Straits Inter Logistics has allocated RM6m of capex for the 1st 2 years to upgrade the terminal’s facilities after takeover
by S BIRRUNTHA/ pic by ARIF KARTONO
LABUAN Liberty Terminal’s container handling capacity is expected to increase by 5% to 10% per year following the takeover of the terminal’s operation and facility management by Straits Inter Logistics Bhd.
Labuan Port Authority (LPA) GM Zulkurnain Ayub said the number of containers in the port is hovering around 30,000 twenty-foot equivalent units (TEUs).
“It is a very small number, but you have to understand that there is a physical space constraint to handle more than that.”
“Two years ago, there was an issue of congestion in the port. But, to be able to accept a bigger number, there should be a space management to handle the constraints,” he told reporters after the signing ceremony between the LPA and Straits Inter Logistics in Petaling Jaya yesterday.
“If the operator could manage the space well and have another container yard to absorb the surplus of tonnage, then I think it can grow as much as 5% or 10% per year,” he added.
According to Zulkurnain, the growth depends on the economy and trend of the market prevailing today.
“I am hoping that with the oil and gas business moving up, there should be a surplus of tonnage coming through the port,” he said.
Straits Inter Logistics has signed an agreement with LPA to operate and manage the Labuan Liberty Terminal, after announcing the six-year contract in January.
The contract will be undertaken by the company’s 51%-owned subsidiary, Megah Port Management Sdn Bhd, in which the remaining 49% stake is held by LPM Holdings Bhd.
Its non-independent and non-ED Tan Sri Mohd Bakri Mohd Zinin said the contract serves as an opportunity for the company to venture into port management services, complementing its existing oil trading and bunkering services business.
The port management services, to commence on April 1, include container operations, breakbulk, berthing and mooring, harbour tug services, stevedoring, bunkering, and ship chandler to container and conventional vessels.
Under the agreement, Straits Inter Logistics has allocated RM6 million of capital expenditure (capex) for the first two years to upgrade its Labuan Liberty Terminal facilities.
The group said the fund, which was generated internally, would be used for repairing container yards, improving fire safety system and warehouses.
Meanwhile, Mohd Bakri also noted that the port management industry in Malaysia grew from RM4.9 billion in 2014 to RM5.3 billion in 2018, representing a compound annual growth rate (CAGR) of 2% during the period.
“Moving forward, the industry is expected to further grow to RM5.6 billion in 2021 domestically, registering a CAGR of 1.9% between 2018 and 2021.
“The Labuan Development Blueprint 2030 was launched in January 2018 to drive the transformation of Labuan into a smart and sustainable city,” he said.
Labuan Liberty Terminal is located on an island off Labuan.
Mohd Bakri added that one of the plans in the blueprint is to strengthen the island’s logistics through the enhancements of cargo facilities and infrastructure.
Currently, Straits Inter Logistics’ 55%-owned subsidiary, Tumpuan Megah Development Sdn Bhd, operates eight ports, namely in Lumut, Pasir Gudang, Tanjung Pelepas, Johor Baru, Kuantan, Kemaman, Kuala Terengganu and Labuan.