New Admiralty Court in Malaysia

KUALA LUMPUR: A new Admiralty Court focusing on maritime disputes will commence today along with the New Civil Court (NCvC).

Chief Justice Tun Zaki Azmi said the centralisation of information on registration of claims and caveats at the Admiralty Court will greatly alleviate time and expense, compared with having to check on such matters at various registries throughout the country.

“The purpose of the court is to give parties the option, by consent, to have all claims dealt with expeditiously at one centralised point, in a court which routinely deals with such matters,” he said in his speech at its launch in the Jalan Duta court complex here yesterday.

Officially open: Zaki (left) officiating the Admiralty Court at the Court Complex Library at Jalan Duta Thursday. Also present were Federal Court judge Datuk Seri Md Raus Sharif (right) and Chief Judge of Malaya Tan Seri Arifin Zakaria. — Bernama

Currently, there are 65 admiralty-related cases in the country with 35 cases being handled in Kuala Lumpur. Only 14 of the 35 are backlog cases. Zaki added that the target was for cases to be disposed of within nine months.

Among cases under the jurisdiction of the Admiralty Court would be those involving shipping, marine insurance, death or losses in marine activities, international trading and admiralty-related issues under Section 24(b) ofthe Courts of Judicature Act 1964.

High Court judge Justices P. Nallini and K. Anantham will deal with the matters arising in the new court, which will be supported by an admiralty registry comprising registrars, clerks and bailiffs.

Later, Zaki told a press conference that he hoped the court would benefit the business community and improve the country’s economy by attracting more people to Kuala Lumpur.

“Assuming a collision takes place between ships in the Straits of Malacca,” he said, “the parties can go to Indonesia, Singapore or Kuala Lumpur.

“The perception now is that Singapore is faster and more efficient in disposing of the case. These are the people we are trying to attract.”

Zaki added that the court was also testing a new system that would enable lawyers to handle case management matters via teleconference. The system, expected to help reduce time and costs, has been tested since a week ago.

Source: The Star

10mp: Shot in the arm for maritime industry

The maritime industry welcomes the 10th Malaysia Plan (10MP) initiatives to improve related industry infrastructure, as it will give the industry a much needed boost in terms competitiveness against counterparts in neighbouring countries.

Dr Mohamed Amin Kassim, a founding member of the Malaysian Logistics Council, said although the general consensus might indicate that the country’s maritime infrastructure was already good, the 10MP initiatives would resolve some nagging issues to further improve the industry.

"The last-mile connectivity, especially to seaports, has always been a problem thus the plan to work on that is a good thing"- DR MOHAMED AMIN KASSIM

“For example, the Government has indicated that it will enhance the road connectivity to seaports and airports. The last-mile connectivity, especially to seaports, has always been a problem, thus the plan to work on that is a good thing,” he told StarBiz.

Amin, who is also deputy managing director of Century Logistics Holdings Bhd, lauded the Government’s initiative to improve multimodal connectivity between seaport, airport and rail, which was expected to ensure seamless transportation and distribution of goods.

“But, on the capital dredging part, the Government must justify why only certain ports are selected,” he said.

The Association of Malaysian Hauliers president Datuk Ahmad Shalimin Shaffie said the emphasis given to the logistics sector in the 10MP proved the Government recognised the importance of the sector to economic growth.

“The logistics sector should no longer be part of the services sector, but needed to be established as a stand-alone industry.

"The logistics sector should no longer be part of the services sector, but needed to be established as a stand-alone industry"- DATUK AHMAD SHALIMIN SHAFFIE

“Nevertheless, the association appreciates the initiatives identified under the new plan as it will enhance our competitiveness, especially against our regional rivals,” he said.

In the larger context of the 10MP, Shalimin said it was gathered that the objectives of the plan would only be achieved if everyone worked together.

“This is because 2020 is not that far away and we have to work hard to realise the vision to become a high-income economy.

“Thus, we must strive to move up the value chain in whatever we do. Innovation and productivity are the two key elements that will support that,” he said.

Among the notable maritime-related projects under the 10MP is land reclamation in Westports in Port Klang, where the financing will be under the facilitation fund that is expected to attract private sector investment of RM200bil during the next five years.

The Government also focused on the development of a wider and efficient multimodal transport network to support national growth.

The major projects currently being implemented include Phase 2 of the East Coast Expressway from Kuantan to Kuala Terengganu, which will be completed during the plan period at a total cost of RM3.7bil.

The expressway will also be linked to Kuantan Port, which will be upgraded and spur growth in the east coast. Road networks to the hinterlands will also be improved.

Among them are the roads linking Kuala Lipis to Cameron Highlands, and Jerantut to Sungai Lembing.

In addition, the electrified double-track rail project from Gemas to Johor Baru, which is estimated to cost RM8bil, will be implemented to complete the entire rail project from Padang Besar in the north to Johor Baru in the south.

About RM2.7bil will be invested to build road and rails leading to key ports and airports, while logistics management will be improved to enhance efficiency in the transportation of cargo through rail, ports and airports.

In terms of maritime industry, the national port policy will be formulated during the 10MP to outline the strategic directions and further development of the port sector.

Maritime infrastructure will also be upgraded to ensure the competitiveness of Malaysian ports. The plan includes RM1bil for capital dredging of port channels to cater for bigger vessels and upgrading works at Westports and Port of Tanjung Pelepas to provide additional capacity for import and export of goods.

Key private investment during the period will include upgrading works at Westports, Port of Tanjung Pelepas and Penang Port.

As for airports, capacity would be expanded at a cost of RM3.3bil, as passenger arrivals are expected to grow to 62 million in 2015 from 47 million in 2008.

Source: StarBiz

Malaysian tanker, bulk carrier collide in Singapore Strait Read more: Malaysian tanker, bulk carrier collide in Singapore Strait http://www.nst.com.m

A Malaysian-registered tanker, MT Bunga Kelana 3, collided with a bulk carrier in the Singapore Strait about 13km southeast of Changi East this morning.

The Maritime and Port Authority of Singapore (MPA) said the tanker collided with a St Vincents and The Grenadines-registered bulk carrier, MV Waily, in the traffic separation scheme (TSS) in the strait at about 6.10am.

In a statement, the MPA said there was no report of injury to crew members but the tanker suffered damage to one of its cargo tanks, resulting in an oil spill.

The master of the tanker estimated that 2,000 tonnes of crude oil could have spilled into the sea.

Both vessels are currently anchored in the Singapore Strait, with the MV Waily currently about 11 km southeast of Changi East and the MT Bunga Kelana 3 about 7km south of Changi East.

The MPA Port Operations Control Centre had issued navigational broadcasts to ships transiting the TSS to keep clear of the anchored vessels.

Traffic in the TSS remains unaffected.

Te MPA had also activated oil spill response companies, which had deployed three craft with oil spill equipment.

Work is ongoing to contain and clean up the oil spill.

The MPA had also informed the Malaysian and Indonesian authorities of the incident, the statement added.

Source: NST

MMEA Propose To Buy Two Large Vessels To Enhance Security In Malaysian Waters

The Malaysian Maritime Enforcement Agency (MMEA) hope to purchase two large vessels that can be used for deep sea patrolling covering about 200 nautical miles from the shore.

MMEA director general Admiral Datuk Mohd Amdan Kurish said the vessels measuring 85m long will have the capability to carry helicopters that can be used for patrolling purposes along the Malaysian waters and to monitor activities at oil rigs.

As part of the Langkawi International Maritime and Aerospace Exhibition (LIMA 2009), the MMEA are carrying out a number of demonstrations in the waters off Awana Porto Malai here.

Mohd Amdan said the MMEA's current fleet comprise of 120 vessels of various sizes, class and make, plus six helicopters and two Amfibia Bombardier CL415 aircrafts.

Source: Bernama

Mysterious ship city causes concern

Hundreds of ships mysteriously left idle off the Malaysian coast during the economic downturn are posing environmental and safety hazards, port authorities and fishermen say.

The ships are lying off the southeastern tip of southern Johor state which faces onto Singapore, positioned outside port limits to avoid charges and official scrutiny.

Some authorities said they believed the ships were waiting out the export slump that has deprived them of cargo, while others said they were being used to conduct illegal oil transfers.

"These vessels are not supposed to anchor there. This activity is considered illegal," Johor Port Authority assistant general manager Damon Nori Masood told AFP.

"All of these ships are off port limits, and some are just one metre away from the boundary line, making us unable to take action," he said, adding that the vessels are all believed to be foreign owned or flagged.

Floating city

Damon Nori said the ships are anchored in a narrow strait known as the "traffic separation scheme" (TSS) -- designed as a free passage area to allow authorities to control the movement of vessels in and out of the port.

The huge flotilla is illuminated at night, presenting the illusion of a floating city off the coast. Malaysian newspaper reports have said there are several hundred vessels now gathered there.

Fishermen from coastal villages have complained about seeping pollution which is threatening their livelihood, and Damon Nori said the idle ships pose a safety hazard for vessels attempting to enter the port.

"These ships are blocking the way of the vessels coming to our anchorage, because they need a bigger space when they turn into the anchorage but the TSS is just full of vessels, big or small," he said.

"This anchoring is very much disturbing the passage. The enforcement agency should clear up the area, as there are also concerns over oil spills causing environment issues," he added.

Azlan Mohamad, a fisherman in the area for the past two decades, said that some 300 to 400 ships were parked in the area, causing harm to the industry with oil spills and illegal cleaning of their tanks.

"The ships sit in our fishing area and make our fishing difficult. The ships also dump sludge at night to avoid detection," he told AFP.

"When we ask the ship not to throw anchor, they ignore us and often tell us to fish elsewhere. They are very arrogant," the 43-year-old told AFP.

"The anchored vessels have affected the income of some 3,000 fishermen. Our daily catch has fallen and the oil spills have made our lives more difficult as they damage our nets."

Port authorities declined to identify which agency they believe is responsible for dispersing the ships, and various maritime authorities contacted by AFP passed the buck or said they were unaware of the problem.

The New Straits Times this week quoted Malaysian Maritime Enforcement Agency (MMEA) officials as saying that eight tankers had been seized in recent days for offences including illegal tank cleaning.

"Some of the dilapidated ships that were left there for quite some time may have been used to cover the illegal oil transfer activities," MMEA's southern region head Che Hassan Jusoh reportedly said.

"Oil transfers or bunkering, where one ship transfers its cargo of oil to another while at sea, can only be done once these vessels have a domestic merchant shipping license for such activities," a Malaysian Maritime Enforcement Agency official told AFP.

The process is licensed because of the marine pollution that can occur if it is not done correctly and the transfers must take place in specially gazetted areas because of the danger of fire.

'This is illegal'

But senior marine police officials say they are mostly hamstrung by ambiguous laws and that there is "no black and white" legislation empowering them to clamp down.

However, an official from the marine department in the transport ministry disagreed.

"The law does not directly say anchoring (is illegal) but it falls under 'any other activities' in the section. Everybody in the maritime agencies knows this is illegal," said Fuad Naemoon.

Under the law, the owner, master or agent of an errant ship can be punished by up to two years in jail and a fine, according to Fuad, who heads the port and seafarer division in the southern region office that oversees Johor.

"The enforcement units should be pro-active," he said, pointing a finger at the marine police and MMEA.

"This has happened for almost two years and the number of ships there is increasing since the economic crisis. The government is suffering losses if these ships continue not to report (their presence) and are not paying dues."

He said the illegal anchoring has also caused submarine cable failures, which have resulted in disruption to telecommunication services for countries including Malaysia, Singapore and Indonesia.

Source: Malaysian Mirror

MMEA detains five tankers off Pengerang

The Malaysian Maritime Enforcement Agency (MMEA) detained five foreign tankers for allegedly entering Malaysian waters without permission and conducting illegal cleaning of the vessels near Pengerang.

Its enforcement chief, First Admiral (Maritime) Che Hassan Jusoh said the tankers and the crew, totaling 24 and comprising 20 Indonesian and two Indian nationals, were detained at about 10.30am Sunday at 3.8 nautical miles southeast of Tanjung Stapa.

Checks carried out on one of the tankers, Jakarta-registered M.T Suwito, found 16 bags of sludge on board, he told reporters here Monday.

He said the other four tankers M.T Atago and Antago Power, both registered in San Lorenzo; Her Chang, which is registered in La Paz and Eastern Hill, which did not posses any documents were believed to have not informed the Malaysian authorities about their arrival.

Che Hassan said the five tankers were detained after two others, M.T Jet and Panama-registered M.T Rahmah 1, were detained on suspicion of conducting illegal siphoning of oil.

Source: TheStar

Consumer sector to spur China shipbuilding

THE long-term sustainability of China’s shipbuilding industry may be supported by the demand to increase domestic fleet based on its strengthening consumer sector, said Lloyd’s Register group strategy director John Stansfeld.

“China’s economic development has been predominantly driven by globalisation where its economic strategy mainly focuses on industrial exports.

'The availability of credit is another major issue' - JOHN STANSFELD

“And the country’s shipbuilding industry has reflected this in its order book with the majority of ships built or on order are contracted by foreign owners.

“But now, with the emergence of a strong consumer base that flourished under the forces of industrialisation, the question is whether China can rely on the purchasing power of its emerging consumers to keep its factories busy and by implication, its demand for raw materials and energy strong, if external demand for manufactured goods remains weak,” he said.

Speaking at the China Shipping Energy Conference in Shanghai recently, Stansfeld said this would, in turn, fuel the demand for more ships for the domestic fleet and helped strengthen its emerging marine supply chain.

“The question is whether the growth potential in the domestic fleet will sustain output levels during this unprecedented downturn and support the development of new maritime capabilities,” he said.

Stansfeld said China’s state planners appeared to believe that part of the solution was in the China Shipbuilding Industry’s adjustment and revitalisation plan in response to the adverse impact of the recession unveiled in February.

He said the initiatives in the six-point plan include a determination to spur demand for new ships by speeding up the replacement of China’s ageing domestic fleet.

“A reduction in the maximum age for coastal trading vessels is one solution being discussed.

A filepic of a shipyard in Dalian. The emergence of a strong consumer base will fuel the demand for more ships for domestic fleet in China. - AFP

“The plan is expected to provide the impetus for a long-awaited structural reform of the industry and its products.

“It will also provide the incentives for expansion-minded shipping companies to buy any ships whose construction might otherwise be terminated by a lack of financing or the inability to negotiate new terms,” he said.

Additionally, Stansfeld said China’s demand for energy and the related raw materials would play a key role in determining its future as a maritime nation.

“The development and sustainability of its maritime sector will be underpinned by the commitment to import energy and other raw materials in Chinese-built, owned, managed and crewed ships.

“The ambition to transport 50% of the country’s energy needs in Chinese-owned and operated tonnage is common knowledge.

“Increasingly, we see Chinese owners and yards investing in oil tankers and their design development growing due to Chinese oil imports,” he said.

However, Stansfeld said, the future of maritime industry was also primarily determined by other factors, most of which were beyond the control of the shipping sector.

“The obvious and principal driver for a recovery is an improvement in global trade, which itself is dependant on the economic health of nations. The price of energy will also be a major factor, influenced by the demand of the revitalised economies,” he said.

Stansfeld said this would, in turn, have an impact on the costs of all manufactured goods and the price of raw materials used in the manufacturing sector. “The availability of credit is another significant issue and influence,” he said.

Source: StarBiz

Doing away with Sabah cabotage policy 'inevitable'

LIBERALISATION by doing away with the cabotage policy for Sabah is inevitable in the long run if the state wants to be more competitive, according to the Institute of Development Studies Sabah (IDS).

IDS executive director Datuk Dr Yaakub Johari said, at the moment, protectionism for Malaysian-flagged ships was considered a short-term agenda and in principle, not healthy to continue for too long.

"We believe it's part of the global trend. Liberalisation in the long term helps to reduce cost," Yaakub said.

"Definitely, in the long run we have no choice, it's an open economy. Eventually, if we do not open up, our neighbours (countries) will do something against us," he said on the sidelines of the Gabungan Badan Ekonomi Masyarakat Bumiputera Sabah convention.

He was asked to comment on repeated calls by various local bodies here for the cabotage policy for Sabah to be abolished to do away higher shipping costs.

Yaakub, who presented a paper on "Sabah Development Corridor: Development Concept and Strategies" at the convention, said one of the challenges faced by the corridor was the cost of doing business due to high shipping costs.

He said the high cost of doing business in Kota Kinabalu was compounded by the existing cabotage policy, which was a factor impeding economic growth.

The progressive removal of cabotage policy, leading to forging of alliances with other major ports and shipping liners and liberalising shipping licences to increase competition among local operators, will contribute to lower freight costs, according to Yaakub.

The Federation of Sabah Manufacturers recently reiterated the need to abolish the policy, saying that the move could also pave the way for the Kota Kinabalu Sepangar container port to become a hub for the BIMP-EAGA region.

Its president Datuk Wong Khen Thau said if the policy was lifted, some industries would be able to compete better, with direct impact on the exports market and growth of business volume.

Sabah, he said, needed to rely on shipping for transporting goods from the peninsula due to the absence of road links and railways.

Besides the federation, various other parties have been asking the government to do away with the cabotage policy and the government last year announced an independent study to review the mechanism but so far the results have yet to be released.

Source: Business Times

Cabotage policy affecting Sabah & Sarawak

Shipping rates not the only factor in high prices of goods in Sabah, Sarawak

THE higher prices of consumer goods in Sabah and Sarawak, compared with the peninsula, should not be conveniently attributed to the high shipping cost to east Malaysia in relation to the implementation of the cabotage shipping policy, said Malaysia Shipowners Association (Masa) chairman Nordin Mat Yusoff.

The Federation of Sabah Manufacturers recently urged the Government to remove the policy on account of its adverse effects on the prices of goods in Sabah.

Nordin Mat Yusoff

Under the cabotage shipping policy, implemented since 1980, domestic trade between any two ports in the country can only be served by Malaysian-owned shipping companies with Malaysian-flagged ships.

Nordin said that if the high prices of consumer goods in east Malaysia were caused by high shipping cost, the current downtrend in freight rates should have lowered prices of the goods, but this was not the case.

“Total ocean freight rates declined by about 41% in the last six months in Peninsular-east Malaysia trade but this has not been reflected in the landed prices of the current consumer goods there.

“Also, total freight rate comprising basic freight rate and bunker adjustment factor has actually dropped quite dramatically by about 10% and 300% respectively due to the slide in oil price.

“But, it is unfortunate to note that consumers in east Malaysia are not beneficiaries of our lower prices,” he told a press conference last week.

Masa, in its recent study that compared the retail prices of goods between August and February in Sabah and Sarawak, found that the prices there had either been maintained or increased.

Furthermore, Nordin said shipping rates were only one of eight components in a total supply chain involved in the transportation of goods.

Among other costs involved in total supply chain are charges related to port, forwarding, trucking, storage and terminal handling services.

Vessels often return to Port Klang from east Malaysia with empty containers

“We have always maintained that the shipping cost is only one component of the total transportation and logistics cost and that it makes up 46% of the total transportation cost.

“From this, shipping freight makes up between 5% and 7% of the retail price of consumer goods.

“It is therefore unfair to assume that shipping cost is the only arbiter of the landed cost of consumer goods,” he said.

Explaining why freight rates from Port Klang to places such as Hong Kong are cheaper than to east Malaysia, Nordin pointed out that the Port Klang-east Malaysia trade route often resulted in vessels coming back from east Malaysia to Port Klang with empty containers as east Malaysia had more imports than exports.

“The Port Klang-Hong Kong freight rate is cheaper because Hong Kong is usually lacking in containers due to its high volume goods transportation activities while vessels from Port Klang need to bring extra empty containers to carry goods out of Hong Kong.

“And these extra containers going there are usually given low freight rates by shipping companies as the cost will be covered by the higher freight rates transporting goods out of Hong Kong to Europe and many other places,” he said.

It was also misleading for anyone to suggest that shipping charges from Kota Kinabalu to Southampton were twice that of similar charges from Port Klang to Southampton because of the cabotage policy, he added.

“In fact, the argument is wrong because the policy only involves domestic shipping among local ports,” he said.

Describing it as “barking up the wrong tree,” he said the removal or relaxation of the cabotage policy would in no way change the situation.

This is because the question of freight rates between Kota Kinabalu and a foreign port of destination would be influenced by, among other factors, volume of cargo, geographical factors such as the remoteness of a market, port infrastructure and performance.

Nordin said Masa would resist any attempts to remove the cabotage policy, as it could cause huge collateral damage to the Malaysian shipping industry and also undermined national interests.

Source: Star Online

____________________________________

Local shipping trade not under any cartel

THE domestic shipping trade operating under the cabotage policy is not controlled by shipping cartels, said Malaysia Shipowners Association (Masa) chairman Nordin Mat Yusoff.

“There is no such thing as cartels – Masa is not a cartel and neither are shipping companies serving the cabotage trade.

“There is an open market out there for shippers (importers/exporters) to shop around for freight rates which suit them from the several companies providing shipping services,” Nordin told a press conference last week.

There are about 3,400 Malaysian-owned ships engaged in the domestic trade with 85% of the tonnage belonging to 10 shipping companies, according to Masa.

Under the cabotage policy, the domestic shipping industry had grown significantly since 1980 and a relaxation of the cabotage policy which allowed foreign ships to serve the domestic market would have negative impact on local shipping companies, Nordin said.

The larger national interest of Malaysia as a maritime nation was served under the cabotage policy as employed, he added.

On the claim that the cabotage policy had resulted in the high prices of goods in east Malaysia compared to the peninsula, Nordin said it was evident that the prices of consumer goods had not gone down in tandem with the current lower freight rates and that the cause of this must be investigated by the relevant government agencies.

Masa is willing to sit down with the relevant government agencies as well as manufacturers in Sabah and Sarawak to help determine why the costs of goods are higher in east Malaysia, Nordin said.

Source: Star Online

Credit crunch hurting Malaysian shipping industry

THE financial crisis and global recession have resulted in slumping trade, loss of consumer buying power as well as credit squeeze; in turn contributing to a slowdown in maritime financing.

Nazery Khalid

Maritime Institute of Malaysia (MIMA) senior fellow Nazery Khalid said the Wall Street meltdown and the resulting global economic panic had an adverse impact on trade-facilitating businesses – shipping, port operations as well as offshore oil and gas exploration and production.

“However, it should be noted that 90% of the global trade volume is carried by ships and facilitated by seaports while oil and gas found offshore remain critical sources of energy to power the world economy.

“As such, financial institutions and investors must not lose sight of the opportunities and potential in the maritime industry, amid the doom and gloom of the global financial crisis,” he said at the MIMA-OCBC Bank Maritime Financing Seminar 2009 recently.

Nazery said there was concern among maritime industry players over the impact of the credit crunch on the development of maritime activities, which depended heavily on the availability of competitive, sizeable funds and the fluid, trans-boundary flow of capital.

“Despite the fact that several maritime sectors, such as offshore oil and gas and offshore support vessels, have weathered the storm well, players will inevitably feel the pinch of the tightening of lending and cutback in investments should the economic crisis prolong,” said Nazery.

He expects the impending credit squeeze following the crisis will make banks more cautious in lending.

“Traditional players in maritime financing will no doubt continue lending but will do so more conservatively and prudently,” he said.

However, banks that are not familiar with the maritime sector might stay on the sideline altogether and concentrate on their mainstay areas of lending.

“As less debt financing becomes available, the terms of lending will also become more stringent, hence making it more expensive to raise funds from the banks,” Nazery said.

This can be off-putting to companies looking to embark on ambitious expansion plans that require huge borrowings and capital raising.

“As a direct result of the reduction in debt financing, the maritime industry players will have to seek financing from alternative sources,” he said.

However, Nazery said the underlying sentiment towards activities such as port operations and shipping – crucial facilitators of global trade – and offshore oil and gas exploration and production should remain positive as long as the global economy did not collapse.

He expressed confidence that once the financial market woes subsided, financial institutions, capital providers and investors would re-focus on the fundamentals of the maritime industry to consider their involvement in this crucial sector.

“No doubt, the slump in the world economy has affected many activities, including the maritime sector, but a sense of perspective is needed to assess the value and potential of the industry,” he said.

Source: Star Online

Maersk cuts profit outlook on affiliate loss

COPENHAGEN: A.P. Moeller-Maersk A/S, the world's largest container shipper, said 2008 profit missed targets after Danske Bank A/S, in which the company owns a 20 per cent stake, reported a fourth-quarter loss.

Net income including minority interests probably totaled US$3.4 billion (US$1 = RM3.61) last year, compared with a November 12 forecast of US$4 billion to US$4.3 billion, Copenhagen-based Maersk said in a stock exchange statement on Thursday. The company also said it expects impairment losses from some other units that it didn't identify. Maersk is scheduled to publish earnings for 2008 on March 5.

Danske Bank, Denmark's biggest lender, on Thursday reported the first quarterly loss this decade after bad loans in Denmark and Ireland soared. Maersk said the bank's result will reduce its profit by US$280 million and the shipping company will write down the value of its Danske holding by US$220 million.

"Danske Bank didn't perform as we had hoped for, but I can say that we have no plans of selling our stake," chief financial officer Soeren Thorup Soerensen said in a telephone interview. "The performance of our other units was generally as expected in the fourth quarter."

The company's other units, in addition to the container line, include the Nordic region's second-largest oil and gas company and the world's largest refined oil-product tanker operator. After "impairment tests" on the other divisions, Maersk plans to write down those operations' value by US$300 million, the company said.

Maersk declined 100 kroner (100 kroner = RM64.5), or 0.3 per cent, to close at 30,900 kroner in Copenhagen trading, outperforming Denmark's benchmark OMX C20 Index, which fell 1.6 per cent. The shares have lost 36 per cent in 12 months, valuing Maersk at 137 billion kroner.

The new outlook was "better than expected," Christian Nagstrup, an analyst at Jyske Bank A/S in Silkeborg, Denmark, said by e-mail, reiterating a "buy" recommendation on Maersk stock. Stripping out the combined earnings reduction of US$800 million, Maersk would post profit of US$4.2 billion, at the high end of its previous forecast range, Nagstrup said. - Bloomberg

Source: NST Online

Bombardier targets South-east Asia

SUBANG JAYA: Canadian aircraft maker Bombardier Inc wants to enhance its presence in Southeast Asia after securing a contract for the supply of two amphibious aircraft to the Malaysian Maritime Enforcement Agency (MMEA).

Bombardier's amphibious aircraft division president Michel Bourgeois said it would use the aircraft for MMEA as the benchmark and the showcase towards marketing it to the rest of the region.

Bourgeois . Photo by Suhaimi Yusuf

"We hope that this aircraft will be able to be the showcase in Asia. If Malaysia is able to demonstrate the capability of this aircraft, we believe that other countries will come forward," Bourgeois told The Edge Financial Daily .

From left: Najib, Maritime Malaysia DG Admiral Datuk Mohd Amdan Kurish and Deputy Minister in the Prime Minister's Department Datuk Hasan Malek boarding the Amphibious CL415. Photo by Suhaimi Yusuf

He was speaking after a ceremony to hand over one of the aircraft, the Green Aircraft Amphibious Bombardier CL415, to Deputy Prime Minister Datuk Seri Najib Razak, who received it on behalf of MMEA. The other aircraft will be delivered by November.

Bourgeois said the aircraft, which specialises in fire fighting, search and rescue, surveillance and emergency operations, was unique in the region, with Thailand utilising an older model of the amphibious aircraft.

He was optimistic about Bombardier's potential in the region despite the global economic uncertainty as the aircraft was specifically used by governments and paramilitary organisations.

"We go through a different cycle than you will see in the private sector, so we remain hopeful that we will not be affected," he said. Bombardier has supplied commercial aircraft to countries in Asia including China, Hong Kong and Singapore.

Speaking at the ceremony, Najib said the aircraft purchase underscored the government's commitment to ensuring safety and security in Malaysia's sea zones.

"As a major trading nation, it is important for us in terms of security and economic imperative to ensure our sea lanes are safe," he said.

Bourgeois also said Bombardier, which won the open tender last June, had a two-year contract with MMEA to train its pilots for flight preparation.

The company is also training MMEA engineers and technicians from its local service partner AJ Aeroservices Sdn Bhd to perform maintenance on its aircraft.

Source: Edge Daily

Striking the right balance

THE shipping downturn will narrow the gap between the supply and demand of seafarers, according to the Malaysian Maritime Academy (Alam).

Last year, the Transport Ministry reported that there was a big shortage of local seafarers working on board 3,582 Malaysian-owned merchant vessels.

About half of them were Malaysians.

 It takes about 10 years to develop a fresh school leaver into a master mariner or a chief engineer.

Internationally, before the global financial crisis hit the shipping industry in the fourth quarter last year, it was said that the maritime sector was short of about 20,000 seafarers.

Alam chief executive officer M. Adthisaya Ganesen said the shipping industry slowdown had marginally narrowed the gap between supply and demand of seafarers.

“Not much, but if the market deteriorates further, shipping companies operating in certain sectors may resort to cutting wages,” he toldStarBiz. “And in some cases, they will also be selective in choosing the ‘right’ seafarers.”

However, he said, shipping companies should be careful in managing their human resources since it would not be easy to find efficient seafarers once the market rebounded from the current condition.

“We have to bear in mind that it takes about 10 years to develop a fresh school leaver into a master mariner or a chief engineer,” he said.

Alam will be able to produce marine seagoing engineers quicker and at a lower investment cost without compromising on quality and competency.

As a result of the downturn, Adthisaya expected a cut in sponsorship for cadets this year.

“It is anticipated that industry stakeholders will be very cautious in their spending and implementing cost-cutting measures.

“Sadly, training is always seen as a cost item and it is most likely to get the axe.” From experience, he said, in each recession, investment in human capital ceased. “When the situation changes to an upturn, companies scramble to find people.

“The biggest danger is the tendency for companies to compromise on quality and competency of talent in order to make up for the shortfall in manpower,” he said, adding that companies should have long-term manpower planning.

“Usual business plans, which include fleet expansion, mergers and acquisitions, should take into consideration the aspects of recruitment and training of manpower.

“In doing so, the companies are always better prepared and ready to face the challenges with the right choice of people,” he said.

In the bid to produce competent seafarers, according to Adthisaya, there are cases where the record number of sponsorships and cadet intake of about 500 cadets per year had created a bottleneck in board training.

Apart from completing their cadetship programme, the graduates have to attain the minimum sea time requirements to sit for their certificate of competency (CoC) examinations.

“But, Alam is very careful about the number of cadets that we take in as the numbers are based on the availability of training shipberths.

“Not only do the shipping companies (sponsor) have to ensure provision of shipberths for the cadets but also for those who have graduated to enable them to clock their sea time and become eligible for their higher CoC.

“But, if more ships are being laid off and newbuilding orders are being cancelled, then there could be further reduction in availability of training shipberths,” he said.

Expressing his personal view on the ups and downs of the shipping industry, Adthisaya said shipping was a cyclical industry and it closely followed the growth or decline of trade.

“On the bright side, 90% of goods are still being transported by sea and globalisation cannot be reversed.

“It is almost certain that the industry will pick up fast once the economy recovers,” he said.

Alam, a wholly-onwed subsidiary of MISC Bhd, currently has about 1,476 cadets.

“The next intake in July will see a reduced number in pre-sea student due to the global economic crisis,” Adthisaya said.

Source: Star Online

Survival of the fittest

THE local maritime industry is expected to sail in choppy waters this year as global trade continues to decline.

But the impact of the global economic downturn on the country’s goods transportation sector is expected to be cushioned as intra-Asia trade is still at a healthy level.

This is reflected by the fact that all major ports in the country – Westports, Northport and Port of Tanjung Pelepas – met their volume targets last year.

The three ports are only anticipating slower growth this year as they could still rely on intra-Asia transhipments as well as the import and export business.

Northport's container yard in Port Klang.

For example, although the price of crude palm oil has been falling in recent months, exports to India, one of the major importers of our crude palm oil, is still robust.

Northport, a major import and export terminal in Port Klang, posted slightly above three million 20-foot equivalent units (TEUs) last year, up 5% from 2007.

Due to its large exposure to import and export cargo handling, the port is expected to post slower growth this year compared with last year.

But Northport managing director and chief executive officer Datuk Basheer Hassan Abdul Kader earlier said with the company’s low gearing of almost 0%, Northport could withstand the onslaught of the global economic crisis.

Westports, which has more transhipment business, is in somewhat better shape in terms of volume.

But the declining trade is also affecting Westports’ volume to a certain extent, and the port does not expect its “usual” double-digit growth this year.

The port recorded about 16% volume growth in 2008 to slightly less than five million TEUs.

The country’s main transhipment port, Port of Tanjung Pelepas, posted just below 5.8 million TEUs last year, slightly below expectation, but an increase of about 6.1% over 2007.

Malaysian shipping companies which are mainly involved in the container, bulk and crude palm oil (CPO) transportation are also not spared from the whiplash of the global economic crisis.

MISC Bhd, which operates a relatively small container shipping business compared with its main activity of liquefied natural gas (LNG) transportation, should withstand the lower demand in container cargo.

The country’s major bulk carrier operator, Malaysian Bulk Carriers Bhd (Maybulk), has now ventured into the lucrative offshore support vessel (OSV) market after a collapse in bulk transportation where the Baltic Dry Index plunged more than 90% from its peak of 11,793 points on May 20.

Maybulk has also completed its proposal to acquire a 22.08% stake in PACC Offshore Services Holdings (POSH) for US$221mil.

Based on the current local and international demand, the OSV sector outlook is expected to be positive this year.

For main players in the OSV market such as Alam Maritim Resources Bhd and Tanjung Offshore Bhd, it should be smooth sailing.

The current stronger oil price, which breached US$50 per barrel recently, will also propel OSV demand to greater heights this year.

But future financing for fleet expansion could be difficult as banks are getting jittery on lending, especially for this particular capital-intensive industry.

Thinking ahead, Alam Maritim recently entered into a joint venture with CIMB Private Equity to acquire five vessels for a total of US$70mil.

The local logistics sector is already feeling the pinch of the declining trade. This is due to Port Klang’s monthly volume that has contracted by as much as 25% in the past few months.

On the bright side, the current economic turmoil will result in the survival of the fittest and make the industry less fragmented.

Source: Star Online

Higher risk premium due to higher risk in Gulf of Aden

SHIPPING companies may have to pay higher premiums for their vessels plying in the pirate-infested areas in the Gulf of Aden and along the east coast of Africa.

Marine insurance underwriters in London said the enhanced risk in the area would prompt an increase in premiums.

So far this year, pirates have hijacked about 39 vessels in the Gulf of Aden, with the latest being the Sirius Star, the largest ship to be hijacked so far, which was carrying two million barrels of crude oil.

Large ships usually have three types of insurance policies namely hull policy, which covers physical risks; protection and indemnity policy, which covers matters concerning crew; and war risk policy, which covers acts of terrorism including piracy.

The war risk policy has a clause that requires extra premium charges for ship plying dangerous areas such as the Gulf of Aden.

MISC Bhd, which has also fallen victim to piracy acts in the area, said it had not been charged any additional premiums by its hull and war risk underwriters.

Two of its vessels, MT Bunga Melati Dua and MT Bunga Melati Lima were hijacked in the Gulf of Aden in August and were released after ransom was paid.

A company spokesperson told StarBiz that underwriters generally charged additional premiums by applying a certain agreed rate to the total loss value of the vessel that transit either the Gulf of Aden or any other listed areas falling under the war exclusion zone as defined by the Joint War Committee (JWC).

JWC is a group of marine underwriters based in London.

According to the spokesperson, MISC’s ships were still plying within the safety corridor of the Gulf of Aden, accompanied by Royal Malaysian Navy vessels.

This is because the alternative route via the Cape of Good Hope will incur extra cost.

“Going by the Cape of Good Hope means spending more fuel of about 30 to 35 tonnes per day for an extra 12 days at least, not to mention all other consumable and consumption.

“Additionally, we also will loose out on charter hire earnings for the extra days if the charterer does not agree to the route.

“Also, to maintain the schedule reliability of the service, an extra vessel needs to be injected into the service if we opt for the alternative route. This will increase the system cost by one more vessel,” he said.

In contrast, he said MISC would save on fuel and other costs and would only have to pay approximately US$180,000 per transit toll at the Suez.

“Risk-wise, with Somalian pirates moving further down south, a journey via the east side of African Continent through the Cape, will mean that the vessel is still exposed to the Somali pirates and we also have to face the harsh weather at the Cape,” he said.

Source: Star Online

Gulf of Aden

HOW important is the Gulf of Aden to the shipping industry?

About 11% of the world’s seaborne petroleum shipment passes through the Gulf of Aden to enter the Suez Canal or to go to various regional refineries. The main ports located in the area are Port of Aden in Yemen and Port of Djibouti in Eastern Africa.

The 192km Suez Canal, located in Egypt, is the main waterway for oil shipments from the Persian Gulf to European and US ports, with more than 3,000 oil tankers passing through it annually.

It is the shortest water transportation route between Europe and Asia without navigating around Africa or carrying goods overland between the Mediterranean and the Red Sea.

The canal makes significant distance cuts between countries. It cuts about 22% of the distance between the Japanese and Dutch ports.

The canal averages about 8% of the world shipping traffic. Sea journey along the canal takes between 11 and 16 hours at a speed of around eight knots.

Source: Star Online

Straits safety not just littoral states' burden

There is a dire need for the international shipping community to ensure sustainable development of the Malacca Straits, one of the world’s busiest sea lanes, writes H.M. IBRAHIM

"CARRYING capacity" refers to the number of individuals that can be supported in a given area within natural resource limits and without degrading the natural, social, cultural and economic environment for the present and future generations. Simply put: there is a limit to the number of eggs that a basket can carry without breaking the basket or dropping the eggs.

This basic concept of "carrying capacity" can be applied to all situations: the passenger capacity of a bus or an aircraft, cars on a highway or a roomful of people; indeed, in tourism, ecology and all other situations. The greatest danger when a system exceeds its carrying capacity is irreparable damage, impairing the system's ability to heal itself. This is well-accepted science in ecology, conservation and any natural system.

Between 1978 and 2003, there were 888 accidents in the Straits of Malacca. Fortunately, only a few were major accidents that damaged the environment, depositing oil sludge on tourist beaches, destroying the fishing nets and livelihood of fishermen, and reducing the fish supply to the population centres of the west coast of peninsular Malaysia.

These accidents included the MV Showa Maru in 1975, Nagasaki Spirit and Ocean Blessing in 1992, the Evoikos and Global Oripin in 1997, the MV Sun Vista and Natuna Sea, causing a total of 392,000 barrels of crude and fuel oil to be discharged into the straits.

The Straits of Malacca, connecting the Andaman Sea of the Indian Ocean and the South China Sea of the Pacific Ocean, is the shortest sea route between India and China and one of the oldest and busiest shipping lanes in the world.

The alternative route, through the Lombok and Makassar Straits, is 1,000 nautical miles longer and takes a modern ship an extra three days to traverse, adding hundreds of thousands of dollars more to costs. For this reason, the straits carries more than 50 per cent of the world's trade and 30 per cent of worldwide shipments of oil and gas.

The vessel traffic in the straits increased from 43,965 in 1999 to 70,718 last year (see table) -- a 60.85 per cent increase. More than 60 per cent of these ships transported hazardous and noxious cargo. Through the efforts of the littoral states to enhance navigational safety in straits, with the support of Japan and in collaboration with the International Maritime Organisation, there has been a marked decrease in the number of maritime accidents.

Utilising innovations such as the Vessel Traffic System (VTS), Traffic Separation Scheme (TSS) and mandatory ship reporting system (STRAITREP), shipping accidents decreased from 63 in 2001 to 23 last year.

However, traffic in the straits is expected to increase to more than 100,000 vessels by 2010 and 141,000 by 2020 (not counting cross-straits traffic). There may well be a "tipping point", beyond which any further increase would be too costly and hazardous.

In short, there is a limit to the carrying capacity of the straits -- at least, if current conditions are projected into the future. Congestion may even become self-limiting, in that increased accidents will cause insurance rates to rise and deter some traffic, or congestion may reach a point where it is safer, cheaper and faster to bypass the straits.

The Straits of Malacca is in one of the world's recognised "mega biodiversity" regions. To ensure the sustainable development of these resources, the government has formulated various policies on biodiversity, environment, fisheries and other natural resources related to the land and sea areas of the nation, entrusting the relevant departments to enforce the attendant regulations.

The establishment of the Malaysia Maritime Enforcement Agency (the equivalent of a Coast Guard) is another example of Malaysia's commitment to ensure safety and security in this important Sea Lane of Communication (Sloc).

More than half the vessels using the straits do not call at any littoral state's ports, and thus these ports receive no direct benefit from their passage. Yet they have borne the brunt of the burden of maintaining the safety of navigation and protecting the environment.

Deputy Prime Minister Datuk Seri Najib Razak recently revealed that the nation spent more than RM200 million on providing and maintaining various aids to navigation in the straits, as part of Malaysia's commitment to ensuring the safety, security and environmental protection of the straits.

The littoral states bear the costs and risk, while users reap the benefits of transit passage. In addition to the accidental risks, operational discharge from ships and actions by some unscrupulous ship masters in dumping sludge and solid waste further aggravate the situation.

As a responsible member of the international community, Malaysia takes the comprehensive and functional management of the Straits of Malacca very seriously. The carrying capacity of the straits must therefore be determined, to ensure the waterway continues to play its important role as a Sea Lane of Communication, provider of natural resources for the prosperity of the littoral states, and a mega biodiversity region.

Dialogue on these matters may at least educate littoral states and users alike on ways and means to cooperate. The Centre for the Straits of Malacca of the Maritime Institute of Malaysia is able and willing to offer such a forum and follow-up research.

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Prof Dr Capt H.M. Ibrahim is director of research at the Maritime Institute of Malaysia

Source: NST Online