KUALA LUMPUR, Sept 11 — More firms have shifted their operations away from Port Klang to Singapore under a new alliance agreement that has hit Malaysia’s main shipping hub hard, The Straits Times reported today.
The move has raised questions over Putrajaya’s aggressive plans to build new harbours and rail links along the Straits of Melaka which is one of the world’s busiest maritime trade routes, the Singapore paper said.
It noted further that many of Malaysia’s investments are partnerships with China, yet one of the country’s biggest companies and the world’s fourth largest player, the Ocean Alliance, made a huge shift from Klang to port operator PSA Singapore’s terminal in April.
The move has added to concerns in the industry over China’s commitment to supporting the logistics industry in Malaysia, the paper noted.
State-owned China Cosco Shipping is also among the member companies of the alliance.
“Only Kuantan Port has Chinese equity so far because it also aids Beijing’s South China Sea claims,” former Port Klang Authority chairman Lee Hwa Beng told The Straits Times.
“Other infrastructure plans have either not taken off or are only loans, or worse, just Chinese companies winning construction deals,” he added.
Putrajaya and Beijing had been talking up joint transport infrastructure in Malaysia, such as last month’s launch of the RM55 billion East Coast Rail Link to be built and financed by China.
The project will link Port Klang to Kuantan Port which faces the South China Sea, in what Prime Minister Datuk Seri Najib Razak called an “alternative trade route” to Singapore.
The Straits Times reported that cargo throughput was down by a sharp 8.4 per cent in the second quarter of this year to 3 million twenty-foot equivalent units (TEU) after nearly four years of increasing loads, according to data compiled from Northport and Westports, the two operators in Klang.
This followed an almost stagnant growth of 0.9 per cent in the previous quarter.
Westports, which controls three-quarters of Klang’s total capacity, saw this year’s cargo volume decline by 7 to 12 per cent while next year’s prospect remains “murky”, the paper quoted UOB-Kay Hian’s analyst Kong Ho Meng as saying.
The new alliance agreements’ biggest impact on Klang was reported to be the loss of transshipment volumes — goods stored before being shipped to their final destination — from giants United Arab Shipping Company (UASC) and France’s CMA CGM.
This could total up to 2 million TEU annually. UASC has now merged with Germany’s Hapag-Lloyd, making it part of THE Alliance, while CMA CGM is the biggest company in the rival Ocean Alliance.
Both groups handle nearly half the world’s shipping capacity. It started realigning in April, resulting in more than half of Klang’s Asia-Europe calls being shifted to Singapore, the paper quoted industry officials as saying.
Port Klang is reportedly the only world’s top 20 ports to see a drop in volume in the first half of this year.
The slowdown has added to concerns of oversupply due to plans for new China-backed megaports like the RM43 billion Melaka Gateway and on Carey Island, which sits just off Klang in Selangor, the paper reported.
Quoting government and industry sources, the paper said Chinese companies designated to take a stake in these two projects have had reservations over their viability.
The planned port for Carey Island now has an Indian partner, with its mooted valued halved to RM100 billion.