Port Klang retains status as busiest container port

Port Klang, comprising Northport and Westports, has retained its title as the country's busiest container port in the first half of this year, with a 48.3 per cent share of the total number of containers handled by all Malaysian ports.

Its rival, Port of Tanjung Pelepas in Johor, was listed second busiest, handling 35.4 per cent of the country's total container throughput.

Port Klang moved 4.31 million TEUs (20-foot equivalent units) of cargo in the January-June 2010 period, up 29.3 per cent from 3.33 million TEUs a year earlier, as the global economic recovery boosted cargo traffic, said Port Klang Authority (PKA) general manager Kee Lian Yong.

It handled 856,110 TEUs of exports, up 25.8 per cent from a year earlier, and the volume of imports rose 18.2 per cent to 828,082 TEUs. Transshipment volume rose 34.5 per cent to 2.62 million TEUs.

Kee said Westports led the way in the first half of 2010 with a 30 per cent increase in container volume from the same period in 2009, handling 2.65 million TEUs, while Northport saw a 28 per cent increase to 1.66 million TEUs last year.

"We are on track to achieve our stretch target of 8.4 million TEUs for the whole year, where Westports is projected to handle 5.2 million TEUs and Northport 3.2 million TEUs. The fourth quarter is traditionally the busiest quarter of the year," Kee told Business Times in an interview.

Port Klang moved 7.31 million TEUs last year, a decline of 8.3 per cent compared with 7.97 million TEUs recorded in 2008.

"The projection for 2011 is a growth of 10 to 12 per cent in container volume (from 2010)," said Kee.

Meanwhile, in terms of tonnage handled, traffic through Port Klang in the first five months (January-May) of this year increased by 36.8 per cent to 65.54 million tonnes from 47.90 million tonnes a year earlier.

"PKA and the two terminal operators (Northport and Westports) took this time of slow-paced economy and downturn to reshape our strategies. These strategies have hastened and increased our growth even more so with the global economic recovery as can be seen by our growth percentage for the first half of 2010," said Kee.

He added that the port authority is aware that emerging ports in Asia such as Vietnam and Sri Lanka pose stiff competition to Port Klang.

"In order for us to be competitive, we are constantly looking at our operations to ensure (we offer) effective and efficient service, are service oriented, and have cost-effective operations and a commercial competitive environment," he said.

Source: Business Times

Container ship catches fire off Port Klang

An Oman-bound container ship, MV Charlotte Mearsk, carrying 1,000 containers and 21 crew members, caught fire some 111km off Port Klang Wednesday night.

District maritime enforcement chief Maritime Capt Mohd Amir Hamzah said the fire broke out in the ship's cargo area around 10.10pm.

"All the crew are safe," he told a news conference here Thursday.

He said that the Malaysian Maritime Enforcement Agency (MMEA) dispatched its KM Danga vessel and a speedboat to the scene upon receiving information on the incident.

"Although we were told that the crew were putting out the fire, and would proceed with their journey, we went to the scene nonethless," he said.

Mohd Amir said that when the MMEA team arrived around 4am Thursday, the containers were still on fire.

A Bombardier helicopter and another ship, KM Marlin, were called in to help control the fire, he added.

"We have yet to ascertain the cause of the fire and the items in the containers," he said, adding that the MMEA was also identifying the ship's owner.

The operation to put out the fire was still underway in the afternoon.

Source: The Star

Shipowners refute Sabah manufacturers' claims

THE Malaysian Shipowners' Association (Masa) has once again refuted claims that the cabotage policy and shipping charges are the cause for the high cost of living in Sabah. It was responding to the Federation of Sabah Manufacturers' (FSM) complaints this time.

In a statement yesterday, Masa chairman Nordin Mat Yusoff said there was a distinct difference in what constituted ocean shipping cost and what is within the control of shipowners.

"The ocean shipping cost makes up less than half of the total landed transportation charges paid by shippers in Sabah. The remaining 50 per cent includes charges such as land transportation and storage," he said.

Nordin said that the ocean shipping charges had dropped by more than half a decade ago and that the rates were market-driven. He rejected claims by FSM that Masa was a cartel.

"There is simply no cartel in the trade because shipping lines serving the route do not collectively agree on ocean freight rates and shippers are free to choose the shipping line," Nordin said.

Source: Business Times

Maersk sees unprecedented container shortage

Maersk Line, the world’s biggest container shipping group, said today a strong rebound in global trade has led to an unprecedented shortage of containers as shipping enters its peak season.

Maersk Line, part of Danish oil and shipping group A.P. Moller-Maersk, announced unusually high peak season surcharges on freight rates from Asia to Europe last week.

“The present market situation is unique,” Lars Reno Jakobsen, head of Network and Product and member of Maersk Line’s management board, said in a statement.

“We are experiencing a demand surge in most trades, which is a development that is both unprecedented and unexpected by us and our customers,” Jakobsen said.

The Asia-Europe trade is growing by 23 per cent year-on-year, outpacing the market’s 3-6 per cent forecast from six months ago, he said.

“We expect an even more pronounced and serious shortage of containers in the coming months as we enter the peak season,” he added.

After a plunge in the market from late 2008 through last year, the global shipping industry is recovering with world trade.

“Maersk Line expects the equipment (container) shortage to last through the third quarter of this year and will continue to work closely together with all stakeholders, not least our customers, to further reduce equipment turnaround times,” it said.

During the slump of 2008-2009, many container shipping and container leasing companies stopped sourcing and producing containers, Maersk said.

“As carriers and shippers did not expect the current demand surge, the necessary equipment has not been ordered in 2010, ultimately resulting in the global shortage in equipment,” it said.

In response to the equipment shortage, Maersk Line has begun producing new containers and leasing containers, it said.

It has also re-activated laid-up vessels to help reposition containers as fast as possible from, for instance, the east coast of North America and Latin America to Asia, it said.

Last week, Maersk Line announced a peak season surcharge (PSS) for the Far East-Europe trade applicable from July 2010, Maersk said.

The surcharge will help Maersk recover the higher costs caused by the increased volumes and equipment shortages, such as port costs and costs of extraordinary vessels deployed to reposition containers, Maersk said.

Maersk said it would apply only one peak season surcharge so it would not announce separate surcharges or rate increases in connection with the peak season.

Source: Malaysian Insider

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

Shipping rates plunge as idle ships deployed

Shipping rates on the Asia-Europe trade route have dropped for more than 12 consecutive weeks because of a hasty resumption of idled capacity and new vessel deliveries.

Almost 30% of what had been a rebound in the freight rates over the past year has been wiped out since March as nearly one million 20-foot equivalent units (TEU) of idled vessels have been reintroduced into operation in the year.

The weekly capacity on the Asia-Europe trade route is expected to rise 15% to 48,550 TEU next month from January, industry sources said. Most of this increase is derived from the revival of idled vessels. At the same time, 10 new 13,000 TEU vessels are to be deployed by Maersk Line and CMA CGM in the trade lane.

The idled fleet dropped from a peak of 1.5 million TEU in December to less than 550,000 TEU on May 24, shipping consultant Alphaliner said in a weekly report. As June and July are the peak seasons for the trade lane, it expects the laid-up vessels to further decline to 450,000 TEU by the end of this month.

"Capacity management is the perennial weakness of the shipping lines because the industry is very fragmented and lacks a market leader to stabilise the market," Geoffrey Cheng, a transport analyst at Daiwa Capital Markets, said.

Tung Chee-chen, the chairman of Orient Overseas (International), warned of the problem more than two months ago.

"Any imprudent reintroduction of capacity currently idling or laid up, if mismatched with demand, could see fresh rounds of rate cutting," he said in March.

Since then, the freight rates on the Asia-Europe trade route have fallen 17%.

Transpacific trade, however, is subject to yearly contracts and is less volatile.

Average freight rates from the mainland to northern Europe fell to US$1,802 per TEU for the week to May 23, compared with US$2,164 during the week to March 5.

Laid-up vessels compared with the global fleet have dived to 4.1% from 11% last year.

China Shipping Container Lines, however, said rates on the Asia-Europe trade route had reached the bottom. Freight rates had stabilised and demand from Europe had increased, its investor relations manager Frank Fan said.

Source: Edge Daily

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

MISC buys stake in VTTI for RM2.36bil

MISC Bhd has proposed to buy a 50% stake in global tank terminal firm VTTI BV for US$735mil (RM2.36bil) in a move that will give the home-grown shipping giant immediate access to strategically located assets at the “crossroads of major products and energy shipping lanes of the world,” the company said.

“The acquisition of 50% interest in VTTI is a key element in developing the company's global tank terminal business, in line with MISC's strategy to expand its service offerings across the value chain,” president and chief executive officer Amir Hamzah Azizan said in the statement yesterday.

VTTI owns and operates a network of petroleum product terminals in 11 countries with a gross combined capacity of nearly six million cu m.

This gross combined capacity is set to expand to nearly seven million cu m by 2013.

Its major terminals are located in Amsterdam and Rotterdam in the Netherlands, Fujairah in the United Arab Emirates and Port Canaveral in the US.

An aerial view of VTTI's tank terminal assets

VTTI is a wholly-owned unit of Netherland-based Vitol Group, one of the largest independent energy trading companies in the world.

MISC said the tank terminal business was an “attractive investment that will provide stable returns”.

The company's participation in the business would give it the edge over traditional shipping competitors through marketing opportunities and cross selling in both business segments.

“Upon completion of this sale and purchase transaction, MISC and Vitol will enter into a shareholder agreement to reflect the long-term relationship and strategic cooperation between MISC and Vitol in relation to their interest in VTTI,” the statement said.

MISC owns and operates more than 100 vessels, and is the leading energy transporter in the world in the liquefied natural gas, petroleum and chemical industry.

MISC and Vitol first entered into a partnership last year when the two companies started a joint venture to build and operate an oil blending terminal in Tanjung Bin, Johor. The 841,000 cu m oil blending terminal was scheduled to commence operation in 2012.

With the acquisition of the 50% stake in VTTI, the joint venture deal will be terminated and MISC's shares in the Tanjung Bin joint venture called Asia Tank Terminal Ltd will be sold to VTTI Tanjung Bin SA at cost.

The sale and purchase agreement to acquire the 50% stake in VTTI was signed yesterday in Kuala Lumpur.

MISC was represented by Amir Hamzah, while Vitol was represented by its president and CEO Ian Taylor.

Source: StarBiz

Penang Port will be staying put

There was never any plan to relocate the Penang Port nor has it been discussed in any Penang Port Commission (PPC) planning committee or board meeting, said its chairman Tan Cheng Liang.

Stressing that the suggestion to move the port had only been a proposal during a recent PPC dialogue, she reassured port users and investors that the port was set to stay in Penang.

“Moving a port is not like moving house. The downstream-related industries and operations will all be affected.

“Because of Penang’s airport and seaport, we have attracted a lot of investors and the manufacturing players, industrial players, multi-national companies and logistics suppliers are all here,” Tan said at a press conference at Bangunan Sri Weld yesterday.

“The chain of industry has been here so long. How are we going to move them? That is not economically viable.”

Tan said large amounts of funds had already been committed to upgrading the Penang Port, including RM1.1bil to further develop it to a main line port under port operator Penang Port Sdn Bhd’s 2007-2012 business plan.

She added that about RM300mil had been dedicated to re-develop the Prai Wharf while another RM62mil had been spent to complete the Penang International Cruise Terminal.

She said the 224-year-old port was an important part of the Northern Corridor Economic Region as Penang was a logistics hub and would play an even bigger role once the Ipoh-Padang Besar railway double-tracking project was completed at the end of 2013.

She said the proposal of relocating the port was brought up by the Penang Chinese Chamber of Commerce in a written question at a PPC dialogue with port users last Thursday.

“They are concerned that the North Channel is subjected to heavy siltation and that capital dredging is continually required to maintain the needed draft. Their question was also taken up by the Penang Freight Forwarders Association during the dialogue.

“Everyone has a right to ask questions and air their opinions but Transport Minister (Datuk Seri Ong Tee Keat) never made any statement that the port would move,” Tan said.

She added that the Federal Government had put capital dredging in the North Channel as a top priority under the 10th Malaysia Plan where the draft would be increased to 14.5m to accommodate larger ships at the port.

PPC currently spends RM30mil in maintenance dredging every year to keep the draft at 9m to 11m while RM350mil in capital dredging is needed every 10 years, Tan said.

Source: Star Property

Is relocation of Penang Port the right call?

There has been more than one instance in the past decade, when the issue of relocating the Penang International Airport on Penang island to less "strategic" locations was raised.

And each time the matter was brought up by either politicians or businessmen, very strong reactions to the subject have followed, since it appears that not very strong cases have been put forward when arguments were made for the proposed relocation.

In the usual policy statement issues to test the waters, followed by a chain of statements from affected stakeholders arguing why the move should not take place, to letting the argument simply die a natural death, Penang residents can safely say "been there, seen it and done that".

Each time the matter of relocating or closing the international airport came up, it appeared that the economic sense to such a plan had not been fully evaluated, particularly the impact it would have on the manufacturing and tourism sectors, Penang's major revenue earners.

Fast forward to 2010 and all eyes are now trained on Malaysia's oldest port, Penang Port.

The announcement by Transport Minister Datuk Seri Ong Tee Keat last week that the 224-year-old port, which was set up by Captain Francis Light, may be moved to a more "suitable" location to cater to future expansion plans has raised some eyebrows.

Ong was quoted as saying that suggestions for this move came from port users. This statement was backed up by a representative of the freight forwarding industry in Penang by saying that "anywhere in the northern part of Malaysia should be acceptable".

No mention was made on whether all those involved in the running and using of the port have been consulted and whether all parties think this is a good move.

Also silent was the role which is supposed to be played by the port as the logistics centre of the Northern Corridor Economic Region.

It also did not appear as if the tourism sector has been consulted on the possible move to relocate the port, which in the past year, has seen increased activity in the form of multiple economic spinoffs to the state.

The question being asked now is: Is the move to relocate the port simply a knee-jerk reaction to some dissatisfaction by certain quarters over less than satisfactory services experienced at the port, or have some serious discussions, feasibility studies and alternative sites identified before this, before the statement was issued?

When Penang island lost its free-trade port status in the 60s, many residents of the island state, whose livelihoods depended solely on the port status had to "shift gears" and make rapid adjustments.

It was a very painful time for those who waited with bated breath and hoped that the policy would be reviewed.

This was prior to the revocation of the duty-free status, Penang had thrived on its barter trade with Medan and Singapore, while attracting a fair share of tourists and bargain shoppers.

The economic fortunes of the state took a turn for the better when Penang began enjoying the boon from domestic and foreign investments, earning itself the title "Silicon of the East".

Many of Penang's investors - which comprise some of the world's top multinational corporations - are still here today, because of the many facilities offered to them such as skilled labour and infrastructure like the airport and port.

Also to be considered is the fact that Penang's position as a preferred port of call for luxury cruise liners has only been restored this year with the opening of the RM62.9 million Swettenham Pier.

The busload of tourists being shuttled to eateries, hotels and other attractions on the island cannot be missed on days that the big ships drop anchor or berth at the port.

The issue of repeated dredging, which is needed at the port to accommodate all types of vessels, is one which should have been addressed and made provisions for a long time ago.

All hopes are now being placed on the federal government to follow through with Deputy Prime Minister Tan Sri Muhyddin Yassin's pledge in April for a financial allocation for a proposed dredging scheme of the Penang channel in the upcoming 10th Malaysia Plan.

The RM322 million project was shelved under the Ninth Malaysia Plan mid-term review.

Terminal operator Penang Port Sdn Bhd has been targeting to develop Penang Port into a premier port by 2012 if the deepening of the north channel proceeded.

It is hoped that the fortunes of the state can then come full circle in anchoring itself back on its waterways, which once helped boost its fortunes and fame.

Source: Business Times

Northport expects further volume increase

Northport (Malaysia) Bhd, which recorded a 26% jump in volume for the first quarter of this year against the same period last year, is positive of a further uptrend in its business.

For the first three months of this year, Northport’s volume hit 779, 867 twenty-foot equivalents (TEUs).

Northport managing director Datuk Basheer Hassan Abdul Kader said the port recorded a 30% growth in transhipment containers, which reflected a strong resurgence in regional economies.

“We are confident of a sustainable growth in container volume at Northport, based on a positive forecast of the country’s economy and also on recovery trends in the shipping market,” he said in a statement.

Basheer added that recent developments in the fleet deployment of shipping lines – which included restoration of suspended services, injection of additional ships and changes in their service strings – mirrored the renewed confidence in the shipping markets.

“Based on these demands, Northport aims to chart a cargo volume increase of between 10% and 15% for this year against that of last year.

“The positive forecast is also applicable to our non-containerised cargo business that recorded a 40% growth in the first quarter of this year compared with a year ago,” he said.

Source: StarBiz

MISC’s pre-tax profit down 40pc to RM933m

MISC Bhd announced a 40 per cent lower pre-tax profit of RM933.1 million for the financial year ended March 31, 2010 compared with a pre-tax profit of RM1.556 billion last year.

The reduction in profits was mainly due to higher losses in the liner and chemical businesses and reduced profits in the petroleum segment, MISC said in a statement today.

Revenue was at RM13.775 billion against a revenue of RM15.783 billion in the previous financial year.

MISC also said the rights issue exercise completed in February, with the issuance of 744.0 million new shares, has led to a drop in net tangible asset (NTA) per share from RM5.54 at the end of the previous financial year to RM5.17 as at March 31, 2010.

Meanwhile, the higher group cash balances from the rights issue proceeds have led to a reduction in net debt equity ratio to 0.2:1 during the year reviewed compared with 0.38:1 the previous year.

MISC has recommended a final dividend of 20 sen per share tax exempt.

The company said it expected better performance ahead with the containment of losses of its liner business.

Additionally, expansion of its heavy engineering business and its offshore business are expected to contribute positively to the group’s performance.

Source: Malaysian Insider

Sabah re-ignites cabotage policy row

The Federation of Sabah Manufacturers (FSM) wants Sabah to be made the hub port for the Far East, much like what Dubai is to the Middle East.

However, the FSM sees the National Cabotage Policy (NCP) as an impediment since this designates Port Klang as the National Load Centre at the expense of Sabah and the nation.

“Sabah has all the necessary ingredients to be the hub port for the Far East,” said FSM president Wong Khen Thau in pitching for the state.

“It is the centre of this region, within five to six hours flight to all major Asian capital cities."

Sabah is also central to the large populations of India, Indonesia and China besides being in the right location vis-à-vis Tokyo, Seoul and Sydney.”

Wong was lamenting the failure of the partial liberalisation of the NCP since May last year.

The failure has been attributed to the limited scope of the liberalisation, which only allows direct carriage of containerised trans-shipment cargo to Sabah and Sarawak by foreign vessels without the need for a domestic shipping licence.

Wong noted that Deputy International Trade and Industry Minister Jacob Dungau Sagan's admission in recent days that the liberalisation has had little impact is a good reason for doing away with the NCP.

Wong, taking up the cudgels again, pointed out that 70 percent of Malaysia's imports come from China, Japan, Korea and other countries that are in close proximity to Sabah.

This, he argued, gives Sabah an advantage over Port Klang as the natural hub for the country.

“Sabah can also present a better alternative and challenge to Singapore than Port Klang or Tanjung Pelepas in Johor,” he claimed.

He also said the state could make the quantum leap in per capita income if the hub port is located in Sabah.

The FSM has estimated a minimum US$15,000 in per capita income for Sabah by 2020, a huge improvement from the current US$3,000-4,000.

'Pump in funds'

FSM is calling for the federal government to pump in the necessary funds to build up the state's infrastructure in addition to dismantling the NCP.

“There would be a need to develop industries and promote revenue-oriented sectors such as tourism, education and aquaculture for Sabah to make a leap in its economic standing. A lot of money would be required from the federal government to increase such economic activities.”

The FSM sees Sabah bargaining for state-of-the-art industrial and other infrastructure as a better alternative to pressing for a bigger oil royalty, adding, “we have enough gas reserves which can feed the industries”.

For starters, said Wong, the federal government should set up petrochemical industries in the state while considering an upward review of the oil royalty, which has been frozen at 5 percent since the late 1970s.

Infrastructure improvements envisaged by the FSM include building up rail transport services and improving roads linking Kota Kinabalu to main regional towns along the east coast like Sandakan, Lahad Datu and Tawau. This will mean upgrading 9,825km of gravel roads to add to the 6,000km of sealed roads.

There is also a need to focus on courier services, sea transport services, shipping and forwarding agencies, cargo handling, stevedoring services and port services, bunkering services, water and power.

State Industrial Development Minister Raymond Tan is hopeful that the NCP will be done away with in the near future, but prefers to use the term “further liberalisation”.

“The state government is requesting the federal government to fully liberalise the Cabotage Policy. At the same time, we are undertaking a study on the high cost of logistics services in Sabah,” he said.

The liberalisation of the NCP, he said, is among the 'Strategic Changes Initiative' study being undertaken by his ministry.

“We need a freight equalisation scheme through affirmative action - read subsidies - to settle the high shipping cost in Sabah,” added Tan.

Sabah's moves are likely to invite flak from shippers based in Peninsular Malaysia who are dependent on carriage to Sabah and Sarawak.

In the past, these shippers have resisted any plan to do away with the NCP. This has led to the charge that the federal transport ministry is in the pockets of the shippers.

The higher cost of living in Sabah and Sarawak, compared to the peninsula, is also attributed to the NCP.

Source: Malaysiakini

Europe’s shipbuilders may break out of the doldrums before Asia’s

FOR those who regard the smashing of a champagne bottle as a tragic waste, the problems facing the world’s shipbuilders are excellent news. It takes such a long time to construct huge ocean-going container ships, bulk carriers and oil tankers that the vast shipyards of South Korea, China and Japan will still be cracking bottles of bubbly over newly launched ships for a couple of years yet. But once these vessels, ordered in the boom before the financial crisis, are in the water, the course ahead looks rocky. Oddly, Europe’s shipyards, although still storm-lashed after 30 years of low-cost competition from Asia, seem to face a slightly brighter horizon.

Fresh orders for the world’s shipyards are at a low ebb. Last year they were more than 80% lower than in 2007, when sky-high freight rates and cheery economic forecasts encouraged shipping companies to scramble for new vessels. The subsequent recession in the rich world sent shipping rates tumbling. A swift rebound is unlikely: despite more scrapping and some cancellations, hundreds of ships are poised to hit the oceans this year.

Asia’s shipyards, streamlined and efficient, concentrate on building large, standardised ships. These are the sort in greatest oversupply. South Korea’s shipyards won over half of global orders for new ships in the first quarter of 2010, but they were worth just $2.2 billion. In 2008 Korean yards won orders worth $32 billion. Hyundai Heavy Industries, one of four big Korean shipbuilders, has not won a single order for a ship since late 2008.

European shipbuilders are suffering from a dearth of new orders too. The Odense shipyard owned by A.P. Moller-Maersk, one of the world’s biggest shippers, has an illustrious history: it produced the world’s biggest container ship. But cheap Asian competition for this type of vessel has holed it below the waterline. It will close in 2012.

Europe’s shipmakers are turning to national governments and the European Union for help, claiming that their industry is close to collapse. In early April representatives from nine EU countries called for an emergency programme to support the industry. Shipyards want help in gaining access to credit lines and soft loans, as well as rules to promote greener ships. This would support them until shipping finance recovers and hesitant customers regain faith in the world economy.

Yet the restructuring forced by low-cost Asian competitors has left Europe’s shipyards with some advantages. Their revenues of €30 billion-40 billion ($40 billion-53 billion) a year come mainly from niche markets which are not suffering from as much overcapacity as the mainstream.

Cruise ships are a particular speciality, and the market is growing. Four orders have been placed with European yards this year, compared with one in 2009. Ferries, another area of European dominance, are also in demand, and ageing ferry fleets in the Mediterranean are due for replacement soon. The offshore wind farms sprouting around the continent provide another opportunity. Europe’s shipmakers are adept at designing cable-laying ships and other service vessels. And as oil firms are forced to drill in ever deeper waters, ships suited to the task of towing and maintaining new rigs will be needed.

Pressure to make ships greener will also favour European shipyards. The International Maritime Organisation is discussing regulations that may force ships to belch out less carbon dioxide, and has introduced tighter limits on other pollutants. Europe leads in this type of technology, too. European shipmakers will also benefit from plans to encourage greater use of the continent’s inland waterways to ship goods instead of hauling them by road. If they can weather the current storm, Europe’s shipyards may yet resound again to the smashing of bottles.

Source: Economist