Logistics roadmap will benefit the region

Malaysia’s Roadmap for Development of the Logistics Services Industry will see a flourish of trade opportunities in the Pan-Beibu Gulf Economic Cooperation (PBGEC) member countries, according to Deputy Transport Minister Jelaing Mersat.

He said the roadmap commissioned by the Malaysian Logistics Council and the EPU of the Prime Minister’s Department contained recommendations on improving performance of ports, shipping, land transport and freight transportation.

He said the Transport Ministry would play an active role in the roll-out of the plan which would include strategic initiatives to strengthen capital capacity and also to review and revamp regulatory and intuitional framework.

“The ministry will also look into legislations and international conventions involving shipping, liability regimes, air and surface transport to strengthen our governance, regulatory functions and ensure international compliance,” he told Bernama on Saturday.

“With the roadmap, the transportation networks will be connected within the Asean and PBG countries. This will further develop investment, trade and economic cooperation in the region and form cluster of industries, accelerate economic growth in the PBGEC.” – Bernama

Jelaing attended the 6th PBGEC Forum, which concluded here on Friday.

He said Malaysia would play its role in transportation infrastructure to improve the connectivity between Asean and China.

“We are doing everything that we can to speed up the connection, such as the Singapore-Kunming Rail Link.”

The roadmap for the Development of the Logistics Services Industry is an Asean economic blueprint signed by all Asean leader at the Asean Summit, which was attended by former prime minister Tun Abdullah Ahmad Badawi in 2007.

Meanwhile, Jelaing said the Transport Ministry would evaluate and implement relevant strategic initiatives under the roadmap which whould envision the development of world class freight logistics system, including strengthening the role of ports and shipping to support the country’s economic growth and development.

“We will liaise and consult with various stakeholders in the industry through the focus in moving the agenda on freight logistics forward,” he said.

On maritime cooperation, Jelaing said China-Asean Maritime Consultation Mechanism is in the midst of exploring cooperative opportunities.

Under the mechanism, he said both countries conducted numerous activities, including the meeting on Tide, Current, and Wind Measurement Project of Malacca and Singapore Straits (March and April) and the Workshop on Port Facility Security in July.

Source: BizStar

Economic fears deepen dry bulk shipping woes

Growing fears for the world economy signal more pain and even bankruptcies among dry bulk ship owners who are getting rock-bottom rates to carry cargoes like coal and now face a glut of new vessels ordered when times were good. 

The tougher climate has hit the sector hard this year and confidence is at a record low. Korea Line, South Korea's debt-stricken second largest dry bulk shipping line, is among the casualties. The firm, under court receivership, has filed a restructuring plan to the court. While cheaper rates could benefit buyers of commodities, the weak economic prospects are set to hit more ship owners. "Smaller companies tend to have less access to capital, especially in weak markets. High financial leverage and weak earnings could force covenant breaches or defaults in the sector," Deutsche Bank analyst Justin Yagerman said. 


The Baltic Exchange's main sea freight index, which track rates to ship raw materials, has already declined nearly 30 per cent since the start of the year as ship supply has outpaced demand to transport strategic commodities including coal, iron ore and grains. 


"A recession or recession like situation will actually prolong the period with poor freight markets," said Sverre Svenning, a director with broker Fearnley Consultants."In normal circumstances, governments - especially in Europe - would try and stimulate the economy through infrastructure and construction work but there is no government in Europe that has money for that now and the US government definitely does not have money." 


Investors worry that fiscal cutbacks due to Western credit softness and stagnating output are holding back global recovery.Weak US services sector data and poor manufacturing data this week have compounded the fragile outlook.


Former US Treasury Secretary Lawrence Summers wrote in a Reuters column this week that there is a one in three chance of a US recession. 


"If there were to be a double dip recession in both the US and Europe, then it would feel like the mother of all recessions for the dry bulk market," said Khalid Hashim, managing director of the Thai-listed group Precious Shipping . 


"It would probably take us to the bad old days of the mid 1980s when the BDI was barely above its all-time low of 557 points." Khalid said that in such tougher economic conditions, he would not be surprised to see the BDI fall below the 1,000 point level and remain depressed for four to six quarters. 


The index was seen by investors in 2008 as an indicator of the global contagion from the financial crisis, highlighting the fall-off in demand for raw materials. During the boom times, the index posted a record high in May 2008 of 11,793 points. 


The financial crisis drove it as low as 663 points in December 2008. It reached 1,268 points on Thursday, having hit its lowest in more than three months early this week. 


"A further a slowdown from here would be very bad news for the freight market," said Georgi Slavov, head of dry research and structured products at broker ICAP Shipping. "I really hope this is a short lived seasonal slowdown in the West."


Read more: Economic fears deepen dry bulk shipping woes http://www.btimes.com.my/Current_News/BTIMES/articles/brulk/Article/#ixzz1UQVnlIYi

Professional body CILTM recognises varsity’s logistics programme

A memorandum of agreement (MoA) signed between Chartered Institute of Logistics and Transport Malaysia (CILTM) and Universiti Utara Malaysia (UUM) recently will act as a springboard for the latter’s graduates in logistics studies to enter the industry.

CILTM president Datuk Abdul Radzak Abdul Malek said the MoA allowed for a greater and mutually beneficial cooperation between academia and the industry.

“Areas like exchange of knowledge from the industry to the academic through invited guest lectures by industry professionals can be made possible with this MoA.

“Others like joint research activities that has high application value to the industry, student-led out-of-classroom experiential learning activities and leadership camp for young professionals will add value to this MoA,” he said at the agreement singing.

The MoA entailed accreditation by CILTM to the Bachelor of Business Administration in Logistics and Transport (BBLT) programme currently offered by UUM.

“With this, the degree will not only be recognised globally but also has better marketability,” said Abdul Radzak.

The Chartered Institute of Logistics and Transport (CILT) is the international professional body for all sectors of the transport industry.

Founded in the United Kingdom in 1919 and granted a Royal Charter in 1926, it was formed to promote knowledge of the science and arts of logistics and transport and to provide a source of authoritative views for communication to government, industry and the community.

Abdul Radzak said the MoA was timely as Malaysia was now undertaking a huge step in the logistics and transport industry.

He said the formation of Land Public Transport Commission, the development of mass rapid transit system in the Klang Valley and the creation of Southern Logistics Hub in Iskandar Malaysia were just a few examples of the Government’s seriousness in developing the industry.

He said all these economic and infrastructure development activities spelt the need for qualified logistics and transportation professionals.

“The fact that UUM has its BBLT programme recognised by CILTM as a professional degree is just like a stamp of endorsement that the graduates of this degree from UUM are not only qualified academically but also equipped with skills that the industry needs.

“This endorsement is further amplified when the graduates are conferred the Member of The CILT (MILT) immediately upon their graduation. This will put them in a better position to compete in the job market,” he said.

UUM vice-chancellor Professor Datuk Dr Mohamed Mustafa Ishak said the university had been offering the BBLT since 1993 and so far, 431 graduates had completed their studies.

“At present, we have about 453 undergraduate students enrolled in the programme of which about 15% are from countries like Nigeria, Chad, Sudan, Somalia, Thailand, China, Indonesia and Saudi Arabia.

“Through this smart collaboration, our graduates are better positioned to face challenging careers as qualified professionals in logistics and transportation either in the Government or private sector,” he said.

Source: BizStar

Bright outlook for ports

Almost all Malaysian container ports are poised to record good growth this year, based on current statistics of containers throughput and stable economic activities.

But the rosy outlook is not without any pockets of concern, with the slowing down of the country’s economy due to external influence a worry.

The Malaysian economy grew 4.6% in the first quarter, marginally missing the 4.8% forecast by most economists.

The Transport Ministry reported last Tuesday that Malaysian ports had handled a total of 8.2 million TEUs (twenty-foot equivalent units) for the first five months this year, up 10.9% from the same period last year.

Transport Minister Datuk Seri Kong Cho Ha said among the notable ports that registered positive growth were Port Klang and Port of Tanjung Pelepas (PTP).

Port Klang and PTP retained its position as the world’s top 20 container ports last year at number 13 and 17 respectively.

The Maritime Institute of Malaysia senior fellow Nazery Khalid told StarBizthat the increase in throughput was not only a reflection of an improving global economy and rebound in international trade, but also stood as testimony to the efficiency and productivity of the ports in attracting cargoes even in leaner times.

“One can say Malaysia is blessed with strategic location, being at the heart of the world’s busiest shipping lanes. However, we also have to be mindful that there are many ports in these areas with equally good infrastructures and services like Malaysian ports, if not better.

“Competition to attract cargo is stiff, and for Malaysia to have recorded impressive throughput growth in the first five months of 2011 is a commendable performance that says much about the competitiveness,” he said.

Nazery partly attributed the growth to growing intra-Asean trade and transshipment trade, the latter thanks to the relentless momentum of China’s economic growth.

“At this rate, and if the global economy continues its slow but steady recovery, our ports should exceed the volumes handled in 2010.

“However, competition for cargo is ferocious. Our ports not only have to compete with one another for a not-too-large slice of domestic cargo but also with up-and-coming ports in Vietnam, Thailand and Indonesia.

“Then, there is also competition with other transport modes in vying for cargo. With the double-track railway in the picture, I foresee rail giving our local ports a run for their money,” he said.

An analyst from a local brokerage said ports in the country would most probably sustain or increase its growth momentum based on the export targets of RM700bil this year from RM639.4bil last year according to the International Trade and Industry Ministry.

Import value was at RM529.2bil last year, up 21.8% from 2009.

But the analyst also cautioned that despite the positive outlook, the momentum of economic growth was expected to slow down in the second quarter due to the impact of the devastating earthquake in Japan and social uprising in the Middle East and North Africa.

This positive development in the port industry contradicted the dilemma faced by most shipping companies as freight rates continue to be battered by an excess of supply.

According to CIMB Research, despite the gloomy rate environment, containership newbuilding orders have zoomed ahead, with over a million TEUs ordered year-to-date from about 700,000 TEUs last year.

“This has tilted the equilibrium negatively and supply is now expected to grow faster than demand in 2012 and 2013,” it said in a recent report.

Last year, according to axs-alphaliner.com, the worldwide reference in liner shipping, global container throughput hit a new record of 560 million TEUs.

“The highest growth was posted by Chinese ports which grew by 17.9% last year, followed by South American ports which grew by 17.6%

“Forty-eight of the top 50 ports registered volume gains in 2010, with only two suffering minor losses. An average growth of 15% was recorded by these main ports,” it said.

Going forward, axs-alphaliner.com said that for this year, growth was expected to moderate to 8.4% as volumes returned to more sustainable levels, with Chinese ports again expected to lead the gains this year.

Source; BizStar

Container freight continues to be battered by excess supply

Container shipping freight rates, which have shown signs of recovery at the beginning of the year, are now back sailing on choppy waters as rates continue to be battered by excess supply.

According to CIMB Research, despite the gloomy rate environment, containership newbuilding orders have zoomed ahead, with over a million twenty-foot equivalent units (TEUs) ordered year-to-date from about 700,000 TEUs last year.

“This has tilted the equilibrium negatively and supply is now expected to grow faster than demand in 2012 and 2013.” it said.

The research house said it was bullish on the sector at the start of the year based on a modest pace of newbuilding orders, but the dramatic surge of orders had taken it by surprise.

Excess supply: Maersk and MSC have already deferred proposed rate increases from June to July on weak ship utilisation.

“We are worried that liners are repeating the mistakes of the past,” it said in a recent sector report.

It said freight rates continued to be battered by excess supply, and base rates for Asia to Europe are probably close to zero.

“Rates between China and Europe have declined 60% to US$874 per TEU, from a peak of US$2,164 per TEU in March 2010, and are now close to zero after deducting the bunker adjustment factor of around US$750 per TEU.

“Spot rates have declined despite higher bunker prices, exacerbating the squeeze on margins,” said the research house.

CIMB Research expected rates could plummet below bunker costs over the next month or two.

“Maersk and MSC have already deferred proposed rate increases from June to July on weak ship utilisation, which could prevent a sustained rise in rates even during the coming peak season.

It said the present situation was much worse than its expectation at the start of the year.

According to Alphaliner, weekly Asia-Europe (AE) shipping capacity was 21% higher year-on-year (y-o-y) in May, substantially ahead of the 4% y-o-y rise in head-haul trade volume in April.

“Also, economic indicators in Europe appear to be weakening, with a flattish composite leading indicator for the big four European economies, weak retail sales, and rising retail stock levels.

The weekly expects carriers to begin cancelling services, redeploy capacity to other trades, or lay up ships if the situation continues.

Sharing the negative sentiment, according to CIMB Research, is Transpacific rates, which had resumed its downtrend after making tentative upward moves in April and early May.

“The Transpacific Stabilisation Agreement, a research and discussion group of 15 major container shipping lines had recommended US$400 per forty-foot-equivalent-unit increase in contract rates from May, but carriers likely lowered rates instead.

“According to Alphaliner, Transpacific capacity was 19% higher y-o-y in May against a 7% to 8% annual demand growth,” it said.

Source: BizStar

Kontena unveils logistics package for SMEs

Third party logistics provider Kontena Nasional Bhd will launch a warehouse and transportation package deal for small- and medium-sized enterprises (SMEs) today, which may make it viable for your favourite Penang halal "tao sah piah" manufacturer to bring it to a store near you.

The launch is in conjunction with Smidex Exhibition 2011.

SMEs have always been limited geographically due to high transportation costs. Starting out small, SMEs do not have the necessary volume to negotiate competitive rates with transportation providers.

"Our strategy is if we are able to cater, not to a single SME, but a group of SMEs in a single platform, in a single location, then we will be able to reduce the cost significantly, bearing in mind that once they grow they will be able to add volume to this produce of theirs," Kontena Nasional chief executive officer Hood Osman said in an interview here recently.

About 95 per cent of total businesses in Malaysia are SMEs.

Called 1 KN 1 Rate, Kontena Nasional's latest offering is customised to meet individual SMEs needs. It includes role consulting, planning, transport rates and warehouse rates.

Hood said the last six to eight months have been about bringing Kontena Nasional to a state of readiness to offer the services.

"We have applied halal certification and increased our fleet to multi-vehicle services. We used to be wholly in prime movers and hauliers, and have expanded our warehouses. These are all significant contributors to the whole infrastructure that will help facilitate the growth of SMEs," he said.

Kontena Nasional currently has about 15 warehouses nationwide, and is expected to add another three by the end of the year.

"We have used the past six months to make sure that we can cater to individual requirements, to do a bit of study, to see where SMEs are and how to go about servicing them," Hood said.

He said its studies have shown that SMEs generally do irregular deliveries, make sporadic requests and require too small a space in warehouses for retention.

Kontena Nasional expects to bring in between RM7 million and RM8 million in sales from the venture.

The second phase will be the introduction of its product to SMEs in Sabah and Sarawak.

Source: Business Times

More investments needed

Logistics sector should be able to meet expected increase in demand

SHAH ALAM: The logistics sector must further invest in technology, capacity and talent to offer more value-added services in line with the uptrend in trade volume.

SME Corp Malaysia chairman Datuk Dr Mohamed Al Amin Abdul Majid said the logistics sector capacity should meet the expected increase in demand in view of the growth of the global economy.

Datuk Dr Mohamed Al Amin

“This is the time where the logistics sector must take advantage because as trade grows, the services offered by the logistics sector are much needed to ensure seamless transportation, storing and distribution of goods.

“For Malaysia, the main challenges are to further improve the services offered towards total logistics services and multi-modal transportation.

“To date, there are about 31,168 companies involved in the logistics sector in the country with 30,766 belonging to the small and medium-size entreprises (SMEs) category,” he said in his speech to officiate the Bumiputra Logistics Entrepreneurs Association AGM last week.

Mohamed Al Amin said as the logistics sector remained as one of the strong pillars of the country’s trade growth and competitiveness while the Government had acted as an “enabler” via its support and various incentives.

The private sector specifically the transportation, storage, and communication industry contributed about 8% to the country’s gross national product last year.

“This year, there are about 219 programmes with financial commitment of RM5.9bil to be implemented via various ministries and agencies.

“For SME Corp, we have launched two programmes early this year namely Business Accelerator and Enrichment & Enhancement Programme to support the SME industry and players.

“PPLB members who are interested in this programme are welcome to join and application can be made online.

“We have also collaborated with a prominent logistics player, Kontena Nasional Bhd, to widen the scope of the logistics sector market via talks, site visits and business-to-business sessions,” he said.

Source: BizStar

In anti-trust law we trust

COMMENT

By NAZERY KHALID

IT was reported recently that the big boys in the container shipping industry were among the companies that were raided by the European Union (EU) anti-trust officials over a possible collusion. This has sparked an interest to re-visit the subject of EU anti-trust law in the liner shipping industry, which was implemented in October 2008.

Last week, Bloomberg reported that AP Moller-Maersk A/S, CMA CGM SA and Hapag-Lloyd AG were among companies raided by EU anti-trust officials. The companies were reported to give full cooperation to the officials to carry out the probe.

EU regulators said they had “reason to believe” that the companies might have breached EU cartel or monopoly-abuse rules. The raid doesn’t mean that the companies are guilty of anti-competitive behaviour, according to the European Commission.

The raid came in the midst of investigation into how container shipping freight rates rose in 2009, although demand dropped sharply amid the global recession and industry capacity swelled owing to delivery of huge new tonnage in the box trade.

Since the implementation of the anti-trust law, liner shipping companies have lost their privileged status under EU competition law with the withdrawal of the liner conference block exemption, which authorised horizontal price-fixing and similar agreements.

In areas where the liner consortia block exemption does not apply, all cooperative arrangements are carefully and individually vetted under the competition provisions of the European Council Treaty.

The competition regime, while lauded by importers and exporters, in the EU liner shipping context is not without problems, though.

Several legal questions have been raised over the introduction of the competition law in EU, in areas such as cooperation between liner shipping companies and the benefit of cooperative arrangement between liner shipping companies over the negative impact on competition. The strategies of these companies that may lead to an abuse of a dominant position have also been put under scrutiny.

Liner shipping companies have had to reconfigure their discussion agreements and business strategies to accommodate the abolishment of the block exemption so generously accorded to them before the enactment of the EU competition law.

This has led to greater competition among them in the EU trade, which is lauded by shippers.

It was reported that Hong Kong’s OOCL, a powerful player in the liner shipping trade, cautioned against implementing anti-trust laws that prevent shipping lines from developing solutions and rationalisation exercises to deal with capacity overhang. While stopping short at endorsing price-fixing conferences, OOCL lamented that anti-trust laws have restricted liner companies from collectively discussing issues affecting the liner trade.

That coming from the world’s 11th largest container shipping operator (based on 2010 ranking) is noteworthy. OOCL’s grouse echoes that of many other liner companies which fear that the onslaught of open competition will adversely affect their business.

This anxiety is echoed by the recent recommendation of Singapore Competition Commission for the Singapore government to extend the block exemption to allow liner conferences to continue their trade until December 2015, with minor changes. This was made on grounds that anti-trust exemptions remain the norm for the global liner trade and most of Singapore’s trading partners.

Also getting into the act are Australia and Japan, which are also looking to apply competition rules on liner shipping.

To this end, the recent announcement by the Joint Global Shippers Forum (JGSF) to promote anti-trust laws in Asia should make governments sit up and take note. Countries, especially trade dependent ones, which ignore the call by this powerful forum do so at their own peril and run the risk of being bypassed by shippers.

Best business behaviour

With the Competition Act slated for enforcement in Malaysia on Jan 1, 2012, companies in the maritime sector are expected to make a major leap forward in their business conduct and be at their “best business behaviours.”

Operating in a borderless theater and ultra-competitive environment, the local maritime sector, which facilitates 95% of the nation’s trade, is expected to take the front in realising the targets of the Act, in line with the aspiration to make Malaysia a regional shipping and logistics hub and a globally competitive maritime nation. Being an open but small economy, Malaysia must put in place an institutional framework that will not only lure investors and businesses but also to align local companies with international best practices to enable them to compete globally.

Even skeptics of anything good introduced by the Government would be hard-pressed to argue against the virtues of the Competition Act.

However, those who will be affected by the Act need to keep to the letter and the spirit of the Act, which must be strictly enforced without fear or favour, to ensure its optimal effectiveness and the attainment of its objectives.

The dynamism generated in the marketplace by the injection of greater competition and innovation through the Act can only be good for a country that is racing against time to become a fully developed nation by 2020. Sharp focus will be trained on the maritime sector to help fulfill this lofty ambition.

● Nazery Khalid is a senior fellow at Maritime Institute of Malaysia.

Source: BizStar

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