MIDF research downgrades ports sector to negative

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

Logistics roadmap will benefit the region

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

Only handful opt for third-party logistics

KUALA LUMPUR: Malaysia’s manufacturing sector is still in transition to fully realise the advantages of outsourcing their logistics activities.

This outsourcing effort, known as third-party logistics (3PL) services, usually involves integrated warehousing and transport services being customised to meet customer’s needs based on their markets, demands and delivery requirements.

According to Dynamic Learning Resources trainer consultant G. Vizayer Raj, only a handful of Malaysian companies have fully outsourced their logistics activities.

“For manufacturers, the long-term benefits of using 3PL services include reduction in warehousing and distribution cost as well as enhanced focus on core activities such as quality control, production and marketing.

“In the long run, the cost of transportation, distribution and inventory management could be reduced by more than half if the company opts for 3PL services,” he told StarBiz.

“At the end of the day, manufacturers could produce good quality and competitively priced products that could reach their target markets on time.”

Vizayer recently presented a paper on Creating Global Value Through Efficient Trade Logistics at the 2nd National Logistics Conference organised by The Exporter Club.

He said the lack of awareness on 3PL services in Malaysia could be due to the perception towards logistics services here.

“Around 20 years ago, we were largely dependent on Singapore in terms of logistics. Our logistics services then did not bring the desired result, but the sector has since evolved.

“Many international logistics companies have set up their hubs in Malaysia and they include DHL, Schenker and Ceva Logistics,” Vizayer said.

He noted that Malaysia had developed its own logistics companies that offered services of international standards. They include Century Logistics Holdings Bhd, Freight Management Holdings Bhd, Tiong Nam Logistics Holdings Bhd and Freight Mark (M) Sdn Bhd.

Vizayer said to achieve a strong logistics sector, a country must put in place the processes of logistics.

“Certain factors must be addressed to stimulate growth and they include infrastructure and policies.

“Physical assets such as skilled workforce; infrastructure like roads, bridges, airports, seaports, railways; and adequate communications network must be of international standards,” he said.

“We also need Government support in the areas of policies, procedures and regulations to ease and promote trade.”

Vizayer said corporations should also play their part to stimulate trade growth.

“They must educate employees on the benefits of global trade, create a sustainable enterprise, utilise the resources of 3PLs and make supply chain management a strategic priority.”

Source: StarBiz

LCLs: Import and Export flows prepared by MITI

In 2008, the Ministry of International Trade and Industry documented a process flow for LCL (Lesser than Container Load) cargo and documentation. This single-window operational target remains highly relevant and necessary.

Click HERE to view the document.

Freight Transportation in Malaysia: Technological and Organizational Issues from an ITS Perspective

This is a report prepared by Sgouris P. Sgouris, Massachusetts Institute of Technology in June 2003. You will find that many of the issues raised are still to be resolved and, recommendations made that have yet to be implemented.

Click HERE to read the article.

Local logistics companies hope for a sustained cargo volume

Domestic logistics players are looking forward to the sustainability of the industry’s recovery next year after a pick up in cargo volumes since the middle of this year.

The local logistics industry had suffered a double-digit drop in volumes earlier this year, especially in the first quarter, due to the global economic downturn.

Century Logistics Holdings Bhd deputy managing director Mohamed Amin Kassim said the current economic climate had clouded the industry outlook for next year.

“Although there was an increase of freight volumes in the second half of this year compared with the dismal performance in the first half, we should still be cautious until we see the growth continuing beyond the first quarter of 2010,” he told StarBiz.

Amin said the road to recovery might be hampered by upheavals in currencies, devaluation of assets and an overhang of idle transportation assets such as ships and aircraft.

“Going forward, the light at the end of the tunnel seems to be coming from the Asian economies and the economic performance of Brazil and Russia. The logistics industry will rebound with the rise in global trade,” he said.

But despite the bearish economic environment, Century Logistics is expecting its best financial results for the financial year ending Dec 31.

“This expected remarkable achievement will be the result of strategic development after our re-engineering exercise in 2003.

“The building blocks of innovative products and solutions are now bearing fruits,” Amin said.

Freight Management Holdings Bhd (FMH) managing director Chew Chong Keat said while the company was still cautious on the outlook for the next calendar year, it believed it would still chart growth in earnings in the current financial year ending June 30 (FY10).

“This is because we have always adopted a strategy to expand our business in line with industry’s growth. We minimise outsourcing so that we can effectively manage our costs and level of services.

“We are able to withstand the economic slowdown mainly due to this strategy,” he said.

FMH managed to record an 11.5% increase in net profit to RM13.6mil in FY09 amid the economic downturn.

Infinity Logistics and Transport Sdn Bhd managing director Chan Kong Yew said the market expected cargo volumes to return to 2008 figures next year.

“This is supported by the increase of local container volume in October. And if the trend continues, we will see an overall grow on containers (local volume) of between 15% and 18% next year compared with 2009,” he said.

Multi Cargo Express group executive group managing director Hoh Ding Wei expects the market the market to improve after the first quarter of next year.

“Today, China plays an important role in the world’s economic development and is anticipating 9% growth next year, followed by India at 8% and Indonesia 6%. This will help the shipping industry to improve in terms of volume,” he said.

Hoh said Multi Cargo had been preparing for the expected growth next year by hiring more qualified professionals.

“Our mission has always been to scout for new and improved services to cater to the demand of our shippers,” he said.

He added that Multi Cargo’s plans for next year included increasing its existing fleet of trucks for domestic shipments and inland transport, procuring two additional sets of tugs and barges to increase bulk cargo deliveries and expanding into courier and parcel deliveries.

“With these expansion plans, new equipment and services, we are looking at an additional RM3.5mil in earnings and RM20mil in revenue to meet our forecast of RM90mil revenue and RM 7.5mil profit next year,” Hoh said.

Source: StarBiz

KLIA: Big cargo pile-up after Customs system failure

A breakdown of the Customs Department's electronic document processing system has caused a backlog which is costing shipping and forwarding agents millions of ringgit a day.

The mainframe of the department's online computerised system broke down on Sept 2 and clearing processes, which usually take two hours, now take more than 24 hours.

The mainframe, located at the Kuala Lumpur International Airport's cargo complex in Sepang, is connected to airports, seaports and border checkpoints.

Sources told the New Straits Times that the system failure had severed the link between the electronic data interchange (EDI) connection server and Customs, forwarders and agents.

Clearing processes now are being done manually but work is hampered by shortage of Customs personnel, creating long queues and a stockpile of uncleared cargo, including perishable items.

Dagang Net Technologies Sdn Bhd, which provides the EDI connection for the 150-odd airfreight forwarders -- 90 per cent of whom are multi-nationals -- is working overtime to solve the problem.

Customs deputy director-general (management) Ghazali Ahmad, however, described the problem as a "minor hiccup".

Ghazali said they were monitoring the situation round the clock through their information technology specialists.

"We are trying to improve the situation so as not to inconvenience customers who will suffer loss of time and money.

"At the same time, we want to speed up the manual transactions."

Airfreight Forwarders Association of Malaysia (AFAM) chairman Walter Culas said the manual procedure was time consuming, costly and affects efficiency of the forwarding industry.

"An electronic transaction that usually takes two hours now has to be done manually over a 24-hour period."

This, Culas said, was causing a massive slowdown in cargo turn-around, with delays in delivery of goods which in turn caused stockpiles at the warehouses.

"As freight forwarders, we have to absorb delayed expenses. Overheads have increased by 200 per cent to cover additional manpower and demurrage charges. This can cripple our business and eventually affect the country's economy."

Culas said he had highlighted the matter to Customs director-general Datuk Ibrahim Jaapar and Dagang Net Technologies chief executive officer Zaharin Ali, who were equally concerned.

"I have also written to the Transport, Finance and International Trade and Industry ministries for assistance and advice.

"I hope measures are taken to address the matter urgently to safeguard our industry and the country's economy."

Time Engineering Berhad's corporate services spokesman Zulina Mohamad Salleh, whose outfit is Dagang Net Technologies' holding company, said they had sent a team of five systems engineers to address the situation.

"We are still attempting to establish the cause of the problem. It is too early to say anything right now."

Zulina added that the engineers were trying to verify which of the two portions -- one linking the EDI with Customs and the other with the airfreight forwarders -- was malfunctioning.

Source: Business Times

FMFF: Review 51% Bumi equity and Regulate freight forwarders

The Federation of Malaysia Freight Forwarders wants the registration of freight forwarders be made mandatory to weed out fly-by-night operators

THE Federation of Malaysia Freight Forwarders (FMFF) has proposed that the Transport Ministry control the number of players in the market and make the registration of freight forwarders mandatory in order to weed out fly-by-night operators.

Selangor Freight Forwarders & Logistics Association (SFFLA) vice-president Chan Kong Yew said the freight forwarding industry is currently not regulated by any government body.

"The government should recognise the linkage between regulation, accreditation regimes, industry performances and quality standards," he told Business Times in an interview.

"On our part, FMFF is developing a framework where local freight forwarders can be regulated and benchmarked against international standards in terms of paid-up capital, operational capability, financial strength, ethical conduct, professional capacity and experience," he added.

FMFF also plans to upgrade the professionalism of the logistics industry through education and training.

"We recognise the importance of training and upgrading the skills of our members and employees, and have divided them into three focus groups," said FMFF president Alvin Chua Seng Wah.

Chua is also the newly-appointed president of SFFLA, following the demise of former president Abel Tan Ah Beng last month.

"The first group will comprise operational staff, who will undergo practical and vocational training, while the second group will focus on enhancing the knowledge of clerical and supervisory employees through a series of short courses.

"The third group will encompass executive staff, who can participate in the federation's foundation and certificate courses," he said.

In this regard, FMFF is working closely with the United Nations Economic and Social Commission for Asia and the Pacific and the International Federation of Freight Forwarders Associations (Fiata) in developing a series of logistics courses from foundation level to certificate, and eventually leading to a diploma in accordance with Fiata's syllabus, which is recognised by the world logistics industry.

"We are planning to introduce the diploma programme in Multimodal Transport Operation by the end of this year," Chua said, adding that FMFF is in discussions with Universiti Tunku Abdul Rahman to enter into a collaboration to offer the diploma course.

In another development, FMFF wants the government to lower the Bumiputera equity requirement for locally-registered licensed Customs brokers to 30 per cent from the current 51 per cent, to help them compete on a level playing field against their foreign counterparts.

"In 1976, the Customs Authority had imposed a requirement of 51 per cent Bumiputera equity share for all new and renew Customs brokerage licence. As a result, there is now a big percentage of Bumiputera portion that are normally decorative rather than actual contribution," said SFFLA deputy president Yeoh Kean Jin.

It is understood that the current 51 per cent Bumiputera equity requirement has prevented many non-Bumiputera Customs brokers from reinvesting their profits into growing their company over concerns that they do not have control over the company's operations.

To reduce their risk, the non-Bumiputera Customs brokers have spread their investments among many different companies.

"As the Customs brokers start to expand and diversify their businesses to offer integrated logistics services like warehousing and distribution, transportation, and value added services, they would normally form new companies and have different partners," said Yeoh.

This has resulted in many of them not being eligible for the Malaysian Industrial Development Authority (Mida) incentive for integrated logistics services (ILS), which requires the company or the group of companies to have the same shareholding structure.

"This problem is reflected in the number of local freight forwarders who have qualified for the ILS incentive. Of the 12,000-odd freight forwarders in the country, only 21 have qualified so far.

"As such, we call on the government to liberalise the Bumiputera equity requirement in the Customs brokerage business so that we can consolidate all our companies into one integrated logistics service provider and compete with the likes of Nippon Express, Geologistics and BAX Global," said Yeoh.

"This is also in line with the full liberalisation of freight services in Asean by 2010," he added.

Source: Business Times