"These trials are vitally important in ensuring that any teething difficulties are ironed out and that the equipment and information system we have put in place are properly synchronized and can perform as we want.

"Sidik explained that the three-month test period would be undertaken with 'real customers, real ships and real containers' and not in a simulated environment. "We view this approach as being crucial in preparing us for our official opening in January 2000."In fact, the port's first customer, Hub Line, commenced calls at the port in early October.

The executive also stressed the considerable progress that had been made on the marketing front, with PTP personnel having made regular trips to Europe and throughout Asia to see potential customers in recent month.

Sidik explained, "It is very important for us to get our name out into the market place and to start building a brand." According to Sidik, several mainline carriers and feeder companies have already expressed keen interest in the port, with 'certain commitments' having been made.

"Our new port has been well received by the liner companies," he said, "but as you would expect at this stage of any new port development many of them are adopting a wait and see approach. Once we are fully up and running, we will have something more tangible to show the world and I think interest in the facility will build quickly."

Essentially, PTP is the result of more than a decade of double-digit growth at Pasir Gudang (east Johor) and the privatization of that port in 1995, Pasir Gudang is owned / operated by Johor Port Berhad, a publicly listed company whose major shareholder is Seaport Terminal. The latter company also owns most of the equity in PTP (60%) with the remaining 40% controlled by Khazanah Nasional (KN). KN is an investment arm of the Malaysian Government.

Sidik explained, "Because there was a lack of space for expansion at Pasir Gudang, the privatization included the building of an entirely new port." Currently, Pasir Gudang which has just 2 x 300m purpose-designed container berths, has a total box throughput of about 500,000 TEU a year.

The executive explained that although the requirement was for a minimum of a 2 x 300m berths, it soon became apparent that the project offered many other interesting commercial opportunities. "We viewed the greenfield site as providing the space for a much bigger development, with better cost structures and operating efficiencies." Said Sidik, who added, "that with Singapore across the water, we viewed size as very important."

Hence PTP set about developing a much larger facility that would not only relieved Pasir Gudang but exploit the regional container transhipment market. Overall, a five-phase program has been devised by PTP, with stage one alone providing sufficient capacity for handling well over three million TEU a year.

Although, transhipment traffic will comprise a significant portion of the port's annualized throughput, Sidik was keen to highlight the importance in the domestic market. Indeed, with the Malaysian Government actively pursuing policies that will encourage more Malaysian cargo to move through local ports, Tanjung Pelepas appears well placed to take a sizeable chunk of southern Malaysia's import and export exchanges.

"Johor and the region south of Malacca, plus the eastern state of Sabah and Sarawak, are our natural hinterlands," said the executive, "yet a significant portion of this cargo is routed via Singapore and either trucked over the causeway or put into feederships."

Sidik sees this traffic gradually switching to Tanjung Pelepas. Moreover, with distances in Malaysia relatively short and with the port having good connections to the highway systems and a direct rail spur scheduled to be built between the marine facilities and KTM's national network, the whole of Malaysia and even southern Thailand appear to be within 'competitive reach' of PTP.

In addition, he sees traffic being generated as a result of carriers moving overspill cargo from Pasir Gudang to Tanjung Pelepas. Ultimately, Sidik thinks that several of these mainly intra-Asia operators will transfer their business to the new port, as they seek to improved economics of scale and greater operating efficiencies.

In fact, a consolidation of activities is expected in the region, particularly as ownership of the two port rests with the same parent group. In such a scenario, this would most likely result in PTP focusing on the container sector and Pasir Gudang specializing in liquid bulks and break-bulk cargoes.

Asked about the balance between local and relay traffic at Tanjung Pelepas, the executive cited that about 80% would be 'non-Malaysian' cargo.

"Of course we are able to offer liner operators a viable alternative to Singapore as a regional relay hub." Said Sidik. He described Tanjung Pelepas's location as 'one of the best in Malaysia' and as 'practically mirroring' that of the world's largest box port. Indeed, the port is only 45 minutes from the main international shipping lanes. Its 12.6km approach channel, which allows for the two-way movement of vessels, has a draught in access of 15m. Furthermore, it is at the crossroads of many east/west and north/south routes.

Nonetheless, the executive played down talked of rivalry with other Malaysian ports, notably Port Klang, which has been accorded hub port status by the Malaysian Government. Over the past year, Port Klang has aggressively sought a regional cargo base of its own.

Sidik would not comment directly on PTP's pricing policy, but suggested that carriers using the facility would have the ability to realize significant cost saving. "If a carrier, which spends US$100 million in Singapore, say, can bring its cost down by $20 million by using Tanjung Pelepas, then that is significant in today's trading environment." he said.

However, the executive stressed that cost was not the only issue and that carriers had to weigh up the whole package of services available. In this respect, he feels PTP is in a particularly strong position."

"We are new and we are very flexible." commented Sidik. "As we are not saddled with regimented work practices and ideas, we are able to offer our customers highly customized service packages."

Indeed, Sidik intends allowing liner companies to lease and operate their own dedicated terminals in the port, provided the benefits are agreeable to all parties.

Furthermore, the executive director did not rule out a specialized terminal operating companies, such as Hutchison Port Holdings or P&O Ports, leasing berths at the port, suggesting that every commercial opportunity would be thoroughly evaluated.

However, he stressed that any dedicated/exclusive terminal arrangements would not happen until a sufficient number of wharves had been completed. "Our first two berths will definitely be common-user, but I don't rule out anything for the remaining four."

PTP's approach is different from that of PSA Corp - owner /operator of Singapore - and Port Klang, where all terminals are operated on a common-user basis.

"Carriers, " he said, "were striving to control more of their operation and to improve their overall competitiveness. For the right volumes, I'm sure we can help them in the process."

PTP’s arrival on the scene will elicit a response from competitors such as Port Klang and Singapore. With talk of further rationalisation taking place between the three terminal operating companies in Port Klang, the interesting issue is what will the PSA do? In the past, the company has reacted aggressively to the threatened loss of any of its business and in many respects thwarted the development of other hub port projects in the region. Over the past three years, PSA has become proactive and even more service minded, as schemes such as the Virtual Terminal Agreements have been implemented.

There is no doubt that PTP will have its work cut out in the early years. However, with considerable terminal operating experience gained from running Pasir Gudang, with state of the art equipment and computer systems installed and with a reasonably captive cargo base in Southern Malaysia, the port has a good starting point.

Ultimately, though, PTP’s success will be determined by its ability to consistently provide reliable operations, characterised by commercial flexibility and a range of value added services similar to those being offered by Singapore. Getting those finishing touches right is going to be absolutely crucial to PTP’s future success.

 

Taking Shape

Pelabuhan Tanjung Pelepas (PTP) development plan for its new port in south west Johor comprises a five Phase plan.

Phase One, which will cost an estimated RM 2.8 billion (US$737 million) involves the construction of six deepwater (15m) berths with a total length of 2.16 km and the capacity to handle 3.8 million TEUs a year. The first two wharves, which opened in December 1999 will be equipped with six ship-to-shore super Post Panamax gantry cranes and 24 rubber-tyred gantry cranes (RTGs capable of lifting one box over five and spanning seven seven rows of containers) by March 2000. Total handing capacity will be one million TEUs a year.

In June 2000, a further two berths will be commissioned, with the final two wharves of phase one coming into operation by mid 2001. At this time, Tanjung Pelepas will have 18 ship-to-shore gantry cranes and 58 RTGs and 300 tractors/trailers working in the yards. The ship-to-shore cranes will all have an outreach of 53 m, while the 1.2 km yard will have the capacity to stack 110,000 TEUs.

A total of 20,000 m of CFS space will be provided in two warehouses as part of the phase one development plan.

Already, the port and its industrial/distribution zones, which are being built on 1935 acres of land have good landside infrastructure in place with a 5.4 km access road linking the facility to the second Singapore/Malaysia highway. In addition, a direct connection exists between the port and the pan-peninsula Malaysia highway linking Johor, Kuala Lumpur and southern Thailand.

It is hoped that the rail link will be completed by January 2002.

Mohd Sidik Shaik Osman, executive director also stressed the importance of the ports related warehousing/distripark and industrial zones and cutting-edge I.T. systems which he feels are even better than Singapore’s.

The heart of the online system is the company’s Integrated Terminal and Port Management Information system (ITPMIS) which according to Sidik, will offer up to date information in the near paperless environment for the port, shipping lines and their customers and freight forwarders.

In addition, PTP will feature a fully automated gatehouse and totally computerised terminal management and ship planning activities.

Several companies have already committed themselves to using the industrial parks including the UK based building materials group Hanson. Hanson Pacific Ltd is to spend approximately US$100 million on developing plants for the manufacturing of concrete prefabricated building products and materials for housing and infrastructural developments in Singapore, Malaysia and other markets in South-east Asia.

By the completion of Phase five, the port could have up to 20km of berthing line.