Shipping industry remains in choppy waters

KUALA LUMPUR – The local shipping industry is still struggling to recover from the heavy hammering of the pandemic amid challenges stemming from the geopolitical crisis, its impact on crude oil prices and fluctuating freight rate, as well as the fragility of the global supply chain.

According to a maritime sector study, governments are being asked to assist and provide financial support for businesses that have been impacted by the COVID-19 outbreak.

In Budget 2023, the Malaysian government provided the Maritime and Logistics Financing Scheme Incentive worth RM1 billion to bolster the growth of the country’s maritime industry, which required a lot of support, however, market reactions indicated that the disbursement of the cash should be more open and more effective.

As for the offshore support vessel (OSV) sector, Universiti Malaysia Terengganu adjunct professor and Maritime Institute of Malaysia distinguished fellow Nazery Khalid opined that the segment is set to perform well.

He said the OSV sector is supported by exploration and production (E&P) activities in search of hydrocarbon energy in Malaysian waters and beyond, which are set to remain vibrant, spurred by insatiable demand for oil and gas.

Environmental, social, and corporate governance (ESG) adoption

Amid the move towards sustainability, some players in Malaysia’s maritime sector have undertaken earnest efforts to reduce their carbon footprint to comply with international regulations and to meet the national zero-carbon targets and those set by the International Maritime Organisation (IMO) as more shipowners shift towards lower-sulphur fuel and instal scrubbers onboard their ships to reduce greenhouse gas emissions (GHG).

“For the shipping sector, some owners have replaced old vessels with newer, more fuel-efficient ones with environmentally friendly features in line with IMO rules and regulations.

“The drive for the local marine industry to go green is led by the Ministry of Transport (MOT) Malaysia and one example is the shift towards using sustainable fuel from the more polluting bunker fuel used in most ships,” Nazery added.

He emphasised that the Malaysia Shipowners’ Association and Malaysia Bunkering Association and other shipping and industry players have kickstarted the discussions on the use of sustainable fuel among Malaysian shipowners.

“The MOT is reactivating the National Shipping and Port Council (NSPC) to provide a platform for industry associations and players to share ideas and insights on how to make the transition to cleaner fuel,” he added.

Simultaneously, the Port of Tanjung Pelepas, a joint-venture between APM Terminals (30 per cent) and the MMC Group, has been selected to join the Partnerships for Infrastructure (P4I) initiative, a government-to-government decarbonisation scheme between Malaysia and Australia.

The P4I project aims to spearhead Malaysia’s decarbonising effort in the maritime industry and foster inclusive growth through sustainable infrastructure in Southeast Asia.

Industry outlook looks promising

Nazery said that global and domestic demand for commodities is set to remain robust in 2024 with rising population and demand from businesses and industries, despite the move towards energy transition, which will drive the demand for local-made OSVs and drive Malaysia’s shipbuilding and ship repair sector, along with many supporting activities such as naval design, equipment manufacturing and supply, and maritime logistics services.

“Yards specialising in the fabrication of offshore structures are also set to benefit from E&P activities,” he added.

The recent announcement by Petronas that it has, through its petroleum arrangement contractors, commissioned the construction of 11 OSVs under the first phase of its Safina Project augurs well for the OSV sector in 2024.

The project entails the building of up to 100 vessels over the next 4-5 years to phase out old OSVs that are reaching the end of their productive and efficient age of 15 years. – BERNAMA / pic TMR FILE