. Australia is of the world’s largest overall coal exporters.

According to Reuters, Japan’s reconstruction efforts would do little to boost global freight rates that were nearing two-year lows as fleet expansion overshadowed any demand surge from the world’s third largest economy.

The report cited Hong Kong-based Citigroup shipping analyst, Rigan Wong, who said there was as much as a 10% difference between demand and supply growth this year.

“Japan alone will not be able to push up demand in line with supply. That just isn’t possible,” he said.

Macquarie Securities shipping analyst Janet Lewis said she didn’t think Japan would affect dry bulk rates all that much.

“I still think we could see fresh two-year lows. Through the end of the second quarter, we will see the BDI firming up but probably not a whole lot higher than where we are now. I don’t expect we will get above 2,000 points anytime soon. Maybe we can get up to 1,700,” she said.

Reuters also reported that the supply glut was best reflected by the severe downturn in the daily earnings of cape-size vessels, which briefly dipped below US$5,000 in February after surging to nearly US$60,000 eight months before. Earnings traded at US$9,430 on Thursday.

Dry bulk ship owners ramped up orders of vessels before the economic downturn in 2008. It normally takes three years for a ship to be delivered and most of those vessels are now coming online, exacerbating an already oversupplied market.

The Reuters report also quoted an analyst who said the world’s dry bulk fleet, responsible for shipping iron ore, coal, grains and other commodities, was expected to grow between 11% and 13% this year to top an unprecedented 600 million deadweight tonnes - that would far outpace demand of between 5% and 8%.

On the bright side, the report said many of the ports in Japan were unscathed by the earthquake, providing ample capacity to import coal and other dry bulk goods.

Source: BizStar

Kuantan Port City + East Coast Economic Region

2011-02-13T20:31:00.000-08:00

Kuantan Port City can attract RM38bil investments by 2020

KUALA LUMPUR: Kuantan Port City (KPC) is projected to attract up to RM38bil investments by 2020, and help the East Coast Economic Region (ECER) and the country’s first Special Economic Zone located within it, to be an industrial and logistics hub.

The ECER encompasses Kelantan, Terengganu and Pahang as well as the Mersing district in Johor.

KPC forms one of the main components of the development corridor. Encompassing 12,667ha, the completed project will see a throughput of 24 million tonnes, create 44,785 jobs and contribute RM9.3bil to the local economy by 2020.

According to a shipping analyst, KPC projects would certainly transform Kuantan Port into a mega port as the development calls for the expansion of Kuantan Port.

He said feasibility studies had been completed. “With new port facilities, it will enable the port to receive vessels above 40,000 tonnes or the next generation of container ships,” he said.

The analyst said KPC’s integrated development would also result in petrochemical, palm oil, automotive, container markets, as well as a major industrial and manufacturing zone serving the entire Asia-Pacific region.

He said KPC would also be the site for a Palm Oil Industrial Cluster (POIC) with one of its manufacturing components specialising in the downstream palm oil industry and the petrochemical cluster. Construction work at the POIC began in September last year. “The port city will improve the income and skills of the population while providing them with convenient and safe access to modern and efficient facilities and infrastructure,” the analyst said.

The Integrated Master Plan for KPC has been finalised and was handed over to the Kuantan Municipal Council last year.

Meanwhile, improvements in KPC’s main infrastructure, such as roads and drainage system, commenced this year.

To improve the water quality in KPC, a two-km water pipeline in Gebeng was completed and was handed over to the Pahang Water Supply Department in March last year. Land clearing and survey works for the construction of Panching Water Treatment Plant, are ongoing.

Once completed, the water treatment plant will have a capacity of 160 million litres per day, which will ensure adequate water supply, particularly in the Gebeng area.

To serve KPC, a multimodal network of highways, roads, railway and airports will move people and goods between KPC and the hinterland or the industrial clusters.

A logistics and distribution centre located near the port will also substantially improve the handling of goods.

KPC covers the existing Gebeng industrial area and Kuantan Port, up to the Mardi Institute in the north and the Pahang border in the west.

Source: BizStar

Malaysia needs to overcome major legal hurdles to fight high-seas piracy

2011-02-07T22:49:00.000-08:00

THE recent pirate attack on a Panamian-flagged, Japanese-owned, Filipino-crewed, Malaysian-chartered, Singapore-bound tanker, the MT Bunga Laurel in the high seas off the Gulf of Aden highlighted the escalating seriousness of the piracy threat in that region.

Only the quick and decisive action of the Royal Malaysian Navy’s elite team of commandos or Paskal, prevented the horrific possibility of a hijacking and kidnapping for ransom of the vessel and the 23 crew on board. Seven pirates were apprehended.

The prosecution of the captured Somali suspects would be Malaysia’s first trial involving high-seas piracy and as such careful planning and implementation of the trial is essential to ensure successful prosecution of perpetrators.

(According to latest news report on Feb 1, the Somali pirates were remanded at the Bukit Jalil detention centre until Feb 6).

The event also highlighted the complexity of the piracy situation worldwide, especially on the question of what to do with the apprehended pirates. Unfortunately, it is not as easy as making them walk the plank.

Factors to be considered

Various factors have to be taken into consideration such as costs, logistics, ability to prosecute, due process, and human rights aspects.

Customary law codified in The Law of the Sea Convention 1982 (Unclos) establishes high-seas piracy as a universal crime. Pirates are described as enemy of mankind and as such, all sovereign nations have the jurisdiction to apprehend, prosecute, and punish acts of piracy regardless of where it happens, the pirate’s nationality, the registry of the ship or the destination of the cargo.

Unclos defines piracy as any illegal acts of violence, detention, or depredation, committed for private ends by the crew or the passengers of a private ship and directed against another ship or against persons or property on board such ship on the high seas or in a place outside the jurisdiction of any state.

It has to be noted however, that universal jurisdiction only applies to piracy beyond the jurisdiction of any nation, i.e., the high seas. Pirate-like acts that take place within the jurisdictional waters of a state, such as those that occur in the Straits of Malacca, remain the responsibility and under the jurisdiction of that littoral state and perpetrators are often charged for armed robbery.

Despite the carte blanche nature of universal jurisdiction, prosecution must still come under the framework of local legislation and many countries are wary of or unwilling to shoulder the responsibility of prosecuting apprehended pirates due to the logistical and legal burdens.

The escalating cost incurred throughout the duration for which pirates have to be kept in custody pending transportation and trial, the piecing together of evidence and the gathering of witnesses who may be scattered across the globe, the trial, language barriers, legal assistance to the accused, would all prove to be major hurdles.

Underage pirates will add another layer of complexity to the matter in terms of the different laws applicable as well as the need to adhere strictly to human rights standards.

Pirates are still humans and therefore, entitled to due process and fair treatment while in custody. Political concerns can also be a deterrent and the media scrutiny of the matter may not be welcomed. In the United Kingdom for example, the possibility of pirates staying indefinitely as asylum seekers after incarceration or due to failed prosecution has deterred the United Kingdom from transporting captured pirates for prosecution on UK soil.

Further, there is the concern over the likelihood of the suspects receiving harsh treatment in Somalia upon deportation which would violate British Human Rights Act.

Solutions available

To counter the various legal concerns and logistical difficulties of transporting pirates over long distances to be tried in the arresting state, arrangements were made with a number of East African States to prosecute arrested pirates and to help repatriate hostages.

Malaysia however, has not signed any memorandum with Kenya or Seychelles or any other East African country that allows them to receive and prosecute pirates caught by the Malaysian navy. As such, the choices of what to do with captured pirates are restricted to catch and release, handing over to the barely functioning Somalia, or transporting them to be tried in Malaysian courts. Catch and release will undermine international anti-piracy efforts and only encourage future acts of piracy. Handing them over to Somali authorities where they will most likely be treated harshly or released for being national heroes, is also not a viable option.

It is certainly commendable that the Malaysian Government has decided to prosecute the captured suspects on Malaysian soil thereby, shouldering its international obligations towards repressing piracy. The Courts of Judicature Act 1964 (CJA) and the Penal Code firmly establishes universal jurisdiction to prosecute high sea piracy in Malaysia.

However, the domestic legal framework for the crime is lacking. Malaysia does not have legislation or a provision catering specifically to the crime of piracy and has not incorporated any definition of piracy in domestic legislation.

As such, the captured suspects will have to be tried for other crimes that could best fit the bill such as armed robbery, criminal conspiracy or even terrorism if certain elements are met. Our dilemma is that while the suspects are brought here for the crime of piracy under the international principle of universal jurisdiction, yet when tried, are charged under different offences. Would Malaysia still retain the jurisdiction to try the suspects then?

The MT Bunga Laurel is neither a Malaysian registered ship, nor crewed by Malaysians. Malaysia’s links to the vessel are as the arresting state and in relation to the cargo. It would be less complicated if the ship was Malaysian-registered as it would then provide Malaysia the extraterritorial jurisdiction to try the suspects for any offence under the Penal Code or under any other domestic legislation. Piracy however, usually refers to a broad range of violent acts at sea. Illegal violent acts of piracy under Unclos include armed robbery, murder or assault.

Therefore, the suspects could technically be charged with armed robbery or other penal offences.

More comprehensive future

A comprehensive national anti-piracy enactment would ensure a more effective framework to try and punish pirates for various acts of piracy. It would provide for piracy whether within or beyond Malaysian jurisdiction and could cover acts such as hijacking, kidnapping for ransom, armed robbery or any act that jeopardises Malaysian interests at sea. It would dispel any uncertainty in conducting the prosecution and ensure that any piratical act committed would be met with just punishment. The right tool is required to do the job properly.

Malaysia and its neighbours have been exemplary in successfully suppressing pirate-like acts in the Straits of Malacca. High-seas piracy however, is a different kettle of fish. The recent attack on MT Bunga Laurel was not the first time that a Malaysian-linked ship has been targeted by pirates.

In August 2008, MISC tankers MT Bunga Melati Dua and MT Bunga Melati Lima were hijacked within days in the Gulf of Aden. It is high time for Malaysia to improve its legal regime concerning piracy by enacting a national anti-piracy law.

It was reported in the media not so long ago that a national anti-piracy legislation is in the pipeline. This is certainly a positive development towards enhancing and strengthening the domestic legal framework to deal with piracy that threatens Malaysia’s maritime interests in whatever form.

Perhaps, the Government could also look into the various regional efforts against piracy and consider entering into other joint cooperation efforts. Until a robust international legal regime dealing with piracy can be established and a strong domestic legal framework developed, the best recourse would lie in taking the necessary deterrent steps to foil any pirate attacks before they occur.

● Melda Marissa Malek is a researcher with the centre for ocean law and policy, Maritime Institute of Malaysia. The author is indebted to Amy Aai and Shantini Guna Rajan for their helpful comments and feedback.

Source: BizStar

Delicate outlook for container, dry bulk

2011-01-31T10:07:00.000-08:00

Container and dry-bulk shipping sectors in the Asia-Pacific are still facing uncertain times.

Slower demand from Europe and a stream of newbuildings that was anticipated to enter the market this year were factors impinging on the container shipping sector, said investment banking group Nomura International (HK) Ltd in a report recently.

Meanwhile, the dry-bulk sector continued to suffer from oversupply of vessels, and was currently hampered by low freight rates due to the recent floods in Australia, it said.

Nomura remains cautious on the container shipping sector as demand growth in Europe is set to be slower than that in the United States.

The key earnings driver would be the Asia-to-Europe routes, which experienced higher margins and profitability last year.

“Supply of vessels is likely to be focused on those exceeding 10,000-TEUs (twenty-foot equivalent units).

“The order book is skewed towards this segment, which accounts for 45%. The supply of vessels of this size is set to grow by 98% this year,” it said.

However, Nomura said port and route limitations were preventing these large vessels from operating on many Asia-to-US routes.

“Carriers also face cost pressures from higher bunker oil prices and terminal-handling charges, primarily from Chinese ports,” it said.

Nomura estimates that Asia-to-Europe freight rates would drop by 4% this year while trans-Pacific freight rates would increase 1% despite the fact that annual contracts, for which negotiation usually ends in May, are likely to be concluded marginally lower this year.

“The main reason for these diverging freight rates is the way the routes are structured, mainly on a quarterly basis for the Asia-to-Europe routes and annually for the trans-Pacific routes.

“We also estimate that Asia-to-Europe routes would have higher spot contracts and a greater percentage of freight forwarders on the European routes than end-users on the US routes,” it said.

For dry-bulk shipping, Nomura said oversupply, slower demand and inflation concerns continued to plague the outlook for sector.

“While we believe these are valid concerns, we estimate that current freight rates are at artificially low levels due to bad weather and flooding problems in Australia,” it said.

With iron ore and coal each accounting for 30% and 27% of total volumes, Australia is a key export region of the raw materials, given that the continent is the largest exporter of iron-ore and second-largest of thermal coal globally.

“Once the Australian flooding problem eases, we expect a rebound in freight rates, although this will still be lower than historical highs, given the problem with the supply of vessels,” it added.

Nomura said supply growth remained a concern for the sector. Despite record newbuilding deliveries last year, orderbook as a percentage of current fleet remains at 52%.

“We estimate net supply growth of 11.3% in 2011 and 2012 respectively, after factoring in a 42% newbuilding delivery slippages in both years.

“This is higher than in 2010 with newbuilding slippage of 36% due to lower freight rates this year and 2012,” it said, adding that scrapping was the wild card, given that 31% of the existing fleet was over 20 years old.

Newbuilding delivery slippages refers to new vessels that do not enter the market.

Nevertheless, Nomura remained relatively optimistic that demand for iron ore and coal (thermal and coking) would remain strong.

Source: BizStar

Economic woes in US, Europe still cast shadow on local shipping sector

2011-01-28T00:58:00.000-08:00

Despite the rosy outlook of seaborne container trade anticipated this year in continuation of last year’s growth, there are several negative variables that could still cloud the positive sentiment.

Maritime Institute of Malaysia senior fellow Nazery Khalid said Malaysia, being a trade-dependent country, would be subjected to the economic performance of countries it traded with and the economic woes of the United States – a key trade partner – were not likely to improve soon.

“The eurozone crisis might add to the gloom; already Portugal is feeling the contagion effect of a crisis that has hit Ireland and Greece.

Naery Khalid says the US economic woes are not likely to improve soon.

“And China’s effort to ease economic growth to prevent overheating could also have an adverse effect to Malaysia’s trade and ports’ performance in the near term,” he toldStarBiz.

According to Nazery, the World Bank projected that China’s economy would grow at an average of 8.4% over 2011-2015 and 7% over 2016 to 2020, compared with the double-digit average annual growth it registered in the past decade.

“Other quantitative easing measures by several major trading countries may also dampen a sharp rebound in global economic and trade growth, and this will obviously have a telling effect on Malaysia,” he said.

Although Malaysia’s economy emerged largely unscathed from the global recession, Nazery said recently-released domestic figures suggested that the country was not entirely immune to the devastating effects of the downturn.

Malaysia’s exports in October 2010 slumped to an 11-month low, with a mere 1.3% growth recorded year-on-year, despite the economy posting a strong growth of 8.1% in the first three quarters of 2010.

“Also, the specter of huge new tonnage coming into shipping trades such as container and bulk will add downward pressure to freight rates.

“It would be unlikely that these vessels would be able to find demand for such cargos to be able to match the supply of the vessels carrying them,” he said.

To recap, Minister of Transport, Datuk Seri Chong Kong Ha recently announced that that Malaysian ports handled a total of 18.4 million 20-foot equivalent units (TEUs) last year.

This commendable figure was a 14.8% increase from the 16.04 million TEUs of total container throughput recorded by local ports in 2009.

The minister has forecast a 7% year-on-year growth in total throughput in 2011.

Nazery said the confidence of a productive year for local ports this year was not misplaced as economic indicators pointed to decent growth for Malaysia’s trade and economy this year, in line with improving global economic sentiment.

World Trade Organization projected global trade to grow 13.5% this year, compared with its earlier growth forecast of 10%.

Meanwhile, Bloomberg recently reported that Asian exports that helped power the world recovery last year were poised to grow more slowly as the region’s manufacturing rebound eases and the US unemployment restrains consumption after a post-recession spending spree.

According to the newswire, Container traffic growth in Shanghai, Singapore and Hong Kong, the world’s busiest ports, has cooled since the first half of last year.

Singapore exports in 2011 may rise at a third of last year’s pace of as much as 24%, according to DBS Group Holdings Ltd. The island’s government joins Taiwan and South Korea in predicting smaller gains in overseas sales.

While seaborne container trade outlook is still on cautious mode, shipping companies that were severely battered when freight rates plunged during the height of the global economic crisis, were slowly “restoring” their rates in tandem with the increase demand for their services.

Maersk, the largest container shipping company globally, had on Dec 22 announced general rate increase for its Middle East- Europe service for the first quarter of this year.

CMA CGM in its revenue restoration programme has also embarked on new rate restoration and surcharges for a few of it services this month.

Rising trade strains Malaysia's top ports

2011-01-21T10:49:00.000-08:00

Malaysia's growing international trade is putting a strain on main ports, with delays in cargo handling being reported despite an increase in throughput volume, according to a business report on Malaysia.

Publisher and consultancy Oxford Business Group (OBG) said as majority of Malaysia's foreign trade as well as its domestic cargo transfer is moved by sea, delays in clearing the ports can have a direct impact on the economy.

"Bottlenecks add to the costs of both shipping firms and their clients, especially those with perishable freight or cargoes being transported on a tight deadline.

"Though there has been an increase in the number of 20-footer container units being handled by Malaysia's ports this year, some of the main cargo facilities are being stretched, with complaints coming from representatives of the shipping industry and producers," it said in its latest Economic Updates on Malaysia.

International Trade and Industry Ministry's (Miti) figures released in early December show a continuing surge in overseas trade, with the 10-month import and export data rose over 20 per cent from the same period in 2009 to RM967.58 billion. Exports climbed by 18 per cent to RM529.56 billion, while imports increased by 24.7 per cent to RM438.02 billion.

The government has revised upwards its projected economic growth for 2010 to 7 per cent from 6 per cent, due partly to a solid increase in foreign trade.

In the south, Johor Port Shipping and Forwarding Association said delays at the Johor Port were slowing the flow of imported raw materials, disrupting production, and resulting in missed deadlines for shipments. These are potentially harming Malaysia's reputation as a supplier.

The port has little room for further expansion, having been designed to handle a maximum of 800,000 20-foot equivalent units (TEUs) a year, a limit it has now reached.

In mid-November, a number of shipping companies operating through Johor Port said they would be imposing a surcharge on exporters due to high levels of congestion and delays at the facility.

The surcharge is to offset losses stemming from the delays, including the costs of operating vessels, charter fees and charges resulting from missed connections.

This is expected to hit industries in Pasir Gudang, with manufacturers having to fork out US$25 (RM77) or more per container in extra levies.

OBG said port operators in Johor are trying to improve the situation, but there have been no quick-fix solutions to that.

MMC Corp Bhd, which operates both Johor Port and Port of Tanjung Pelepas (PTP), recently floated a proposal to shift all container-handling activities to PTP, leaving Johor Port to deal with other cargoes.

However, the move to consolidate port activities was rejected by the government, with Miti Minister Datuk Seri Mustapa Mohamed saying the decision had been taken after considering views and concerns from companies and industries operating in Pasir Gudang.

Geodis Wilson Freight Management general manager Donovan Niap believes the government should reconsider its decision, given the continuing congestion at Johor Port.

Johor Port's operators have announced plans to improve cargo-handling capacity, including acquiring more cranes and replacing ageing equipment.

"However, the space constraints will mean there is only so much improvement that can be wrung out of the upgrades," said OBG.

Up north, the operators of Penang Port are taking a different tack, hoping a US$100 million (RM307) dredging project to deepen the main channel leading to the port's container facility will enable it to attract more trade and handle larger vessels.

The project has the potential to turn the North Butterworth Container Terminal into a major facility, capable of handling up to two million TEUs a year.

The expansion of the port is timed to coincide with work to electrify and lay duel track on the Ipoh-Padang Besar railway, which should be completed by 2013.

OBG reckons that despite the private sector and state authorities' additional investments to improve port facilities and infrastructure to clear the bottlenecks, these projects will take time.

"This means freighting delays will continue to pose problems for Malaysia's economy," it added.

Source: Business Times

CMA-CGM hopes for a repeat performance

2011-01-21T10:46:00.000-08:00

The CMA-CGM Group expects to grow its container volume in Port Klang between 12 per cent and 13 per cent again this year, if everything goes reasonably well.

"It's very difficult to predict. We don't want to be too optimistic and tempt fate, because there is still a lot of uncertainties in the European and US economy but we think with the good recovery last year we can continue," CMA-CGM & ANL Malaysia managing director Simon Whitelaw told reporters during an appreciation lunch to mark CMA-CGM's for breaching 2 million twenty-foot equivalent units (TEUs) in Port Klang.

CMA-CGM registered between 12 and 13 per cent growth in container volume in Port Klang in 2010, due to good growth in transshipment as well as local cargo.

Last year the company contributed about 26 per cent to Port Klang's overall throughput volume.

Local cargo makes up about 10 - 12 per cent of the cargo CMA-CGM handles while the remainder is from transfer of containers and transshipment.

Whitelaw said however that the fourth quarter of 2010 saw some softening in cargo movement, as China's consumer demand eased off.

"The fourth quarter was definitely softening a little bit partly because business tailed off, and China was not the big consumer demand everyone was expecting. Fourth quarter was a little bit softer from the third quarter," Whitelaw said.

CMA-CGM started out in Port Klang in 1998, handling some 20,000 TEUs.

Meanwhile Port Klang Authority chairman Datuk Lee Hwa Beng said he is confident that the port would be able to at least maintain its world ranking of the previous year. Port Klang was ranked 13th in the world's busiest container port in 2009.

"We improved by 21 per cent last year, we still don't know the world ranking for 2010 but we expect to at least maintain it. I don't think many ports in the world have seen such a large jump," Lee said.

Port Klang, which comprises Westports and Northport, recorded a 21 per cent rise in container volume in 2010, to 8.9 million TEUs.

Source:Business Times

Malaysian navy thwarts Somali pirate attack on MISC tanker

2011-01-21T10:07:00.000-08:00

GULF OF EDEN: Malaysian navy commandoes thwarted an attempt by Somali pirates to hijack a Malaysian International Shipping Corporation (MISC) tanker early Thursday.

Sources said the commandoes on board the Royal Malaysian Navy's Bunga Mas 5 were on a routine escort mission of MISC's chemical-laden MT Bunga Laurel and another LPG carrier out of the dangerous gulf waters enroute to Singapore.

But hours out of the danger zone, when the RMN would cease their escort, the pirates struck.

At least seven pirates began attacking the MT Bunga Laurel firing their assault rifles and machine guns when trying to board the vessel.

The crew of MT Bunga Laurel activited the alarm and the commandoes, which were about 30km away, reacted immediately by dispatching a helicopter to the scene.

The sources said the commandoes boarded the tanker and subdued the pirates.

They said the swift action saved the 20-odd Malaysian crew and the vessel. At least three pirates were injured in the shoot out with the commandoes.

In another incident, South Korean navy commandos stormed a ship hijacked by Somali pirates in the Indian Ocean on Friday.

All 21 crew were saved and eight pirates killed.

The hijacking came two months after another Korean supertanker was released by Somali pirates after being held for seven months.

Piracy has surged off lawless Somalia in recent years. Pirates are currently holding 29 vessels and about 700 hostages.

Source: Star

Malaysia’s cargo handling to grow 7pc

2011-01-11T05:12:00.000-08:00

Competitive pricing and efficient services, including a speedy turnaround time, is expected to drive Malaysian ports to achieve a seven per cent growth in cargo handling in 2011, said Transport Minister Datuk Seri Kong Cho Ha.

He said Malaysian ports handled 18.4 million twenty-foot equivalent units (TEUs) last year, up 14.8 per cent, compared to 16.04 million in 2009.

"We expect further growth for this year and ahead. We are projecting a seven per cent growth in terms of TEUs and it is a conservative figure," he told reporters after opening the National Maritime Conference here today

Source: Business Times

Forwarders cry foul over port deposits

2011-01-02T16:59:00.000-08:00

PORT KLANG (Jan 2, 2011): Freight forwarders are crying foul over the requirement of shipping lines that they deposit up to RM2 billion a year to cover damage; and the Port Klang Authority (PKA) is seemingly powerless to do anything.

The Selangor Freight Forwarding and Logistics Association (SFFLA) is furious that the PKA is allowing the 100 foreign shipping lines that call at our ports to dictate terms to terminal operators and refuse to adopt internationally-accepted rules which protect terminal operators, freight forwarders and shippers.

SFFLA honorary secretary-general Wee Ah Sah said the Equipment Interchange Report (EIR), a document accompanying containers stating the condition of the boxes at each point of exchange, have been replaced by deposit takings of between RM750 and RM1,000 per container.

"The deposits were imposed in early 2010 and have to be paid as insurance to ensure that shippers are protected if the boxes are damaged although this is already covered by the EIR," Wee told theSun.

He claimed that in almost all cases, 10% of the deposit is retained due to damaged containers, although these boxes are prone to wear and tear due to extensive use.

"There have been cases where the deposits were not returned due to rusty containers but the rust could have been there much earlier," said Wee whose association represents 550 active forwarders.

He said as 2.5 million containers came into Port Klang (North Port and Westport) a year, by simply taking 10% of the minimum RM750 deposit, the amount is almost RM187.5 million. And as deposits are not returned immediately, millions of ringgit more in interests are tied up.

"Sometimes it takes up to five months to get our money back! Can you imagine the amount of interest that is lost?" said Wee, adding that the container should be the shippers’ responsibility.

However, he admits that stiff competition led to several terminal operators bending backwards to accommodate shippers' demands.

The European Union (EU) had introduced a charter to prevent shipping cartels which could wreak havoc to world trade by raising the cost of transportation, and by extension, the price of goods and services.

"What they can’t do in the West they are trying it here," Wee claimed.

He blamed PKA for encouraging the practice, which he equates to blackmail.

"The PKA has lost its purpose and is not playing its role as regulator and facilitator of the ports by ensuring fair practices," he said. He also blamed terminal operators for not putting their foot down by refusing to collect the deposits.

Operators are also spoiling these shipping lines by allowing lengthy free storage periods. "Previously used to be seven days, at least now they have brought it down to three days, but why?" said Wee.

He added that while tariff rates were RM140 per (container) lift, undercutting had led some terminal operators to offer shipping lines RM50 per lift.

"The competition between the terminal operators is hurting the ports and the PKA must step in," said Wee.

He cited an example where one shipping line which owed millions to one operator had since moved to another operator due to incentives – without settling the debt to the former.

Westports Malaysia Sdn Bhd chairman Tan Sri G. Gnanalingam agreed that PKA must impose some form of control. "The PKA must be a regulatory body that is run by people who know the port business," he said.

However, he said Wee’s claims must be taken with a pinch of salt.

"There are over 3,500 freight forwarders in the country, while even Japan has only 300.

"Seems that anyone can be a freight forwarder, so this portion of the industry must also be regulated," he said, declining to comment further.

Source-- theSun

Hauliers irked by gate charge

2010-12-30T17:27:00.000-08:00

BUTTERWORTH: The Association of Malaysian Hauliers (AMH) has urged the Transport Ministry to intervene on the move by the Malaysia Container Depot Association (MCDA) to impose a RM5 fee for every container that is returned to or taken from their depots.

AMH northern region chairman R. Amaiappan said MCDA had notified the association via email that it would imposed the fee starting Jan 2. All 30 AMH members had protested. “We are only transport agents who collect containers from the depot as ordered by the shipping agents and the charge should be imposed on the shipping agents,” he said.

Source: BizStar

Westports seals long-term deal with China Shipping

2010-12-24T19:36:00.001-08:00

China Shipping Container Lines Co Ltd (CSCL) would continue to make Westports Malaysia in Port Klang its mega trans-shipment hub in Southeast Asia.

This was following the signing of a long-term Terminal Service Agreement between Westports and CSCL in Shanghai on December 7.

"CSCL will be deploying 14,000 20-ft equivalent units (TEUs) vessels from first-quarter next year as our 17m natural deep sea port is their preferred port of call.

"We have been constantly improving the productivity rate on their vessels. Our skilful workforce and state-of-the-art port facilities are ready to handle these growing sizes of container vessels, Westports chief executive officer Ruben Gnanalingam said in a statement yesterday.

CSCL, a division of China Shipping Group, is currently the second largest customer at Westports, after French Liner, CMA CGM.

Westports is expected to handle some 600,000 TEUs for CSCL this year, including the group's Feeder Liner - Puhai Shipping, Westports said.

"Westports had given excellent service and we are confident of growing further in the next decade," deputy managing director of CSCL Zhau Hongzhou said.

Zhau also expressed happiness with the agreement saying it reflected the strong bond of friendship and growing trade volume between both Malaysia and China.

Westports staff proved that productivity is the core objective of business by setting yet another benchmark for a China Shipping vessel in March this year.

They hit a crane productivity of 734 moves in a single hour of operations with nine-crane deployment. This feat was performed while working on CSCL Pusan, a 9,600 TEUs vessel.

Source: Business Times.

Syed Mokhtar gets Penang Port

2010-12-23T18:16:00.000-08:00

Losses from the ferry service have hamstrung PPSB’s efforts to be publicly listed. — Reuters pic

KUALA LUMPUR, Dec 24 — Tycoon Tan Sri Syed Mokhtar Al-Bukhary has won the race to take over the Ministry of Finance’s (MoF) Penang Port Sdn Bhd (PPSB), adding the northern port operator to his maritime logistics operations.

The Malaysian Insider understands that the Cabinet approved the sale at its meeting this week despite competitive bids from other top businessmen and also the Penang government, which owns the port land.

“The Cabinet has decided in favour of Syed Mokhtar,” a source told The Malaysian Insider, saying the tycoon’s company will buy into the port operator and the ferry service between Penang and Butterworth.

It is not known what price the government had agreed on but sources said it will be finalised soon.

Syed Mokhtar also owns PTP and Johor Port.

The influential businessman already owns Port of Tanjung Pelepas and Johor Port via MMC Corp Bhd, whose joint venture with Gamuda Bhd were also named Project Delivery Partner (PDP) for the RM36 billion Mass Rapid Transit (MRT) project in Kuala Lumpur.

Sources said Syed Mokhtar was the preferred contender as he already owned ports and airports although another Putrajaya-friendly tycoon Datuk Siew Ka Wei was keen to purchase PPSB through Ancom Logistics Bhd, whose chairman Datuk Abdul Latif Abdullah used to be PPSB chairman.

PPSB is a wholly-owned subsidiary of MoF Inc while the regulator, Penang Port Commission (PPC), also reports to Putrajaya through the Transport Ministry. Prime Minister Datuk Seri Najib Razak recently named MCA president Datuk Seri Dr Chua Soi Lek to head the PPC.

Penang Chief Minister Lim Guan Eng wrote to Najib in early December to put in a bid to run the port, which has declined since the MoF took over in 1994. The port lost its free port status in 1974.

It is learnt that cargo volumes have failed to match Port Klang and Tanjung Pelepas, growing only 5.8 per cent a year between 1995 and 2009, against Klang which grew 14.2 per cent annually.

Syed Mokhtar’s Tanjung Pelepas port began in 1999 but now handles more than six million TEUs (twenty-foot equivalent units) a year, six times more than the one million TEUs in Penang.

Penang has complained that federal ownership of the port operator has worsened its financial position, with net debt rising from RM148 million in 2004 to RM832 million in 2009 — a 462 per cent increase in five years.

Apart from the debt, any company taking over PPSB will also have to find nearly RM400 million to dredge the port channel and attract larger vessels there.

PPSB is already carrying out dredging in the North Channel to ensure it goes from 11.5m to between 13.5m and 14.5m in the coming year.

Lim’s administration had sought to take over PPSB.

PPSB has been planning to privatise and float its shares on Bursa Malaysia since 1996, but it was not able to do so because of the loss-making ferry service. A plan to hive off the ferry operation to Syarikat Prasarana Negara Bhd last year also fell through at the last minute.

The ferry service has been a major hindrance to state-owned PPSB’s listing plans in the past due to the losses incurred, running into some RM13 million to RM15 million a year.

PPSB made RM77.74 million in after-tax profit in 2009, up from RM22.70 million the previous year despite revenues falling to RM268.54 million in 2009 against RM277.04 million in 2008.

State government sources said Lim could bring in enough businessmen and experts to run PPSB, which needed funds to deepen the port’s channel and also modernise its wharfs and berths.

“Lim has a few ideas to turn around the port and make it perform better,” a source said, pointing out that Penang owns the port’s land and waters and would have a say over who eventually owns PPSB.

Lim’s DAP colleagues had told Parliament on November 24 that Putrajaya should come clean on whether Syed Mokhtar had bought into the management of PPSB, which is led by Penang Umno leaders such as PPSB chairman Datuk Seri Dr Hilmi Yahya and its managing director, Datuk Ahmad Ibnuhajar.

A unit of Syed Mokhtar’s diverse infrastructure and logistics conglomerate was awarded a 4G network provider licence recently while another subsidiary is interested in acquiring the North-South Expressway (NSE).

Source: malaysian Insider

Tight capacity seen in container sector ahead

2010-12-17T21:01:00.000-08:00

The container shipping industry is expected to experience tight capacity next year due to limited access to new capital or bank financing for ship building coupled with tight supply of new containers, said United Arab Shipping Co (UASC) Malaysia Sdn Bhd country general manager Desmond Yong.

“Trade volume is also expected to continue to grow in line with this year’s trend indicating a possibility of a global container trade reaching 11.1% growth or a total of 138 million twenty-foot equivalent units (TEU).

Desmond Yong ... ‘Security, environment and oil price will have major effects on the business.’

“Although various regional trade sectors may see differing demand as well as supply trend – vessel lay-ups, extreme slow steaming, service or capacity diversions will continue to be the options for lines to strike a balance in revenue.

“Looking ahead, three major factors will have major effects on the business, namely security, environment and oil price, which will require sector players to adjust their business process to a new mode of operation,” Yong told StarBiz.

In general this year, Yong said the trend of global demand was exceeding boxship supply due to cancellation of ship deliveries and the high demolition rate earlier this year.

As for Malaysia, Yong indicated that there were a number of positive developments which had materialised this year, with some shipping lines and manufacturing base making Port Klang their hub.

“The challenges ahead for next year is really on how Malaysia can focus on seizing this golden opportunity by enhancing and strengthening Port Klang, making it truly a convenient and business friendly hub for the shipping lines and manufacturers.

Yong said there were a number of areas that the country needed to benchmark against neighbouring countries in order to increase local efficiencies.

“As for shipping lines sustaining their hub at Port Klang, areas we do need to watch out for are some untimely and outdated practices and policies within the industry, which do not make it any easier for shipping lines to conduct their business.

“And there is indeed an urgent need by various authorities and sector players to jointly make the necessary improvements,” he said.

Meanwhile, Wilhelmsen Ships Service managing director Winston W.F. Loo foresaw a pickup in demand in the near term (next month) running up to the Chinese New Year festival, before it tapers off.

This year, Loo said it had been a decent year for container operators despite rates being “softer” compared to 2009.

“Rates for both the main East-West trades have remained fairly decent supported by shortage of containers as well as shortage of spaces in the early part of the year.

“Rates were as high as US$2,000 per TEU to European main ports during the first quarter.

“Unfortunately, the rates continued to slip from thereon by an average of US$200 per TEU per quarter.

“Present rates out from Malaysia hovers around US$1,300 – US$1,400 per TEU,” he said.

Going forth, Loo said many carriers had announced general rate increase (GRI) to be implemented with effect from Jan 1, with average increase of between US$250 and US$300 per TEU.

On the other East-West trade of Asia-US-Asia, Loo said it started off the year poorly, averaging US$1,800 (West Coast) and US$2,900 (East Coast), but gained strength during the second quarter.

“Implementation of the peak season surcharge of US$600 per forty-foot equivalent units (FEU) for West Coast and US$800 per feu (East Coast) in June were very successful.

“This success prompted the shipping lines to further implement a GRI averaging US$600 per feu (West Coast) and US$800 per FEU (East Coast) from July 1.

“Unfortunately, some could only hold for two weeks before mitigation starts creeping in due to both supply and demand pressures. After that, rates continued to decline.

Presently, Loo said the rates out of Malaysia hover around US$1,900 to US$2,000 per FEU (West Coast) and US$2,900 – US$3,000 per FEU (East Coast).

“In the near term, we foresee that volume to the United States out of Malaysia will remained stagnant, thus rates will remain under pressure going into next year,” he said.

Source: BizStar

Tight capacity seen in container sector ahead

2010-12-12T23:06:00.000-08:00