'Empty cargo'-between the lines, by CS Tan of the Staronline recently is a clear indication on what is taking shape in the downturn of the economy in the coming months.
Looking at the dramatic decline in the Baltic Dry Index (BDI), which measures the demand for shipping capacity with the supply of dry-bulk carriers, is felt close to home by two domestic carriers.
C.S. Tan wrote "The BDI closed at 666 points on Thursday, showing the anaemic demand for shipping – a massive drop from its peak of 11,793 in May when demand was overwhelming. The current shortfall of demand against supply is greater than during the Asian financial crisis when the index hovered around 800.
As a result of the fall-off in demand to ship commodities, many shipping companies have cut freight rates, reduced sailing frequencies or idled some of their ships altogether.
The recent financial results of MISC Bhd showed its liner logistics division suffered an operating loss of RM71mil in its second quarter ended Sept 30, 2008.
With that kind of loss in a single quarter, and shipping rates declining further since September, that division could lose RM700mil a year under current conditions. The liner division refers to MISC’s container shipping business.
Fortunately for MISC, its liquefied natural gas (LNG) shipping business produced RM1.2bil in operating profit in the first half of its financial year. It would remain a very profitable company.
The drag of cargo transport losses is more severe for Malaysia Airlines (MAS). The company reported that its operating loss from cargo services totalled RM75mil in its third quarter ended Sept 30 against an operating profit of RM119mil from airline operations.
The national carrier’s third-quarter profit would, therefore, have been much higher if not for the collapse in the demand for cargo transport.
The group’s net profit in the final quarter should, however, be much higher as it is sticking to a net profit target of RM400mil to RM550mil for the full year against RM200mil in the first nine months.
Hence, MAS’ fourth quarter could show a net profit of RM200mil or more, especially as oil prices continue to drop, but assuming cargo losses do not expand further."
Since the above statistics are available, it would good if we could get indications of the state of the matter as it affects the economy of Sabah. Sabah Ports I am sure would be able to provide us with the latest statistics, at least for the month of October, so that we could see how far the effect on the shipping decline will show on the operations of the port. We know for a fact that there is a direct correlation with the two elements. We just need to inform ourselves of how the situation is shaping up. We also know that what you see at the harbour is an indication enough of the volume of economic activities in the various zones or divisions in the state, ie west and east coasts. Statistics speaks of the numbers of containers handled in any given period, so too of the volumes and types of of cargoes handled and which port they are handled. From these statistics we can directly deduce the situations that we are in. If it is merely and purely as information to the public at large, so be it as education is central of a knowledge-based society.
The same goes to airports in Sabah. The statistics from this sector will be the most sought after as it directly tell us of the number of visitors coming to visit Sabah. This is important as tourism is our money earner and we want to take stock of informations so that hopefully we could at the various options at mitigating the blow of the economic tsunami impacting upon this sector.
So Sabah Ports, Innoprise, Sawit Kinabalu and other hosts of GLC's in the state, do let us know of the statistics so that there is greater awareness amongst the rakyats of the state of the matter. There is nothing better than an enriched society in terms of facts of their own economy.
Wednesday, December 17, 2008
How A Port in the UK Deal with the future amid challenging times
Excellent planning amid challenging times can bring us to a better future. This is the story of PD Ports, a new container port located at Teesport, at the North East Coast of the UK has to offer.
In a report entitled 'A year of progress amid challenging times' on Dec 15 2008 by Evening Gazette, the following excerpts of the story line is unfolded for us to savour and think it aloud in respect of our own home port.
AS 2008 rapidly draws to a close, many businesses across the UK will be breathing a sigh of relief and hoping that the next 12 months will be somewhat better than recent ‘doom and gloom’ forecasts in the media.
PD Ports, like many businesses has not been immune to the effects of the economic downturn. However as a region, the North-east seems not to have suffered as severely as many areas in the UK.
Despite a downturn in volume linked to reduced flows of crude oil, a falling flow of imported cars and a slowdown in container volumes due to weaker UK consumer demand, 2008 has been a year of real progress for PD Ports at Teesport.
The past 12 months has seen the continued awareness raising campaign in the Far and Middle East for PD Ports’ now fully approved deep sea container terminal, known as The Northern Gateway (NGCT). Construction has also started on the 1.2 million sq ft Tesco import centre at Teesport and across the river at Hartlepool there has been growing success for PD Ports in the offshore sector.
In December 2007 PD Ports first began important initiatives to increase the company’s presence and visibility in the Far East as part of a broad awareness campaign for the NGCT.
The campaign began in 2007 with a visit to Singapore and Malaysia by key port representatives and has continued successfully since then, with strategic visits in 2008 to Thailand, Dubai, China, Vietnam and India. The aim of these visits has been to further establish PD Ports’ plans to attract deep sea vessels to call directly to the company’s northern UK port of Teesport.
Back in the Tees Valley, PD Ports group development director, Martyn Pellew, is continuing to lobby both locally and to the UK Government for much needed infrastructure upgrades on the North-east rail network.
While a recent minor success has enabled a few modern high cube, taller containers to be taken by rail to Scotland, this is only a short term solution.
“These upgrades remain a vital issue, in particular, full rail gauge enhancement for both the Teesport spur to the East Coast Main Line and also for the ECML in either direction north through Newcastle and into Scotland as well as south to Yorkshire and the Midlands, commented Pellew.
“If we are to achieve the full potential of the NGCT and the Tees Valley businesses then we need to see much greater use of rail rather than road transport for onward inland movements. We must see full rail gauge enhancement being authorised as soon as possible.”
Increasing levels of container traffic passing through the NGCT will be brought to the Tees by the likes of leading retailers ASDA Wal*Mart and Tesco who are based at the Port. ASDA Wal*Mart successfully opened a 360,000 sq ft import centre at Teesport in 2006 to handle 75% of its general merchandise destined for its northern consumers. In doing so the retailer has estimated in excess of two million road miles saved per annum by bringing its goods closer to their final UK destination.
This major UK logistics trend of handling goods at the UK port closest to their final UK destination has also been endorsed by Tesco, the UK’s largest retailer. Construction is proceeding at pace on the 1.2 million sq ft import centre, which is the equivalent of 22 football pitches. More than 800 new jobs are expected to be created at this new Tesco facility and recruitment will begin in the New Year. Operations are expected to commence from summer 2009.
2008 also saw the creation of 80 new jobs at Hartlepool due to the growing success of the Port’s offshore-related activities. In July, PD Ports signed a 15-year lease with subsea cable manufacturer, JDR Cables Ltd, which now operates from a 100,000 sq ft factory, located on the deep water berth at Hartlepool dock. 2009 is anticipated to bring further developments in this important sector at Hartlepool.
Looking beyond 2009, the longer term prospects at the port and in the Tees Valley region are planned to see the progress of a number of significant developments. MGT Power have gained local Redcar and Cleveland Borough Council planning approval for their proposed wood chip fuelled 300mw power station at Teesport but have yet to achieve the necessary approval from Department of Energy and Climate Change.
This £400m investment will bring new jobs in construction (2010-2011) and operations from 2012. Conoco Phillips and partners has gained planning approval for their proposed new liquefied natural gas facility at Seal Sands but progress toward implementation is not expected before 2010.
It is also hoped that outstanding issues on land ownership can be swiftly resolved to enable Sonhoe to progress with exciting plans to create a heavy oil upgrader processing plant in the Tees Valley.
So while the next 12 months forecasts further challenging times for us all, PD Ports and fellow North-east businesses are firmly committed to progressing with projects that will prove vital to the future economic sustainability of the region.
This is very educational indeed. In my opinion you cannot let just the port do the planning. This category of economic planning must be dreamed at the macro-economic level. A picture of port planning and development will have to come into the bigger picture of economic plans for the state. This is a game that has to borne out of a dream. This dream that will encapsulate the economic well being of the state, if not the country at large. Someone with this dream must be influential enough to push this into plans.
Simply it is merely the creation of a concept of how you want your economy to happen. We have our SDC as an example. So with this concept or vision comes the mission statement of how you want it achieved. So here, how you want the SDC to succeed, in what manner and how you want to fit into the big SDC picture will depend on vision of SDC ie how big and what facilities must the port have to serve these needs.
The strategy is the success of the SDC, for without a successful objective, there is nothing that will assist the port in getting more traffic for the ports. The success of the SDC will spell volumes of cargoes for the port. By itself, it will be a futile exercise of marketing and promotion by the port, cargoes are only attracted by what is being consumed by economic activities rolled down by the success of the SDC programme.
In the Teesports experience, the vision of a container Gateway for the North East of the UK, was mooted and developed through a total transport economics perspective. The effect is tremendous, for the North East economy, of savings in transportation cost from the South to the Northern cities and resolving timeliness to the handling and delivery of container traffic bound for the North East. Please note that their campaign started only in 2007 and see how fast and big a progress they have made.
Are we ready to consummate such plans here in Sabah. Have we got the departmental structure and strength to translate these dreams into reality?
In a report entitled 'A year of progress amid challenging times' on Dec 15 2008 by Evening Gazette, the following excerpts of the story line is unfolded for us to savour and think it aloud in respect of our own home port.
AS 2008 rapidly draws to a close, many businesses across the UK will be breathing a sigh of relief and hoping that the next 12 months will be somewhat better than recent ‘doom and gloom’ forecasts in the media.
PD Ports, like many businesses has not been immune to the effects of the economic downturn. However as a region, the North-east seems not to have suffered as severely as many areas in the UK.
Despite a downturn in volume linked to reduced flows of crude oil, a falling flow of imported cars and a slowdown in container volumes due to weaker UK consumer demand, 2008 has been a year of real progress for PD Ports at Teesport.
The past 12 months has seen the continued awareness raising campaign in the Far and Middle East for PD Ports’ now fully approved deep sea container terminal, known as The Northern Gateway (NGCT). Construction has also started on the 1.2 million sq ft Tesco import centre at Teesport and across the river at Hartlepool there has been growing success for PD Ports in the offshore sector.
In December 2007 PD Ports first began important initiatives to increase the company’s presence and visibility in the Far East as part of a broad awareness campaign for the NGCT.
The campaign began in 2007 with a visit to Singapore and Malaysia by key port representatives and has continued successfully since then, with strategic visits in 2008 to Thailand, Dubai, China, Vietnam and India. The aim of these visits has been to further establish PD Ports’ plans to attract deep sea vessels to call directly to the company’s northern UK port of Teesport.
Back in the Tees Valley, PD Ports group development director, Martyn Pellew, is continuing to lobby both locally and to the UK Government for much needed infrastructure upgrades on the North-east rail network.
While a recent minor success has enabled a few modern high cube, taller containers to be taken by rail to Scotland, this is only a short term solution.
“These upgrades remain a vital issue, in particular, full rail gauge enhancement for both the Teesport spur to the East Coast Main Line and also for the ECML in either direction north through Newcastle and into Scotland as well as south to Yorkshire and the Midlands, commented Pellew.
“If we are to achieve the full potential of the NGCT and the Tees Valley businesses then we need to see much greater use of rail rather than road transport for onward inland movements. We must see full rail gauge enhancement being authorised as soon as possible.”
Increasing levels of container traffic passing through the NGCT will be brought to the Tees by the likes of leading retailers ASDA Wal*Mart and Tesco who are based at the Port. ASDA Wal*Mart successfully opened a 360,000 sq ft import centre at Teesport in 2006 to handle 75% of its general merchandise destined for its northern consumers. In doing so the retailer has estimated in excess of two million road miles saved per annum by bringing its goods closer to their final UK destination.
This major UK logistics trend of handling goods at the UK port closest to their final UK destination has also been endorsed by Tesco, the UK’s largest retailer. Construction is proceeding at pace on the 1.2 million sq ft import centre, which is the equivalent of 22 football pitches. More than 800 new jobs are expected to be created at this new Tesco facility and recruitment will begin in the New Year. Operations are expected to commence from summer 2009.
2008 also saw the creation of 80 new jobs at Hartlepool due to the growing success of the Port’s offshore-related activities. In July, PD Ports signed a 15-year lease with subsea cable manufacturer, JDR Cables Ltd, which now operates from a 100,000 sq ft factory, located on the deep water berth at Hartlepool dock. 2009 is anticipated to bring further developments in this important sector at Hartlepool.
Looking beyond 2009, the longer term prospects at the port and in the Tees Valley region are planned to see the progress of a number of significant developments. MGT Power have gained local Redcar and Cleveland Borough Council planning approval for their proposed wood chip fuelled 300mw power station at Teesport but have yet to achieve the necessary approval from Department of Energy and Climate Change.
This £400m investment will bring new jobs in construction (2010-2011) and operations from 2012. Conoco Phillips and partners has gained planning approval for their proposed new liquefied natural gas facility at Seal Sands but progress toward implementation is not expected before 2010.
It is also hoped that outstanding issues on land ownership can be swiftly resolved to enable Sonhoe to progress with exciting plans to create a heavy oil upgrader processing plant in the Tees Valley.
So while the next 12 months forecasts further challenging times for us all, PD Ports and fellow North-east businesses are firmly committed to progressing with projects that will prove vital to the future economic sustainability of the region.
This is very educational indeed. In my opinion you cannot let just the port do the planning. This category of economic planning must be dreamed at the macro-economic level. A picture of port planning and development will have to come into the bigger picture of economic plans for the state. This is a game that has to borne out of a dream. This dream that will encapsulate the economic well being of the state, if not the country at large. Someone with this dream must be influential enough to push this into plans.
Simply it is merely the creation of a concept of how you want your economy to happen. We have our SDC as an example. So with this concept or vision comes the mission statement of how you want it achieved. So here, how you want the SDC to succeed, in what manner and how you want to fit into the big SDC picture will depend on vision of SDC ie how big and what facilities must the port have to serve these needs.
The strategy is the success of the SDC, for without a successful objective, there is nothing that will assist the port in getting more traffic for the ports. The success of the SDC will spell volumes of cargoes for the port. By itself, it will be a futile exercise of marketing and promotion by the port, cargoes are only attracted by what is being consumed by economic activities rolled down by the success of the SDC programme.
In the Teesports experience, the vision of a container Gateway for the North East of the UK, was mooted and developed through a total transport economics perspective. The effect is tremendous, for the North East economy, of savings in transportation cost from the South to the Northern cities and resolving timeliness to the handling and delivery of container traffic bound for the North East. Please note that their campaign started only in 2007 and see how fast and big a progress they have made.
Are we ready to consummate such plans here in Sabah. Have we got the departmental structure and strength to translate these dreams into reality?
Sunday, December 7, 2008
Sabah Ports Buying KK Airport
The news received yesterday invite a thought provoking action from Sabahans.
The news excerpts:
MMC Corp Bhd is buying the entire stake in Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7bil which is RM250mil below the earlier proposed price of RM1.95bil.
MMC said yesterday the RM1.7bil cash deal would be financed via internally generated funds and might include the disposal of some assets. The earlier proposed RM1.95bil would have involved a share issue.
“The new acquisition price of RM1.7bil comprises RM580mil for airport operations and RM1.1 bil for SATS’s 1087.2ha of freehold land slated for development as a logistics city (equivalent to RM9.45 per sq ft currently compared with RM11.39 per sq ft previously),” it said.
“Having considered all factors, the board decided to negotiate for payment in cash,” he said in statement yesterday
The acquisition of SATS would be a strategic fit for MMC as the airport provides the group with a competitive advantage in the transport and logistics businesses, one of MMC’s three core businesses.
Hasni said this acquisition would be earnings accretive and contribute sustainable future earnings for the group.
The deal will make MMC the only company which owns a private airport in the country.
Also, MMC would be venturing in air logistics, in addition to its existing port operations and land-based logistics business.
MMC owns 70% of in Port of Tanjung Pelepas (PTP) and owns the entire stake of Johor Port.
“This acquisition will enable MMC to exploit SATS’s potential in becoming a regional cargo and logistics hub under a free zone flagship. The airport is also well-positioned to benefit from the growth potential of Iskandar Malaysia,” added Hasni.
The news yesterday triggers what i think Sabah or for that matter Sabah Ports should be thinking aloud.
Not until recently have Sabah Members of Parliament made the loudest of noise in Parliament. This piece of news is something that if Sabah were to exert pressure in Parliament in regard to an economic/business issue for the benefit of Sabah, it would most welcomed and supported by the majority of the population.
The issue is if MMC could make such a move why a Sabah based company cannot follow suit. Sabah Ports/Suria Capital Holdings Berhad is well within its capacity to make a foray into Kota Kinabalu Airports. Is there any reason why Sabah cannot do so?
It would be a well received move by the people of Sabah, and also it would also be considered a fantastic move by federal government to heal whatever bad rifts that maybe in the relationship between the two governments. It would definitely be an excellent public relation effort on behalf of the federal government.
Control of Sabah based assets to local companies would make for excellent avenues for further forays by local based companies into the corporate economic activities of the nation.
I would expect it would a big move with huge capital requirement for this to take place. This is where the state govenment may consciously garner the strengths not only from its own coffer but from the various GLC's to ensure that the move can be successfully undertaken.
The move by MMC states enhancing the Iskandar Role. Sabah Development Corridor needs this more.
When else are we to show that we are SABAH BOLEH!
ramli@ramgold.net
The news excerpts:
MMC Corp Bhd is buying the entire stake in Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.7bil which is RM250mil below the earlier proposed price of RM1.95bil.
MMC said yesterday the RM1.7bil cash deal would be financed via internally generated funds and might include the disposal of some assets. The earlier proposed RM1.95bil would have involved a share issue.
“The new acquisition price of RM1.7bil comprises RM580mil for airport operations and RM1.1 bil for SATS’s 1087.2ha of freehold land slated for development as a logistics city (equivalent to RM9.45 per sq ft currently compared with RM11.39 per sq ft previously),” it said.
“Having considered all factors, the board decided to negotiate for payment in cash,” he said in statement yesterday
The acquisition of SATS would be a strategic fit for MMC as the airport provides the group with a competitive advantage in the transport and logistics businesses, one of MMC’s three core businesses.
Hasni said this acquisition would be earnings accretive and contribute sustainable future earnings for the group.
The deal will make MMC the only company which owns a private airport in the country.
Also, MMC would be venturing in air logistics, in addition to its existing port operations and land-based logistics business.
MMC owns 70% of in Port of Tanjung Pelepas (PTP) and owns the entire stake of Johor Port.
“This acquisition will enable MMC to exploit SATS’s potential in becoming a regional cargo and logistics hub under a free zone flagship. The airport is also well-positioned to benefit from the growth potential of Iskandar Malaysia,” added Hasni.
The news yesterday triggers what i think Sabah or for that matter Sabah Ports should be thinking aloud.
Not until recently have Sabah Members of Parliament made the loudest of noise in Parliament. This piece of news is something that if Sabah were to exert pressure in Parliament in regard to an economic/business issue for the benefit of Sabah, it would most welcomed and supported by the majority of the population.
The issue is if MMC could make such a move why a Sabah based company cannot follow suit. Sabah Ports/Suria Capital Holdings Berhad is well within its capacity to make a foray into Kota Kinabalu Airports. Is there any reason why Sabah cannot do so?
It would be a well received move by the people of Sabah, and also it would also be considered a fantastic move by federal government to heal whatever bad rifts that maybe in the relationship between the two governments. It would definitely be an excellent public relation effort on behalf of the federal government.
Control of Sabah based assets to local companies would make for excellent avenues for further forays by local based companies into the corporate economic activities of the nation.
I would expect it would a big move with huge capital requirement for this to take place. This is where the state govenment may consciously garner the strengths not only from its own coffer but from the various GLC's to ensure that the move can be successfully undertaken.
The move by MMC states enhancing the Iskandar Role. Sabah Development Corridor needs this more.
When else are we to show that we are SABAH BOLEH!
ramli@ramgold.net
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