M’sian ports recovering despite gloomy outlook

KUCHING: Malaysian ports recorded a quarter-on-quarter (QoQ) increase of 10 per cent in container traffic for the second quarter of this year (2Q09), reflecting a recovery in both domestic and transhipment cargo.

According to a maritime report published recently by London-based Drewry Shipping Consultants, traffic at the 10 major ports nationwide rose to 3.79 million TEUs (20-foot equivalent units) from 3.44 million previously.

Port Klang, comprising Northport and Westports, confirmed its position as the largest container port in the country. Its container throughput rose 7.8 per cent in 2Q09, handling a total of 1.73 million TEUs versus 1.6 million in 1Q09.

Transhipment volume came to 996,508 TEUs in 2Q09, up 4.6 per cent from 1Q09 and comprising 57.7 per cent of Port Klang’s total throughput.

The second largest container port in the country, the Port of Tanjung Pelepas in Johor handled 1.47 million TEUs in 2Q09, an increase of 17.6 per cent from 1.25 million TEUs in 1Q09, with 94.4 per cent of all volume deriving from transhipment.

In East Malaysia, Bintulu Port saw a 16 per cent growth to 57,895 TEUs in 2Q09 from 49,875 in 1Q09.

In line with the expectation of a recovery beginning in the middle of next year, total trade growth for major Malaysian ports is forecast to increase by 4.4 per cent next year, followed by an average yearly growth of 6.9 per cent between 2011 and 2013.

However, trading activities in ports globally are expected to decline significantly by over 10 per cent this year, due to the continued contraction of the global economy.

The report said cargo ships are anticipated to carry 27 million fewer containers by the year’s end compared to last year, possibly resulting in an estimated loss of US$20 billion worldwide.

Many key players in the international shipping industry almost unanimously agreed that turnaround would only begin to emerge in the middle of next year.

Even then, the situation is seen as a long-term problem that would require several years to regain trade levels achieved in 2006 and 2007.

In the US, the continuing global recession has caused the industry to deteriorate, leading to a downgraded overall outlook for 53 major ports including those of Los Angeles and Long Beach, two of its busiest seaports.

Port of Los Angeles recently lost its biggest tenant, the world’s largest shipping line AP Moller-Maersk.

The Danish-based line, which has a worldwide fleet that is bigger than the US Navy, withdrew its services in Los Angeles as well as other ports in order to cut cost.

The Maersk line, which operates 470 vessels and owns 1.9 million containers, posted a loss of US$559 million during the first quarter of the year.

At the Long beach port, trade volumes have contracted all the way down to 2003 levels, diminishing all of the trade gains recorded during peak periods of 2004 to 2007. Similar situations can be found at many US ports.

In the Asean region, the performance of major ports is showing declines of 15 to 30 per cent.

Ports in the Philippines reported a drop in cargo volume of an average 20.6 per cent in the first half of this year (1H09), while Vietnam’s port container throughput was down between 14 and 30 per cent.

Even the trade route between Asia and Europe, which has been the most resilient in the face of global recession, has now succumbed as well.

So far, the last three years of growth in trade within this route has been erased.

According to the report, such setbacks in international ports would result in consolidation throughout the shipping business.

As in the case of the Maersk line, many shipping lines are consolidating and sharing cargo routes with competitors to reduce costs.

Further aggravating the situation, the report also stated that freight rates for trans-Pacific trade, the amount that shipping lines can charge for a typical 40-foot container for cargo moving between Asia and the West Coast of the US, have now plummeted to US$920 from US$1,400 at the beginning of the year.

Nevertheless, there are several optimistic indications that are seen as possible mitigating factors against the economic crisis.

The ports of Los Angeles and Long Beach have been the two most highly rated ports in the US, a factor which has retained their continued attractiveness to shippers.

Along with their strong financial situations and competitive market presence, it is expected that both ports will have better leverage points to be among the first to benefit when the recovery begins to take effect.