Thursday 22 Feb 2024
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This article first appeared in The Edge Financial Daily on September 12, 2017

KUALA LUMPUR: Port Klang has been impacted this year as key shipping companies chose to shift their operations to Singapore under new alliance agreements, putting a poser over Malaysia’s aggressive plans to expand the logistics industry, The Straits Times reported.

The publication said many of these partnerships are with Beijing, but noted the Ocean Alliance, which includes state-owned China Cosco Shipping, had shifted to PSA Singapore’s terminal from Klang in April. Meanwhile, it said the Chinese and Malaysian governments are still pushing to develop logistics infrastructure, including the RM55 billion East Coast Rail Link (ECRL) to be built and financed by China.

“Only Kuantan Port has Chinese equity so far because it also aids Beijing’s South China Sea claims. Other infrastructure plans have not taken off or are only loans, or worse, just Chinese companies winning construction deals,” Port Klang Authority chairman Lee Hwa Beng was quoted as saying. Data compiled by Northport and Westports show that cargo throughput dropped 8.4% in the second quarter of 2017 to three million 20ft equivalent units (TEU), after nearly four years of increasing loads. Quoting UOB Kay Hian analyst Kong Ho Meng, the publication reported that Westports had guided a decline of between 7% and 12% in volume in 2017, with 2018 prospects remaining murky.

The new alliance has also resulted in a loss of transshipment volumes — goods stored before being shipped to their final destinations — from giants United Arab Shipping Company (UASC) and France’s CMA CGM. It said this could total up to two million TEU per year. Industry officials said the realigning of the two groups has resulted in more than half of Klang’s Asia-Europe calls being shifted to Singapore. There are concerns of oversupply amid plans for new ports such as the RM43 billion Melaka Gateway and another on Carey Island in Klang.

The publication, citing government and industry sources, reported that Chinese companies earmarked to take a stake in the two projects have had reservations over their viability. Moreover, it noted the Malaysian government had approved Westports’ proposal to double its capacity to 30 million TEU, equivalent to PSA’s handling in 2016, despite the shrinking volume year to date. However, it said the Malaysian government has insisted that cargo volumes would rise as the country strengthens links with southern Thailand and Sumatra, Indonesia.

“Only the transshipment volume came down a bit but our local volume [has] increased. We can see strong growth in Malaysia, especially our economic production,” Transport Minister Datuk Seri Liow Tiong Lai was quoted as saying, adding that Malaysia has a very good relationship with Cosco.

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