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Saturday May 11, 2013
Major ports ramping up capacities
By SHARIDAN M. ALI
sharidan@thestar.com.my
Northport has a RM500mil 3-year expansion plan that started early 2011.
AS the Straits of Malacca is undeniably critical to the shipping industry, the major ports along the 500-mile waterway are currently competing stiffly, ramping up their capacities this year, riding on the world economic recovery.
Billions of ringgit are being spent on an expansion race among Malaysian ports, and the growth in capacity and services is expected to reach its pinnacle this year after being temporary stalled by the global economic crisis in late 2008.
This is because ports are more “protected” from the economic turmoil as opposed to its shipping counterparts, due to their more structured container handling fees.
Malaysian ports have been producing quite a good set of financial results even during challenging economic environment a few years ago.
It is thus interesting to look at the plans these terminals have for expansion and competition as there will be a huge amount of capacity coming onstream from this year onwards. All that will change the dynamics of these ports.
The container handling performance by Malaysian ports showed a growth 2.82% or an increase of 569,252 twenty-foot equivalent units (TEUs) last year to a total 20.8 million TEUs.
The ports contributed a total trade of nearly a trillion ringgit annually for the nation. Basically, there are two types of boxes handled at Malaysian ports local containers from the hinterland and transhipment containers which are cargo from outside the country that use the terminals as a distribution hub.
Containerised cargo represents more than 70% of total cargo throughput by sea in the country.
StarBizWeek talks to a few chieftains of these major container terminals to get more insight into this thriving industry and the focal point is Port Klang which controls 47% of the container handling market in the country.
Port Klang
Northport (M) Bhd, a wholly-owned subsidiary of NCB Holdings Bhd, has a RM500mil three-year expansion plan that started early 2011 and includes the development of its container terminal 4 (CT4).
Chief executive officer Abi Sofian Abdul Hamid says CT4 will have a handling capacity of 600,000 TEUs with a 17m draught and four new quay cranes capable of handling ultra-large vessels.
Hilton: ‘The Johor market is expected to grow steadily’.
The development of CT4 includes the construction of Wharf 8A and is expected to be fully operational in July. That will increase Northport's annual capacity to 5.5 million TEUs.
“Northport is projecting an increase of over 5% this year, which will give an estimated of 3.4 million TEUs.
“The company is gearing towards fulfilling the capacity available post-July and is riding on domestic and external economic growth which is anticipated to be higher than last year.
“Northport will also focus on conventional cargo in anticipation of higher demand for break bulk and dry bulk cargoes as we are a multi-purpose port terminal,” he says.
Northport handles 3.1 million TEUs last year, reflecting a marginal decrease from the previous year's 3.2 million TEUs.
In terms of demand, Abi says that at the macro level, the movement of cargo to and from Port Klang is dependent on the demand and supply of cargo in the world's economic zones such as Europe, the United States, Middle East, South Asia etc.
“And at the micro level, Northport's container growth currently is driven by domestic cargo and cargoes from intra-Asia namely South-East Asia, East Asia, South Asia as well as the Middle East.
“Intra-Asia is mainly made up of China, South Korea, Japan, Taiwan and South-East Asia.
“Northport is identifying targeted market sectors to develop cargo convergence into Northport in the form of transshipment containers. This will be the next target growth for Northport,” he says.
Ruben: ‘We feel that our target is achievable’.
NCB recorded a turnover of RM987.2mil in the financial year ended Dec 31, 2012, reflecting an increase of 6.4% over 2011.
The pre-tax profit of the group was RM180.4mil, representing a decrease of 5.1%.
Another major terminal in Port Klang, Westports Malaysia, is also busy ramping up its capacity.
Westports Malaysia CEO Ruben Emir Gnanalingam reveals that Westports' container terminal 6 (CT6) is already completed and boosts the port's total capacity to nine million TEUs.
Westports handled 6.9 million TEUs last year, up from 6.4 million TEUs in 2011.
“The target the board has set me for 2013 is 7.5 million TEUs and I am hopeful that we can achieve that. The first quarter was slow as anticipated, but we expect the next few quarters to be better,” he says.
And the port's expansion plans actually span up to CT9 that should be ready next year.
“Provided there are no major shocks to the world economy, we feel that our volume target is achievable,” says Ruben.
In February 2012, it was reported that Westports planned to invest RM3.18bil for expansion.
Ruben says Westports revenue has been growing for the past three years in line with the corresponding volume growth.
“For 2012, our revenue has surpassed RM1bil,” he says.
MMC Corp Bhd and its ports in Johor
The country biggest, and the world's 16th largest, transhipment terminal located south of the country, Port of Tanjung Pelepas (PTP), has embarked on a RM1.4bil expansion plan.
PTP is a 70% subsidiary of MMC Corp Bhd while the remaining stake belongs to APM Terminal.
“Construction of berths 13 and 14 is underway and expected to be fully operational by May 1 next year.
“These berths will be equipped with cranes capable of handling the new generation of 18,000 TEU vessels, which will start calling at PTP from this year.
“Its capacity will increase by 24% to 10.5 million TEU and there is strong demand for this capacity, particularly from our current customers. We expect the new berths to be utilised at an optimum level by 2015,” sayschief executive officer Glen Hilton.
Hilton adds that PTP is also working hard to improve its operational efficiency on the current 12 berths which will increase the existing capacity by up to 15%. “This will ensure we have sufficient capacity to meet the requirements of our customers,” he says.
Hilton explains that the bulk of PTP's volumes currently are transhipment cargo as the terminal's strategic location and facilities continue to make it an attractive and competitive hub for shipping lines in South-East Asia.
“However, we are equally focused on attracting local hinterland cargo,” he says.
PTP handled 523,000 TEUs of local boxes in 2012, representing 7% growth year-on-year.
“The Johor market is expected to grow steadily in the coming years, especially with the development of the Iskandar region.
“PTP is also developing its free zone land, especially warehousing for cargo consolidation,” he says.
PTP Free Zone has over 30 tenants currently, and several key clients will add one million sq ft of warehouse space this quarter.
PTP's sister port and wholly-owned subsidiary of MMC, Johor Port, is also expanding its capacity under its five-year strategic plan with RM400mil of investment.
CEO Shahrull Allam Shah Abdul Halim says Johor Port has been a catalyst and an agent for development of the surrounding Pasir Gudang industrial area.
“In fact, the port is also facilitating the import and export needs of industries in 28 other industrial areas around Johor and also other industrial areas in the south,” he says.
Shahrull says there are also a number of new developments cropping up along the Pasir Gudang coastline and within the port limits.
“Today, Johor Port is providing marine services to a number of these private terminals and private jetties which are located within our port water limits,” he says.
But Shahrull admits that as a port which commenced operations 36 years ago, Johor Port is facing some operational challenges to meet the growing demand of industries.
“Therefore in 2012, we embarked on a five-year redevelopment plan to further modernise the port and improve our overall operational efficiencies and ultimately increase our port capacity.
“With the initiatives that we have planned, we hope to see significant improvements in our overall productivity rates and create capacity to meet the growing demand.
“Some of the ongoing initiatives include upgrading and refurbishing existing cranes and repairing the wharf structures,” he says.
As Johor Port is a multi-purpose port with large bulk operations, Shahrull explains that they are also focusing on improving operational facilities and productivity of its break bulk terminal.
On its performance, Shahrull says last year was a good year that saw Johor Port handled a total cargo throughput of 25.91 million tonnes.
“We did well in our dry bulk cargo sector which saw the overall dry bulk cargo throughput (edible and non-edible) increased by 12% compared with 2011,” he says.
Shahrul says the amount of London Metal Exchange (LME) cargo (non-ferrous metal) handled at Johor Port increased by 15% last year, ranking Johor Port 7th in the world in terms of LME volume handled by a single LME-approved facility.
Johor Port aims to be among the top three LME ports globally and to do this, the port needs to enhance its LME cargo handling capacity to one million tonnes annually.
Currently, Johor Port handles about 430,000 tonnes of LME cargo annually.
For MMC, the port and logistics business segment recorded a higher revenue of RM1.5bil for the financial year ended Dec 31, 2012, a rise of 7% against 2011. However, pre-tax profit declined by 4%to RM285.6mil for the year under review.
Penang Port
Up north, there is only one prominent terminal Penang Port Sdn Bhd that still has a lot more room for growth based on its available capacity.
According to chief operating officer Obaid Mansor, with the completion of expanded facilities, the port has the capacity to handle 2 million TEUs annually.
Its North Butterworth Container Terminal (NBCT) handled 1.16 million TEUs of cargo in 2012, down 2.8% compared with 1.19 million TEUs in 2011.
Containerised cargo generates about 70% of the port's annual revenue with the remainder from non-containerised cargo.
“The landside infrastructure and superstructure are in place while waiting for the overdue deepening of waters at the main channel and harbour area.
“Only the availability of these integrated enabling factors would the port be able to reap the optimum benefits to be gained by all stakeholders.
“It is expected that with the available facilities and resources, the port would improve its service level, efficiency and widening the scope of services. Its strength in direct calls to the Far East would be enhanced by more connectivity to other parts of Asia and the Middle East. Intra-Asia trade provides good insulation against global market uncertainty,” says Obaid.
Although the container volume recorded a dip last year, Obaid is optimistic about the prospects this year.
“Recovery in the US and European economy is expected to impact on better growth in Penang Port.
“Penang Port serves well within the Indonesia-Malaysia-Thailand Growth Triangle and Malaysia's Northern Corridor Economic Region.
It being a gateway port, reflects the true economic situation of a region or country.
“It is also an export port,” he says. Export cargo accounted for 55% of activity while 45% was attributed to import cargo.
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