PORT OF TANJUNG PELEPAS

MMC hurt by low cargo volume
Monday April 27, 2009
By SHARIDAN M. ALI

MMC Corp Bhd sees lower revenue contribution from its port business in Johor this year due to the drop in cargo volume, said chief executive officer Hasni Harun.

Both its ports in the state, Port of Tanjung Pelepas (PTP) and Johor Port, had been hit by the global recession, he said.

“Ports in the region have been experiencing a decline in volume of between 15% and 20% since the fourth quarter last year.

“There has been a spike in volume last month due to the replenishment of depleted inventories but it is premature to say whether this is sustainable.

“Subject to an improvement in consumer confidence globally, the situation may not lead to a long and deep downturn. It might improve in 2010 and we hope to maintain what we’ve achieved last year,” he told StarBiz.
»Ports in the region have experienced a decline in volume of 15% to 20% since the fourth quarter last year«HASNI HARUN

PTP registered a container throughput of 5.6 million twenty-foot equivalent units (TEUs) last year, up 1.8% against 2007.

Johor Port handled 17.2 million freight weight tonnes of bulk and conventional cargo in 2008, representing a growth of 8% year-on-year, and recorded 934,767 TEUs of containers last year, an increase of 1%.

The two ports contributed 14% to MMC group revenue in 2008 compared with 20% in 2007.

Hasni said the decline in percentage of contribution from its ports despite higher revenue was due to the increase in Malakoff Bhd’s revenue contribution, resulting from the 12-month consolidation of Malakoff’s results last year versus only eight months in 2007.

“Based on the current slowdown, we expect the revenue contribution from our ports to also be lower year-on-year,” he said.

On capital expenditure (capex), Hasni said PTP planned to spend RM400mil to RM500mil this year, which is lower than the RM900mil spent last year, in line with the slowdown in business.

“This year’s capex includes for additional equipment at existing berths (berths 9 and 10), which will further increase the port’s operational efficiency, as well as for the ongoing construction of berths 11 and 12.

“We are making prudent decisions on capex and will equip berths 11 and 12 progressively as global shipping trade improves,” he said.
Both of MMC’s ports in Johor – Port of Tanjung Pelepas and Johor Port (pic, below) have been hit by the global economic recession

He added that Johor Port also expected to spend a lower amount of capex this year, primarily for maintenance works.

Going forward, Hasni said PTP’s value proposition was in its strategic location, unrivalled potential capacity growth, connectivity and competitive rates.

“These attributes will continue to make PTP an ideal choice for shipping lines, particularly those that are restructuring their routes and collaborating with other lines to minimise costs under the current economic scenario.

“Meanwhile, Johor Port focuses on high-value cargo and commodities in the bulk and break-bulk terminals,” he said.

Besides port operations, MMC has finalised the acquisition of Senai Airport Terminal Services Sdn Bhd (SATS) in Johor for RM1.7bil.

According to Hasni, having interests in ports and an airport allowed the company to achieve better integration between the two modes of transportation.

“PTP is recognised as an ‘airport within a seaport’ and this further enhances the inter-modal movement of cargo from ships to airplanes and vice-versa.

“The acquisition of SATS will expand MMC’s logistics business, in line with its vision to be a global utilities and logistics group,” he said.

SATS is currently undergoing an expansion, including the extension of its runway from 3,354m to 3,800m, which will accommodate fully-loaded long-haul cargo flights.

“An Aero-Mall is also being built, which will add 6,500 sq m, bringing the total outlet space to 8,500 sq m to cater for the growing population residing within easy access of the airport. The mall is scheduled for completion in the first quarter of 2010.

“The airport also has a cargo capacity of 80,000 tonnes per annum and offers bonded warehouse and warehousing facilities,” he added.

Hasni said SATS’ potential would be realised with the development of Senai Airport City into a regional cargo and logistics hub.

Works on Senai Airport City, with a gross development value of RM10bil, would commence towards the year-end and scheduled for completion by 2020, he said.

CONTAINER SHIPPING RECOVERY

Monday April 27, 2009
Recovery not yet in sight for container sector
By SHARIDAN M. ALI

CONTAINER shipping companies returning to viable business conditions may still be a far-fetched scenario although the sector has seen a slight pick-up since last month due to improvements in global trade volumes and recovering rate charges.

Freight rates, usually determined by demand, fell more than 80% since the last quarter of 2008 due to falling global trades.

But shipping companies are now “restoring” rates spurred by the slight pick-up in demand and the need to at least break even in their operations.

Maersk Line, the world’s largest liner company, will increase its rates for the Europe-to-Middle East and South Asia trades effective May 1.

“Unsustainable rates and continued improved demand lead to rate increases,” said the company in a statement.

Maersk Line raised rates by US$100 per 20-footer container and US$200 per 40-footer container on eastbound services from Northern Europe, North Africa and Mediterranean to the Middle East and South Asia.

Since late last month, Maersk Line has been announcing rate increases that included North America-to-Mediterranean and North African trades, North America-to-Middle East and Indian-subcontinent trades as well as Europe-to-Asia trade.

CMA CGM, France’s largest liner company, also decided to implement a rate restoration exercise on its main trades on April 1.

United Arab Shipping Co (UASC) Malaysia Sdn Bhd country general manager, Desmond Yong told StarBiz that the rate restoration was only a measure for shipping companies to continue providing services rather than pulling out from certain trade routes.

“We just cannot lay up our vessels or pull ourselves from a trade route as there are still exporters and importers that need to do business,” he said.

He believed that the restoration was driven more by business survival rather than demand as the trade volume was only inching up.

“The container shipping sector has suffered so much that we cannot even meet our operating costs since the rate slump.

“For example, the freight rate in certain Asia-westbound trade routes are cheaper compared with the trucking cost from Selangor to Melaka,” he said, reiterating that the rate restoration was certainly not a profit-making move.

Jardine Shipping Services country manager Richard Tan said the restoration of rates would not even cover shipping companies’ operating costs.

“If there is any improvement in the container shipping business, it is expected from intra-Asia trade rather than Asia-US or Asia-Europe trade.

“This is because our financial institutions are still strong while countries with huge population, such as China and India are encouraging domestic population,” he said.

CIMB Research said in its latest sector update that a rebound would be more apparent in months to come and the uptrend would probably last for two to three quarters.

“This could be due to typical seasonal trend of restocking of inventories in the United States and Europe.

“We may actually see positive growth in the fourth quarter of this year,” it said.

The research house said container trade volumes could recover sequentially in the second and third quarter this year due to seasonal factors such as back-to-school shopping in the United States and the coming Christmas.

“Given the sharp decline in Asian exports and US/Europe imports over the past six months, we believe some level of restocking should materialise by the second and third quarter of this year.

“This will help boost volumes in the main East-West trades and provide a lift to spot container shipping rates.

“The key risk is continued weakness in retail sales in the major consuming nations, which may lead importers to maintain a lower baseline of inventory than before,” it said.

CIMB Research said another looming danger that might adversely affect the industry would be the supply growth of container vessels.

“The order book is currently about 50% of the existing fleet.

“Even after adjusting for negotiated delays, cancellations, slippage and scrapping, Drewry Shipping Consultants Ltd expects the global container fleet to grow by 10.5% this year, followed by 8% in 2010 and 5.4% in 2011,” it said.

Monday April 27, 2009
Penang Port to go big in barter trade
By DAVID TAN

THE Penang Port Commission (PPC) wants to expand barter-trading activities and bunkering services at the Prai wharf, which will be included in the port’s new 20-year master plan.

The expansion of these activities, which had received the green light from the Transport Ministry, would stimulate economic activities and create job opportunities in the state, PPC chairman Tan Cheng Liang told StarBiz.

She said PPC would go on a roadshow in June in the Asean region to promote the state’s barter-trading activities and bunkering services.

Penang Port’s new master plan is aimed at upgrading the port to meet the needs of a globalised economy.

“Presently, Penang’s barter-trading activities are with Indonesia and Myanmar. We want to expand these activities to other Asean countries,” she said.

The value of cargo handled through the Prai wharf for barter trading with Indonesia and Myanmar improved to RM139mil in 2008 from RM104mil in 2007.

The freight weight tonnage of cargo handled at Prai wharf has increased to 78,748 tonnes from 66,219 tonnes during the same period.

The cargo traded involves mainly steam coal, rubber, urea, sawn timber, marine products, steam-dried fish meal, marine gas oil, and sugar.

“This improvement in value and tonnage is very encouraging and shows that further growth in barter trading activities is achievable,” Tan said.

She also said PPC hoped to rope in private investments for tourism projects to be set up on a piece of land belonging to PPC at the waterfront in Weld Quay.

“We intend to do this after the expansion of Port Swettenham Pier to accommodate cruises with more than 3,000 passengers is completed in September,” she said.

Tan said the tourism projects would also be incorporated into Penang Port’s new 20-year master plan.

»We want to expand barter-trading activities to other Asean countries«TAN CHENG LIANG

She added that the terms and references for the master plan were now being formulated.

“The new plan is aimed at upgrading the port to meet the needs of a globalised economy, one that is not only focused on serving the needs of the Indonesia-Malaysia-Thailand Growth Triangle,” she said.

Tan said PPC was also now conducting an analysis on the strength and weaknesses of the present 20-year master plan that would expire next year.

“We are looking at why certain projects under the plan were delayed,” she added.

ASIA FREIGHT & SUPPLY CHAIN AWARDS 2009

Malaysia Inc makes big splash at AFSCAs

The 2009 Asian Freight and Supply Chain Awards (AFSCAs) will be remembered as the year Malaysia's transport and logistics companies swept in and captured six major awards.

The 23rd anniversary of the AFSCAs - organised by market leading transport and logistics newspaper Cargonews Asia - unfolded at a glittering gala evening in the Grand Ballroom of the Intercontinental Hotel in Kowloon.

Hundreds of transport, logistics and supply chain executives from around the region gathered to celebrate at the event.

But no celebrations were greater than from the Malaysian contingent, which went home with:

Best Rail Operator: KTM Malaysia;
Best Container Terminal Asia (under 4 million TEUs): Northport;
Best Emerging Airport: Penang International;
Best Air Cargo Carrier Asia: MASkargo;
Best Shipping Line Intra Asia: MISC and
Best Green Airport: Kuala Lumpur International Airport.

DHL won Best Road Haulier Asia, Best Contract Logistics Provider, Best 3PL, Best Lead Logistics Provider and Best Express Operator.

FedEx also shone brightly, winning Best Logistics Service Provider Airfreight, Best All Freighter Airline and Best Air Cargo Carrier North America.

Singapore's Changi Airport maintained its perfect record, flying off with the Best Airport Asia award for the 23rd time, and

the world's biggest container carrier, Maersk Line, maintained its dominance of the liner awards, sailing away with Best Global Shipping Line and Best Shipping Line - Asia-Europe.

But the evening also saw some new faces picking up awards. The biggest upset among the newcomers was DP World, which took the Best Global Terminal Operating Company. OOCL Logistics scooped the Best Logistics Service Provider Sea Freight, Kuehne + Nagel won the Best Logistics Provider Project Cargo and DB Schenker took home the Best Green Logistics Operator.

The awards had an environmentally friendly face for the first time with five Green Service Provider accolades making up the new category. Winners here were the above-mentioned DB Schenker and Kuala Lumpur International Airport, plus the Port of Rotterdam (Best Green Seaport), Singapore Airlines (Best Green Airline) and Maersk Line (Best Green Shipping Line).

The coveted Lifetime Achievement Award was presented to Tung Chee Chen, CEO of Orient Overseas (International) Limited, the parent company of OOCL. The award was in recognition of his work at the forefront of the international shipping industry for many years.

The AFSCAs are widely regarded as the most authoritative and prestigious awards for the industry in Asia and the evening is one of the highlights of the Asian freight industry calendar.

PORT NEWS - West Port

Monday April 6, 2009

Westports bags two brand awards

WESTPORTS Malaysia has bagged two awards at the annual BrandLaureate Awards last week.

The port’s executive chairman Tan Sri G. Gnanalingam received the Brand Personality award for his distinctive branding effort and success.

For more than 30 years, Gnanalingam has been actively involved in brand development for the country that involved small and heavyweight companies, sports, marketing and advertising as well as the corporate world.
From left: The BrandLaureate CEO Dr K.K. Johan, Tun Abdullah Ahmad Badawi, Gnanalingam and Asia Pacific Brands Foundation chairman Tan Sri Dr Elyas Omar.

It was often behind the scene that the marketing wizard undertook brand development and image building initiatives such as the Benson & Hedges Malaysian Open Golf, the 1989 SEA Games hosted by Malaysia and the Westports Millennium Ad.

On the international front, he lent support to campaigns to promote the nation as a transportation hub especially in port industry. Gnanalingam accepted the award from former prime minister Tun Abdullah Ahmad Badawi. The event was organised by the Asia Pacific Brands Foundation.

Westports, as one of the fastest growing terminals in Malaysia, was also awarded the Best Brand in Logistics – Ports.

Gnanalingam said in a statement the awards by BrandLaureate were certainly an honour to Westports’ dedicated and skilful workforce.

“We have continued to innovate and provide the best services to our customers,’’ he said. “Westports was founded around innovation and the pursuit of excellence, and those core values have continued to be at the heart of everything we do.”

Tuesday, April 7, 2009

US provides over $1b for RI airline upgrades

Ika Krismantari, THE JAKARTA POST, JAKARTA | Tue, 04/07/2009 11:01 AM

The United States Export-Import Bank approved more than US$1 billion in financing for Indonesian airlines to improve passenger fleets, generate business and create jobs in Indonesia and throughout the region.

In a press statement in Jakarta on Monday, the US Embassy said the financing was made possible after the ratification and implementation of the Cape Town Treaty, which allows Indonesian airlines to save millions of dollars in financing costs.

“This financing allows Indonesian-registered companies to gain very competitive rates and favorable credit similar to the most advanced countries in the world,” said US Ambassador Cameron R. Hume.

“This action by the US is a vote of confidence for the improvement of aviation regulation and the general business environment in Indonesia,” said Henry Bakti, the Indonesian Transportation Ministry’s director general for air transportation.

The financing will allow Lion Air to access $238 million to purchase new Boeing 737-900ER planes and provide preliminary authorization for another $841 million, for a total of 30 new passenger jets.

Last month, national flag carrier Garuda Indonesia announced the bank’s authorized joint financing of $346 million for increasing its’ fleet.

“We are delighted to offer Lion Air the reduced exposure fee available under this treaty, which reduces the legal risks associated with cross-border, asset-backed aircraft financing and leases,” said Robert Morin, Export-Import Bank vice president of transportation.

The loan facility is expected to boost not only aviation safety but also the country’s image, which has been marred by several air transportation accidents.

Since 2007, the European Commission has banned all Indonesian airliners from flying to EC territory in response to the country’s poor safety record. The government has since tried to improve the airline regulatory system and safety in the hope the EC will revoke the ban. EC representatives have promised to lift the ban, acknowledging the progress Indonesia has made. However, Indonesia will still need to comply with the remaining 10 of 60 flight safety requirements set out by the EC before the ban can be lifted.

At least six incidents of aircrafts skidding off the runaway occurred during the first quarter of this year.

While there were no fatalities, these accidents could signal the government’s sluggish effort to revise safety standards despite EC inspections to ensure the ban could be lifted.

OIL & GAS - Crude Oil Pipelines

IndianOil Chairman inaugurates Paradip-Haldia crude oil pipeline

Kalinga Times Correspondent
Paradip, April 4: Sarthak Behuria, Chairman, IndianOil inaugurated the Paradip-Haldia crude oil pipeline system at Paradip on Friday.

The project included, laying 330 km long pipeline linking Paradip with Haldia and Barauni Refineries of IndianOil, installation of a Single Point Mooring (SPM) system in the offshore waters of Paradip and a crude oil tank farm consisting of 15 crude oil storage tanks.

This Rs 1420-crore project is designed to transport 11 million metric tonnes of crude oil per year from Paradip to refineries at Haldia and Barauni, and would effect substantial savings in the cost of transportation besides being environmentally benign. IndianOil is also setting up a state-of-the-art 15 million tonne refinery at Paradip.

Speaking on the occasion, Behuria said pipeline networks offer a major competitive advantage in our bid to streamline and optimize operations, so as to be least cost supplier in the market place. With the completion of this pipeline our roots in the eastern India will go even deeper by providing efficient and reliable supply chain management of crude oil, he said.

Complimenting all those who carried out this gigantic and challenging task of building first offshore pipeline of IndianOil in the eastern coast, Behuria said our engineers who have worked at this site are more confident than ever before to face newer challenges.

The offshore project like the one completed here is a rarity in India , the narrow fair weather window and frequently fluctuating mood of the sea makes the job extremely difficult, he added.

P.K. Chakraborti, Director (Pipelines) said that IndianOil ventured into the high seas of Bay of Bengal to establish its first Single Point Mooring system on the East Coast. A spectacular engineering feat, this onshore pipeline from Paradip to Haldia crosses about 17 major rivers and canals including the mighty Mahanadi and Baitarani, he said.

Now, the Paradip port will become the largest crude oil handling facility on the east coast of India . This pipeline will contribute to the growth of Paradip Port and be the harbinger of greater prosperity in the lives of people in the surrounding areas, said Chakraborti.

With the commissioning of this landmark pipeline, total network of IndianOil's crude oil and petroleum product pipelines touched the magic figure of over 10,000 km.

IndianOil's cross-country pipelines network is 10,064 km in length and 69.60 million metric tonnes per annum (MMTPA) in capacity.

PIRACY

Somali pirates seize container vessel

Somali pirates have seized a 20,000-tonne German container vessel in their latest attack on the Indian Ocean’s busy commercial shipping lanes, the Irish Examiner reported.

Heavily armed gangs from the lawless Horn of Africa nation hijacked dozens of vessels there and in the strategic Gulf of Aden last year, taking hundreds of sailors hostage and making off with millions of dollars in ransoms.

Foreign navies rushed warships to the area in response, reducing the number of successful attacks in recent months. However, there are still near-daily attempts.

Andrew Mwangura of the Mombasa-based East African Seafarers’ Assistance Programme said the latest hijacking happened on Saturday 400 nautical miles off the southern Somali port of Kismayu, between the Seychelles and Kenya.

"We believe the German ship has 24 crew on board. We’re trying to establish their identities and the name of the vessel," Mwangura said.

The German foreign ministry said it was seeking "concrete evidence" that a German-flagged vessel had been captured.

CHINA'S LOGISTICS INDUSTRY

Players Lacking Confidence in China's logistics industry

1. The result of a survey done show that confidence in the present state of the logistics market has, overall, fallen slightly over the past month. The Index dipped from +6.36 to +1.04. Any result above 0 is positive, with a maximum of +100 and a minimum of -100. However looking ahead, respondents were slightly more optimistic than in the previous survey. Confidence in the state of the market in 12 months time was still negative (-20.02) but not as weak as previously indicated (-26.46 in February).

2. The survey revealed that confidence in China has slumped. From being the most confident country in February (+34.38), the index fell sharply into negative territory -13.33. Chinese logistics executives are even less confident about the prospects for the industry in twelve months time. The index fell to -43.33, the lowest of all regions/countries analysed.

3. On the positive side, although confidence amongst US respondents in the present state of the market also fell from February to March (-4.29 to -6.82), there is much more confidence in the state of market over the longer term. The index improves to -4.55 compared with February's 12 month outlook of -17.14 which although still negative is at least moving in the right direction. Whether this is just a temporary improvement in sentiment, perhaps driven by the new US government's re-financing package, will be seen.

4. The Consumer/retail sector showed a worrying weakness in March. Confidence amongst logistics managers in the sector dropped from positive to negative in the period. Unsurprisingly given the worries over the viability of many automotive manufacturers, the automotive sector is the least confident about its long term prospects.

5. As far as individual logistics segments are concerned, executives in the Express Parcels industry were the most confident in its present state (+14.71) and were least negative about its prospects for the next twelve months (-7.35). Once again shipping executives were the most gloomy, the sector reporting an index of -46.15.