Haulage charges set to go up

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Business Times

Hauliers association says sector needs to improve

Cost hikes, inefficiencies prompt upward revision of tariff guidelines

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: BizStar

Shipping consolidation

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

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

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

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

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

One of Maersk Line’s container ships.

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

Northport’s RM300m expansion depends on lease renewal

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

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

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

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

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

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

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

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

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

“I am always inclined to be prudent and cautious.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: BizStar

Northport expects more traffic in 2011

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

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

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

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

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

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

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

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

Source: Business Times

Baltic Dry Index sheds 1.8% a week after Japan quake

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: BizStar

Kuantan Port City + East Coast Economic Region

Kuantan Port City can attract RM38bil investments by 2020

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: BizStar

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

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

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

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

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

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

Factors to be considered

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

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

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

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

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

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

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

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

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

Solutions available

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

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

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

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

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

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

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

More comprehensive future

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

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

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

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

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

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

Source: BizStar

Delicate outlook for container, dry bulk

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: BizStar

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rising trade strains Malaysia's top ports

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Business Times

CMA-CGM hopes for a repeat performance

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

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

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

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

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

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

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

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

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

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

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

Source:Business Times