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

Tamadam to divest unit?

Logistics and in-flight catering services provider Tamadam Bonded Warehouse Bhd is said to be contemplating spinning off its loss-making warehousing business and selling it to Amanah Raya Bhd.

However, when contacted by The Edge Financial Daily recently, managing director Eric Cheam declined to comment, saying that only once the board of directors was aware of any corporate exercise would it make an announcement as required by Bursa Malaysia’s guidelines.

Rumours are also circulating that the company is considering privatising its profitable food business, although management again declined to comment.

How logistics players can help to meet NEM targets

They have to re-orientate the way they think of business, ops and processes

MALAYSIA is at a crossroad. It has done well to boost economic growth, thanks to sound economic strategies and management.

From being a developing nation dependent upon commodities and agriculture to power its economic growth, Malaysia is now one of the top 20 trading nations. However, it has fallen into ‘middle income trap’.

The economy, while more diversified today compared with three decades ago, is still reliant upon labour-intensive activities.

Malaysia’s vulnerability to external shocks, as seen during the recent global recession, underscores the urgent needs for the economic transformation to be more robust by climbing up the value chain.

Maritime players must boost efficiency in the production of goods and the provision of services.

The New Economic Model (NEM) provides the compass with which Malaysia can refer to in deciding which way to go from this crossroads.

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.

Logistics and Supply Chain in Malaysia: Issues and Challenges

A link is made below to an interesting paper delivered by the Malaysian Institute of Transport (MITRANS), University Technology MARA at a Symposium held by Universiti Teknologi Malaysia in August 2008. It is a useful research reference.

Click HERE to read the article.

Century Logistics charts growth strategy

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

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

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

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

The initial plan was for the facility to cater to multinational corporations (MNCs) with operations in the vicinity.

Besides Thailand, the group also has a presence in China and India.

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

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

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

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

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

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

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

Currently Century Logistics offers only bunker supply services.

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

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

Source: Business Times

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

OSK Slashes Freight Management's Earnings Projection

OSK Research has revised downward its earnings projection for Freight Management Holdings Bhd (FMH) for financial years 2010 and 2011 by 10 to 16 per cent.

The research house said the revision is due to the fact that the high spread in earnings from sea freight is unlikely to be repeated this year, as market rates adjust to improving demand.

"While we expect the group to see positive growth for financial year 2010, we are concerned that the stellar margins achieved in financial year 2009 is unlikely to be repeated as market freight rates normalise on recovering demand.

"As such, we have scaled down our profitability assumptions, where the earnings estimation is slashed by 10 to 16 per cent," OSK said in its research note here, Wednesday.

Freight Management, an integrated logistics services provider, recorded revenue and earnings of RM229.4 million and RM11.14 million respectively, for the financial year ended June 2009.

"Despite the difficult period during which rates in the freight market shrank sharply by 60 to 70 per cent, Freight Management was able to fetch a higher profit spread in its sea freight business.

"This boosted its overall bottom-line margins amid a contracting revenue base in the second half, which sustained its double digit growth earnings by 11.5 per cent, year-on-year basis for the financial year 2009," OSK said.

The company is involved in provision of freight services, investment holding and the charter of barges and tugboats.

OSK forecast Freight Management to achieve a net profit of RM16 million for financial year 2011 against its forecast of RM14.4 million for financial year 2010.

It also forecast a revenue growth of 12.7 per cent to RM299.1 million for financial year 2011 from an estimated RM261.1 million for financial year 2010.

Source: Bernama

Logistics facilities demand a boost

Areas with excellent road network in Klang Valley are hot spots for industrial property sector.

The performance of the industrial property sector will be led by demand for logistics cum warehousing facilities in specific areas in the Klang Valley.

According to CH William Talhar & Wong’s (WTW) first quarter 2009 property market report, these areas include Klang, Shah Alam and more recently, Kota Damansara that have an excellent network of roads and access to major highways – a prerequisite for international logistics providers.

“Some hot spots identified for the industrial property sector include Temasya Industrial Park in Glenmarie, Bandar Sultan Sulaiman Industrial Area in Klang, Port Klang, Section 15, Shah Alam and Selangor Science Park in Kota Damansara,” the report says.

Some notable industrial transactions that took place last year included a 2.6-ha industrial site at Seksyen U8 Shah Alam that was disposed at RM11.15mil and a 9.84-acre industrial site at Bandar Sultan Sulaiman in Klang was acquired at RM27.1mil.

“In 2008, a few manufacturing plants ceased operations including Ford Malaysia’s production and assembly facility in Seksyen 15, Shah Alam, Panasonic’s Sungai Way facility after the operations were moved to Seksyen 16, Shah Alam and the closing of Hitachi Consumer Products’ manufacturing facility in Bangi,” it says.

On its outlook for this year, the report notes that the Malaysian economy is not expected to be fully insulated from the global downturn.

“The full heat of the global crisis is expected to be felt in the second half of 2009 with the market continuing to remain soft. Consumer confidence is not expected to improve with the state of the economic outlook (eg: loss of jobs, pay cuts and reduction in manufacturing output),” it says.

A cautious mood will prevail in the market as property purchasers expect a reduction in prices while developers either opt to postpone, delay or not launch new projects or new phases.

However, with the reduction in interest rates, mortgage payments would be more affordable, it says.

Malaysian Industrial Development Authority in an overview on industrial projects approved from January to March reports a decrease on the number of new projects approved during the period at 128 compared with 548 new projects approved in the same period last year.

The total capital investment from January to March this year for new approved projects is RM4.34bil compared to RM41.99bil it recorded in the same period last year.

National Property Information Centre in its latest Industrial Property Stock Report Q1 2009 says that in the quarter under review, the number of industrial property overhang remains unchanged at 670 units recorded in the previous quarter but the overhang value increased by 2% from RM342.41mil to RM349.1mil.

On a quarter-on-quarter basis, industrial overhang units decreased slightly by 1.3% from 679 units while their value dropped by 0.7% from RM351.42mil.

These units remained unsold in the market for more than 24 months after their initial launch for sale.

Some 40% (269 units) of the overhang indurtrial units are priced between RM250,000 and RM500,000 a unit, while 25.1% (168 units) of them cost RM250,000 and below.

For industrial units that are under construction and remain unsold, the number increased 3.5% from 656 units in the previous quarter to 679 units. Likewise, it said compared to the corresponding quarter of 2008, the number of unsold units increased substantially by 48.9% from 456 units.

In the quarter under review, the number of unsold units that were not under construction remained unchanged at 711 units recorded in the previous quarter.

On the other hand, the quarter-on-quarter analysis shows that the unsold units in this category increased by 57.6% from 451 units.

“Approximately 56.5% (402 units) of the total number of the unsold and not constructed industrial units have been in the market for more than 24 months after their initial launch for sales,” it says.

From the national total, 45.9% of the units (326 units) were priced between RM250,000 to RM500,000 while 39.9% (284 units) were in the RM250,000 and below bracket, the report points out.

Source: StarBiz

Clean-up for Puspakom

KUALA LUMPUR: Puspakom will be the next frontline body to be given a “wake-up jolt” and a “clean-up” following the launch of an integrity plan for the Road Transport Department (JPJ).

In conjunction with the launch, two new bodies, the JPJ Stakeholders’ Panel (SP) and the Puspakom Moni­toring Board (PMB) were also formed yesterday.

Representatives from Non-Go­­vernmental Organisations, political parties and consumer associations received their appointments to sit on the panel and the board which will be overseen by Transport Minister Datuk Seri Ong Tee Keat.

Some of the appointees include Fomca secretary-general Mu­ham­mad Sha’ani Abdullah, Pan Malaysian Lorry Operators Association president Er Sui See and Automotive Association of Malaysia president Datuk Aishah Ahmad.

Ong said the panel and board would get together to monitor en­­forcement by JPJ and Puspakom as well as their effectiveness.

Good start: Ong signing a certificate to mark the launch of JPJ’s integrity plan in Kuala Lumpur Monday. With him is JPJ director-general Datuk Solah Mat Hassan (left).

“It will be a good platform for feedback and to keep an eye on the quality of service,” he said at a press conference.

Ong said JPJ’s integrity plan was a serious initiative that would act on complaints immediately while re­­ducing opportunities for corruption.

JPJ director-general Datuk Solah Mat Hassan said his department was in the midst of reviewing Puspakom procedures to speed up inspection times and that new standard operating procedures would be ready in two weeks.

“We will not compromise on the safety or comfort of passengers but there is a need to prioritise inspections on a want or need basis.”

Solah said it was necessary to ensure vehicles passed engine and brake tests but other tests such those that were cosmetic in nature were not as important.

“Right now there are more than 200 items that are checked and if the vehicle fails just one item, the vehicle would fail the test completely,” he said.

Solah said that for example if the passenger seat was torn on a lorry, it could be overlooked but not if the passenger seat was torn in a taxi or a bus.

Pan Malaysian Bus Operators Association president Datuk Ashfar Ali said the move would definitely curb corruption and would have far-reaching effects.

“The operators will know that they don’t have to be at the mercy of Puspakom for small things like the paintwork not being perfect,” he said.

Source: StarBiz

Daily charter rates fall for offshore support vehicles

DAILY charter rates of offshore support vessels (OSVs) may fall by 10%-15% this year due to the uncertainty in the oil and gas (O&G) sector.

According to AmResearch in its latest O&G sector update, the average daily charter rates this year may return to 2007 level of between US$1.70 and US$1.80 per brake horse power (bhp).

But, the forecast on the slim rate slide this year may not be too detrimental to OSV players as the rates had previously undergone significant increases over the last two years.

The report said that from its checks with the sector players, the average daily charter rates rose between 11% and 25% last year against 2007, with the strongest increase recorded for anchor handling tug and supply (AHTS) vessels.

It added that contracts signed for 5,000-bhp range AHTS vessels last year were at daily rates of US$2 per bhp versus US$1.60 to US$1.80 per bhp in 2007.

AmResearch also told StarBiz in an e-mail that the current daily charter rates were still holding strong at US$1.80 to US$2 per bhp for a 5,000-bhp AHTS vessel.

“For Malaysian OSV operators, we believe that current charter rates are still holding up at last year’s level despite the negative outlook on the sector,” said the research house, acknowledging that Petroliam Nasional Bhd (Petronas) continued its support for local OSV companies.

“But realistically, we do not feel that Petronas will be willing to award contracts at previous levels (US$1.80 to US$2.10 per bhp).

“This is due to rates that are already showing weaknesses elsewhere and the weak oil price that may actually force Petronas to phase out its capex over longer periods although the oil major does not plan to reduce its capex,” said the report.

For example, the North Sea charter rates have been slashed by 33% in January on a month-on-month basis for 8,000-bhp range of vessels.

The report said that while OSV operators such as Tanjung Offshore and Alam Maritim had vessels that had mostly secured long-term charters until 2011 or 2012, the research house expected lower charter rates for new deliveries of vessels this year.

It added that there were fears that new construction of vessels would lead to an excess supply in the market and result in charter rates declining.

Source: Star Online

Accreditation of freight forwarders

The Federation of Malaysian Freight Forwarders (FMFF) has agreed in principle to introduce accreditation to players in the logistics industry, in an effort to raise the quality of freight forwarders in the country.

Selangor Freight Forwarders and Logistics Association (SFFLA) president Tan Ah Beng said the idea is to accredit proven, financially sound and professional companies providing logistics services.

He was speaking to reporters in Port Klang recently, after signing a memorandum of understanding with Celcom (Malaysia) Bhd, for the telecommunications provider to offer its members Celcom Business mobile solutions at attractive rates.

SFFLA has also implemented a professional capacity building programme for its members which will lead to a diploma and even up to a degree in logistics.

The organisation has conducted five foundation courses and the first certificate module in freight forwarding will be ready soon.

"The professional capacity building programme is imperative if we are to ensure professionalism in the logistics industry," Tan said.

The Special Services Capacity Development programme proposed by the Ministry of International Trade and Industry is also expected to work well with the overall strategy of SFFLA/FMFF.

The fund would support among others accreditation, training, information technology investment and merger and acquisitions.

Under the strategic partnership, Celcom will provide voice and data plans to SFFLA's 500-odd members, who will have the choice to select the business postpaid plan that fits their specific needs and budget.

"Communications systems and tools make up about 20 per cent of costs, so by ensuring savings in that area we are reducing our costs significantly," Tan said.

In conjunction with the event, a talk by the Malaysian Industrial Development Authority was also given on incentives for integrated logistics service providers.

"This is part of our ongoing education and training programme to keep our members up to date with the latest information and development relevant to the logistics industry," Tan said.

Container hauliers want axle-load limits raised to 30pc

This will provide a temporary solution for hauliers who are now finding it difficult to increase their haulage charges due to the economic downturn, says an industry group

LOCAL container hauliers want the government to raise the axle-load limits on roads to 30 per cent across the board from the current 5 per cent, to help meet high maintenance costs and turnaround of their vehicles amid the global economic downturn.

Association of Malaysian Hauliers (AMH) president Datuk Ahmad Shalimin Shaffie said a dialogue was held on February 3 between the association and the Road Transport Department (JPJ) director-general Datuk Solah Mat Hassan on, among other things, the implications of the economic crisis on the haulage industry.

"The issue of hauliers overloading their trucks, and the recent announcement by Works Minister Datuk Mohd Zin Mohamad of a new axle rating for all commercial vehicles, was raised," Ahmad Shalimin, who is also chairman of the Malaysian Logistics Council's focus group on land and rail transport, told Business Times.

"Since the official specification (of the new axle standard) and its approval process take a longer time, we are seeking guidance from JPJ and the Transport Ministry for the axle-load limits to be increased to 30 per cent for all commercial vehicles (for now).

"We believe this will provide a temporary solution for hauliers who are now finding it difficult to increase their haulage charges due to the economic downturn," he added.

Ahmad Shalimin said local hauliers have seen a 25-30 per cent drop in revenue and container volume since December last year compared with a year earlier, in tandem with the fall seen by local ports .

It was reported that all container haulage prime mover and trailer combinations in Malaysia are currently licensed at the maximum BDM (berat dengan muatan) of 38 tonnes.

Since last year, AMH has been proposing for an increase in the amount of cargo a container haulage prime mover would be able to transport without incurring a fine.

However, it was reported that the authorities' major concerns are that an increase would cause road safety problems, damage to the roads and increase road maintenance costs.

On whether the current crisis is worse than the 1997 Asian financial crisis for the haulage industry , Ahmad Shalimin said much would depend on the second economic stimulus package to be announced by the government next month.

"We hope that the stimulus package will help to stimulate the economy. If it is effective, we expect to see recovery after the second quarter of this year.

"Still, the government must not stop spending money and the banks must not stop lending money," he said.

Ahmad Shalimin believes that Malaysian businessmen are better equipped to handle the current crisis, having gone through the 1997 one.

"I believe that in a crisis lies an opportunity. We must be more creative in order to get over this crisis. We must work hand-in-hand with other industry players and the regulators in order to ensure that the industry survives," he said, adding that one way to do that is to consolidate.

On the implementation of the three-day free storage period for containers in Port Klang , Ahmad Shalimin urges all parties to get ready so that it would not be postponed again.

"Because we (the maritime community at Port Klang) are moving into international standards, we should be efficient enough to clear our goods to and from the ports within three days.

"I really hope that we can improve ourselves and will be able to become a maritime nation according to international standards. We cannot have this postponed again and again. It does not look good on us as a nation," he said.

The reduction of the free storage period from five days to three was scheduled to take effect on January 1 this year. However, this has been delayed to July 1 in view of the current economic climate and the appeal by some quarters in the maritime community.

AMH represents 64 local companies in Peninsular Malaysia, controlling some 90 per cent of the haulage market.

Source: NST Online

Port Klang keeps position as Malaysia's leading port

Port Klang handled 7.97 million TEUs last year, ie, 48.5 per cent of the total number of containers carried by all Malaysian ports

PORT Klang, the home of Westports and Northport terminals, remained the leading port in the country last year, holding a 48.5 per cent share of the total number of containers carried by all Malaysian ports.

It handled 7.97 million TEUs (20-foot equivalent units) last year, against the 16.4 million TEUs handled by all Malaysian ports last year.

Westports led the way with a 15.2 per cent increase in container volume from 2007, handling some 4.96 million TEUs, while Northport saw a 7.1 per cent increase to three million TEUs last year.

Conventional cargo movement for last year saw a 0.2 per cent increase to 22.2 million tonnes for Port Klang.

In terms of numbers carried by individual terminals, however, Port of Tanjung Pelepas (PTP) in Johor remained the top port, handling 5.6 million TEUs last year.

PTP was followed by Westports and then Northport.

Of all Malaysian port terminals, only one, Kuantan Port, registered a contraction in container volume last year.

Kuantan Port recorded a 0.4 per cent decline in container volume, from 127,600 TEUs in 2007 to 127,061 TEUs last year.

All ports in Sabah and Sarawak recorded positive growth in container volume, with Miri registering the biggest jump, growing by 30 per cent to reach 28,094 TEUs from 21,618 TEUs in 2007.

Bintulu Port managed to record robust growth last year, increasing to 286,013 TEUs from 251,800 TEUs in 2007.

For 2009, the local port industry is expected to experience a drop in cargo volume handled as import and export activities fall, amid slowing demand for goods.

Last week, Port Klang Authority (PKA) general manager Lim Thean Shiang had said that this year's contraction would see Port Klang's container throughput fall to levels experienced in 2007 to 7.118 million TEUs.

Source: Business Times

FedEx Winds Down Asian Hub

MANILA, PHILIPPINES: FedEx began winding down its Asian hub in the Philippines and shedding 800 staff Friday (6 Feb) as the U.S. courier giant started full operation of a new regional facility in China, an official said.

Arman Areza, administrator of the Subic Bay economic and tourism zone where FedEx has been based for nearly 14 years, said the company will for now keep a skeleton operation in Subic as a back up to $150 million hub in Guangzhou in southern China.

FedEx has said the Subic facility may finally close in April after which it has the option to renew its lease on a monthly basis, he said.

The closure of FedEx's operation comes in the wake of an announcement by Intel Corp. last month that it will let go 1,800 workers later this year when the company shuts down its 35-year-old operation in the Philippines amid waning global demand for computers.

Areza said the decision to shift the hub to China was made in 2005 and was based on "market reality" _ the large cargo volume in China _ not on Subic being unable to meet the requirements of FedEx or the current global slump.

"The move has nothing to do with the financial crisis," Areza said.

"The volume and market conditions favored China because the volume in China dwarfed those in Southeast Asia, and China has opened the domestic market to FedEx," he said.

Subic, 50 miles (80 kilometers) west of Manila, was converted from a sprawling U.S. naval base into an economic zone after U.S. forces left in 1992.

The Philippine government will lose 150-160 million pesos ($3.15-$3.37 million) annually in landing, parking and warehousing fees it has been collecting from FedEx since it started operating the Subic hub in September 1995, said Areza.

He said about 800 workers of FedEx and its subcontractors will be affected. He said he expects the highly skilled workers can easily find jobs elsewhere in the economic zone.

Dozens of workers showed up before dawn Friday at the former hub to wave goodbye to one of the last FedEx planes to fly out of Subic.

"Even if the economy is doing well ... it's never a good time if a company as big as FedEx (leaves). We are sorry to see them go," Areza said.

FedEx officials were not immediately available for comment. (By OLIVER TEVES/ AP)

Source: MySinChew

Investor offers tankers to oil speculators

LONDON: Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators who want to store oil and bet they can sell it later in the year for a profit.

Su's Taipei-based company, TMT Co Ltd, will lease out its two-million-barrel vessels at below-market prices in return for a share of any profit his customers make on the trade in oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said.

"The oil price is very low," Su, founder and chief executive officer of TMT, said in an interview here on Thursday. "We get a lot of enquiries" about storing cargoes, he said.

Rather than buy crude now, store it and sell futures contracts to lock in a profit, Su said he thinks the trade will make even more money by simply purchasing the oil and storing it offshore. The investor sells it when crude prices rally later, he said.

Oil companies such as BP and banks including Citigroup, through its Phibro LLC unit, have stored as much as 80 million barrels of crude at sea, seeking to profit from the spread between immediate supply and futures. The price spread, known as a contango, narrowed for some grades this month, reducing opportunities for the trade.

TMT will help investors secure cargoes by introducing them to oil traders, Su said. TMT may store some cargoes in the Persian Gulf at cheaper prices on its four single-hull supertankers and deliver them in vessels with two hulls, he said.

The average price of storing two million barrels of oil on a tanker is about US$57,500 (US$1 = RM3.61) a day, depending on the duration of the contract, the quality of the ship and its location, according to data from London-based shipbroker Galbraith's Ltd. That works out to 86 US cents a barrel a month. Traders also have to pay insurance and financing costs.

Crude oil traded on the New York Mercantile Exchange, more than US$100 a barrel below its July 2008 record, has advanced 26 per cent from its low on January 20 as the Organisation of Petroleum Exporting Countries curbs output.

The cost of shipping Saudi Arabian crude to Japan, the tanker industry benchmark, has slumped for 10 consecutive trading sessions, according to the London-based Baltic Exchange.

The measure, updated once a day, fell 6 per cent to 46.72 Worldscale points on Thursday, which works out at US$37,022 in daily earnings for vessels.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates. 

Source: NST Online

M'sian hauliers gearing up for greater efficiency

ASSOCIATION of Malaysian Hauliers (AMH) is working towards greater efficiency to prepare for the reduction in the free storage period from five days to three for containers at Port Klang effective July 1.

Free storage period is the window duration given to importers or exporters to clear or send their goods to and from the ports without any charges.

"It is an international standard that we ought to follow. It will be good for Malaysia as a maritime nation." - Datuk Ahmad Shalimin Shaffie

After that period, a storage fee will be imposed on a daily basis per container.

The reduction in the free storage period was delayed from Jan 1 to July 1 in view of the current economic climate and the appeal by some quarters in the maritime community in Port Klang.

Since the plan was mooted in 2002, several deadlines have been postponed as the shipping community in Port Klang was not ready for the shorter free storage period.

AMH president Datuk Ahmad Shalimin Shaffie hoped that this would be the final deadline where all parties in the supply chain, including importers and exporters, must improve their efficiency for the shorter free storage period by July 1.

“It is an international standard that we ought to follow. It will be good for Malaysia as a maritime nation,” he told StarBiz.

He said the three-day free storage period would improve the turnaround of prime movers and trailers.

For hauliers, AMH has introduced a guideline that included a RM100 surcharge for the “restrictive time” given by customers to pick up and deliver containers to and from their premises.

According to the new guideline effective Dec 16, customers are free to determine the date of pick-up and delivery of goods, but when they restrict the time frame, for example, the goods must be delivered to their premises before 5pm, or the surcharge will be imposed.

The reduction in the free storage period was delayed from Jan 1 to July 1 in view of the current economic climate and the appeal by some quarters in the maritime community in Port Klang.

Shalimin said the move was not a profit-making initiative, but aimed at efficiency improvements where importers and exporters should be able to receive and deliver goods at any time.

“The RM100 is only a benchmark and is not fixed. This is one of the efforts as a preparation towards the reduction of free storage period at the ports,” he said, adding that hauliers still maintained 48-hour notification from customers for pick-up and delivery.

On another issue, Shalimin said, some manufacturers had kept trailers and containers for a relatively long period of time.

“In China, once an in-bound container arrived at the customer premise, the company only get one hour to clear the goods.

“Here, we left our trailers and containers where we come back to pick up the next day. Some companies have also kept our trailers for two to three days,” he said.

Shalimin added that the stalled trailers at exporters and importers premises meant extra cost for hauliers.

“They can be used for other deliveries,” he said.

On the issue of too many players after the industry was liberalised, Shalimin said the Government should continue to give haulage licences only to “real” operators. “We believe that there are people who do not operate the haulage business themselves when were given the licences.

“Small and medium-size players should have at least 30 permits,’’ he said.

The haulage industry was liberalised on April 1, 2006, after 31 years of government control.

On the recent fluctuation in oil prices and its impact on the haulage industry, Shalimin said the fuel adjustment factor (FAF) surcharge moved in tandem with oil prices.

“But the FAF is only calculated based on oil price. The prices of batteries, tyres and other spare parts that have gone up when oil price was at its peak are still the same.

“It is quite worrying for the industry, especially in this current economic condition, and the Government should look into the matter,” he said.

Source: Star Online

Slower production causes bigger stockpile in warehouses

LOGISTICS firms are experiencing an increase in raw material stockpile in their warehouses as manufacturers have slowed production due to falling demand.

The country’s trade is expected to be hurt even more this year due to its large exposure to the United States, especially for electronics and electrical products.

Also, falling commodity prices have affected Malaysia’s export and import of commodity-related materials such as fertilisers.

Transways Logistics (M) Sdn Bhd president and chief executive officer Edward Chan told StarBiz that the stockpile of raw materials occupied more than 50% or 30,000 sq ft of its warehouse space.

“The raw materials include plywood and fibre boards for the furniture industry that is currently facing falling demand. If this situation persists, we will look into the possibility of acquiring new warehouses,” he said.

He said Transways usually handled the distribution and inventory of the raw materials for its customers in Malaysia, Vietnam and China.

Chan said there was no indication how long it would take for the stockpile of raw materials to clear up as it very much depended on trade.

Infinity Logistics and Transport Sdn Bhd managing director Chan Kong Yew said the company’s warehouses experienced a sudden change in pattern, with slower turnaround for some of the stored materials.

“For imports, we are currently stockpiling or storing a lot of fertilisers. I think the plantation industry, especially oil palm, needs less fertilisers as the palm oil price continues to fall,” he said.

And for exports, he said, there were a lot of electronics product materials being stored at the company’s warehouses. Asked if the long storage of materials meant extra business, Chan explained that the warehouse business made more profit on moving goods rather than “dead” cargo.

“The faster the goods move in and out of warehouses, the more we earn,’’ he said. “But the current situation of increasing stockpile in warehouses in a sense would balance out the supply and demand for warehouses in Port Klang, which are currently facing an oversupply.”

Freight Management Holdings Bhd managing director Chew Chong Keat told StarBiz that the company was not experiencing any “long” storing of products that could be deemed as stockpiling.

“The inventory is a little bit more but electronics products and raw materials are still moving,’’ he said. “Maybe it’s due to how we have structured our service.”

Source: Star Online

Malaysian Logistics no longer just a supporting industry

KUALA LUMPUR: The logistics industry plays a key role in facilitating Malaysia's external trade and can no longer be considered just a supporting industry, Minister of International Trade and Industry Tan Sri Muhyiddin Yassin said yesterday.

In the first half of 2008, the industry, comprising transport and storage services, contributed 11.3% to the country's gross domestic product (GDP) compared with 10.1% a year ago, he said.

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The air-cargo sector was an important component of the logistics industry, said Muhyiddin, and air-cargo volume in Malaysia rose by 5.6% to 416,070 tonnes during the first six months.

"This involved a 44.6% increase in the total value of exports, imports and transshipments handled, to RM1.1 billion from RM760 million in the corresponding period of 2007," he said when opening the 24th International Air Cargo Forum & Exhibition 2008 (ACF 2008).

Muhyiddin called upon Malaysian logistics providers to enhance the quality of their services to prepare themselves to face competition both globally and regionally. He noted that Asean member states would be undertaking equity liberalisation to allow up to 70% Asean equity by 2013.

"This Asean initiative complements the ongoing work in Malaysia, through the Malaysia Services Development Council, which aims to strengthen and promote the services sector in Malaysia," he said.

Source: Edge Daily

Malaysian Freight Forwarders in for hard times

GEORGE TOWN: Freight forwarders are bracing for hard times as they experience a downtrend resulting from the global economic turmoil.

They said business has dropped by at least 8% for the second consecutive year as the forwarders handle less cargo, forcing them to tighten their operational costs.

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Penang Freight Forwarders Association president Joachim Loo said the situation was due to global market forces, especially in the United States and Europe.

“We are now in the final quarter of the fiscal year when demand for goods should be on the increase for Christmas and New Year markets. Manufacturers and retailers in the two regions, however, are placing less orders.

“The most affected business are electronics, garment and medical products. While operational costs have gone up, our members are struggling to survive as we try to fill up our lorries with consignments,” he said.

The total aircargo throughput at the Penang International Airport last year was 158,812 tonnes compared to 172,668 tonnes in 2006.

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Up to August this year, the forwarders only handled a total of 99,529 tonnes of cargo.

Cargo handling in Kuala Lumpur also saw a down trend with forwarders recording 646,529 tonnes of goods last year compared to 657,836 tonnes in 2006.

“Right now, we are tightening our belt. Many of us are not hiring new workers and some of our members have already told their workers not to expect any bonus this year,” he said.

Meanwhile, the Federation of Malaysian Manufacturers (FMM) northern branch said factories here were expected to feel the heat of the global meltdown by December or early next year.

Its chairman Datuk O.K. Lee said the branch was now looking into ways to help factories here cushion the impact and take remedial measures.

A survey would be conducted to find out how members had been affected by the world economic turmoil as Penang is home to many multinational companies.

“The effect is still not that strongly felt here. But we anticipate a chain reaction as it is only a matter of time before it hits us,” he said yesterday.

Lee said industry players complained that demand for their products had softened while the sharp rise in electricity tariff, transportation fees and gas also did not help the current situation.

Source: Star Online