Malaysia seeks to boost ports capacity to rival Singapore

Malaysia is fighting back onshore with bigger ports, improved rail connectivity and new industrial parks


Malaysia has been enjoying brisk exports this year.

Global demand, especially for electronics and commodity-based products, has been on the rise.

Recovery in natural resources, like oil and gas, is driving the country’s exports.

In October, Malaysia’s outbound shipments rose to RM82.4 billion, an 18.9% jump compared to a year ago.

It was also the twelfth straight month of rising exports, enhancing the country’s surpluses and bringing billions to the economy.

While exports maybe on the rise, Port Klang, the country’s busiest port, tells a different tale.

In the third quarter of 2017 (3Q17), Port Klang registered the lowest quarterly performance in cargo throughput since 2014, slumping 18.1% year-on-year.

Total container throughput for the quarter fell 5.9% compared to a year ago.

The drop has been largely blamed on the global shipping alliances’ realignment.

Notably, five global shipping companies under Ocean Alliance, the largest consortium in the container shipping industry, shifted their operation from Port Klang to neighbouring Singapore.

Mergers and operation streamlining have forced shippers to take cost-cutting measures as global trades softened in the last few years.

The exodus of these big shippers added strain to container and cargo throughput for the two port operators in Port Klang — Westports Holdings Bhd and Northport (M) Bhd.

Ministry of Transport’s official data showed that the cargo and container throughput had registered a continuous decline since the 1Q17.

Westports, the largest listed port company, saw its total transshipment containers dropping to 3.3 million twenty-foot equivalent units (TEUs) for the first six months of this year.

In the 2Q17, it recorded an 11% year-on-year drop in container throughput. The port

operator had attributed the drop in container handling due to the departure of China’s Cosco Shipping Co Ltd to Singapore’s PSA Terminals.

The authority, however, expects the exit of the Ocean Alliance would have short- term effects.

Investment in Ports Continues

Despite the industry’s gloomy prognosis, investment and interest in the country’s ports infrastructure have not fizzled out.

Malaysia is taking the fight to neighbouring Singapore as the battle now is drawn on available TEUs’ capacity.

The Carey Island Port project would have an annual capacity of 30 million TEUs, equalling both Northport and Westports’ 30 million TEUs.

Located 50km from the two existing ports in Port Klang, the multibillion development is a 20-year port city project.

Covering an area that is twice the country’s administrative capital of Putrajaya, the project is spearheaded by Sime Darby Bhd.

In April, Sime Darby, MMC Corp Bhd — the country’s largest port operating group — and India’s Adani Ports and Special Economic Zone Ltd signed an agreement to undertake a feasibility study on the project.

But worries over returns and viability have had many speculating that over RM200 billion project could hit a snag.

The authorities were quick to shoot down any rumours that the multibillion project would be delayed, as Port Klang would face a breaking point in cargo handling in the near future.

Melaka Developments

Chinese-state owned companies, which are already big globally in port investments, are putting their money within the Melaka Gateway project.

Expected to be completed in 2019, the port is undertaken by China’s PowerChina International Ltd, Shenzhen Yantian Port Group Co Ltd and Rizhao Port Group Co Ltd as part of the US$10.4 billion (RM42.41 billion) investment in Melaka Gateway.

The development includes three reclaimed islands off the city of Melaka.

The port will consist of a container terminal, a break-bulk and dry bulk terminal, ship-building and repair services, a maritime industrial park and port logistics services, apart from aliquid cargo terminal with storage facilities that will benefit oil trading in Asia, Europe and the Middle East.

The port in Melaka would compliment another Chinese-funded industrial park and port upgrading in Kuantan, as part of the regional economic titan’s One Belt, One Road initiative.

Singapore is expected to fight back and add new berths, expand facilities, entice the sea’s largest vessels and provide greater incentives.

While battles in ancient times are fought on the sea, Malaysia is fighting back onshore with bigger ports, improved rail connectivity and new industrial parks.