Shipping in Malaysia

Shipowners: Why freight-forwarders, others let off hook?

Kota Kinabalu: The Malaysia Shipowners Association (Masa) feels slighted at being held responsible for the higher costs of goods and services in Sabah, while forwarding agents, hauliers, ports and warehouse operators are spared.

In this context, it said the Federation of Sabah Manufacturers (FSM) should demand similar clarifications on the price structures from the others, which it claims are the ones contributing to more than 50 per cent of the transportation costs of goods.

“In many cases, even after the removal of bunker surcharges for the return leg by our member shipping lines the charges will still appear in the invoices received by shippers from their agents,” said Masa Chairman, Ir Nordin Mat Yusoff.

Following an adjustment to the bunker adjustment formula, shippers would have saved more than RM30 million annually.

“We are not sure if this savings have gone to shippers, or are going into the pockets of some others who have chosen to keep silent,” he said.

“Who is responsible for such irresponsible act if such savings are not going to the shippers and places the shippers on a collision course with shipping lines?” he asked.

Ir Nordin said no consumer goes into the supermarket and queries on the price structure “and yet we shipowners have responded to such queries when asked to do so even though we have not asked the exporters and importers to reveal their cost structure.

“We have always maintained that unless and until all the intermediaries involved in the transportation chain act with some positivity, this debate on the Cabotage Policy will never end simply because the issue has become so murky and people are missing the woods for the trees,” he said.

“We feel the debate on the Cabotage Policy has been derailed or is being hijacked though we are less clear of the reasons for this,” he said.

The Cabotage Policy, implemented in 1981, reserves the trade between any two ports in the domestic waters to only Malaysian flagged and owned ships.

The policy is applied by more than 50 countries worldwide, including the US, India, China, Japan, the Philippines, Indonesia and Australia.

Ir Nordin said Masa is appalled by the callous statement of FSM that a few companies in Sabah have gone bankrupt because of the Cabotage Policy.

“While we are not sure of companies in Sabah going bankrupt because of the Cabotage Policy, I can say with certainty that the shipping companies, which incidentally are mostly from Sabah and Sarawak, would face bankruptcy if the Cabotage Policy is removed,” he said.

There are nine local shipping lines serving the container liner trade between Peninsular Malaysia and Sabah/Sarawak.

According to Ir Nordin, these shipping companies, including those listed on the local bourse, have invested billions of ringgit over the last three decades under the Cabotage Policy and would stand to lose.

The collateral damage to the economy would also be higher because of loss of jobs among seafarers and their families who are mostly from Sabah and Sarawak, loss of businesses and livelihood to shipyards, ports and related ancillary service providers.

“While there is no assurance that the shipping cost will decline with the removal of the Cabotage Policy, there is even a bigger threat the shippers and the Government will face as they will have no recourse to remedy if shipping rates are high or increase when the trade is open to foreign shipping lines.”

Hence, there is a urgent need for the shippers, especially the FSM and Masa as well as other intermediaries to discuss the problem and seek an amicable solution.

“We should stop barking up the wrong tree as removing the Cabotage Policy is not a cure all for problems faced by Sabah such as lack of interest in investors, high costs of goods and lack of shipping connectivity to global markets,” said Ir Nordin.

He said the Cabotage Policy does not prevent shippers in Sabah from exporting directly to any market worldwide nor does it prevent any foreign shipping line from calling at any port in Sabah and a foreign port.

“If the complaints by shippers in Sabah is that there are no or not enough shipping services to take their exports to export markets overseas then the solution does not lie with liberalising or scrapping the Cabotage Policy,” he said.

Ir Nordin said foreign shipping lines are free to call between any port in Sabah and overseas ports like Singapore, Yokohama, Busan, Shanghai and Rotterdam and there is no law or government policy stopping foreign shipping lines calling at ports in Sabah.

Masa was able to verify that there are three foreign shipping companies and one local carrier providing shipping services to/from Sepangar Bay Port (Kota Kinabalu) direct to foreign ports without having to tranship at Port Klang or Singapore.

These carriers have been given preferential berthing priority by Sabah Ports Sdn Bhd (operator of Sepangar Bay Port) while Masa members shipping lines are denied of this benefit.

Masa also pointed out that imported raw materials from foreign countries not only can be imported directly by any foreign carrier into Sabah but can be transhipped at Port Klang or any Malaysian ports by any foreign carriers into any Sabah ports under the recently partially liberalised Cabotage Policy.

The same applies to exports from Sabah which may be transhipped by foreign lines to Port Klang for re-shipment to overseas market or can be exported directly.

“Under this circumstance, calls for the removal of the Cabotage Policy is totally misplaced and its removal in this regard would have absolutely no impact simply because the Policy only reserves the trade to Malaysian ships trading between any two ports within the country,” he said.

“If the shippers are having problem finding ships at Sabah ports to take their exports to markets in Japan, Europe or China, then the answer to this problem lies elsewhere and most certainly not in scrapping the Cabotage Policy.”

Among the reasons shipping connectivity is low between ports in Sabah and foreign ports to where the exports are targeted, is simply the volume of cargo is very low, he said, adding this must be examined by the state and federal governments, the ports and the shippers themselves.

“If the shippers in Sabah and the FSM are expecting an overnight solution to this low shipping connectivity by simply calling for the Cabotage Policy to be removed then this is simply a case of misinformation,” he said.

He said Masa as a stakeholder representing shipping lines serving the domestic trade has a duty to correct this wrong perception of the Cabotage Policy as this constant harping on the Policy being responsible for the high cost of goods and high cost of living in Sabah appears to gaining weight for the wrong reason in political circles.

“We want to correct this misperception and would like to urge shippers to also do likewise and direct their grouses elsewhere than blaming the Cabotage Policy for the high cost of goods in the state,” he said.

Ir Nordin called on the shippers in the state to seek clarification of all costs and charges in the total freight or transportation bill and not just attribute the landed cost of goods or the shelf price of goods to shipping costs.

“Our member lines have demonstrated their sincerity by providing details of the cost structure of the shipping cost when called upon by the shippers to do so,” said Ir Nordin.

Source: Daily Express (30th July 2010)

BDI improves further by 41 points on July 29

It is reported that on July 29th 2010, Baltic Dry Index reached 1942 points, up by 41 points as compared to July 28th 2010.

Capsize

All except INDEX in USD
Change is with respect to numbers on July 28th 2010

Panamax

All except INDEX in USD
Change is with respect to numbers on July 28th 2010

Supramax

All except INDEX in USD
Change is with respect to numbers on July 28th 2010

Spot 4 TC Average = Average Value of the Four Main Shipping Routes
BDI = Weighted Composite Index of BCI/BPI/BHMI

Source: www.steelprices-india.com

Shell Secures 14-year Lease To LBT Terminal At Westports

KUALA LUMPUR, July 30 (Bernama) — Shell Malaysia Trading Sdn Bhd has signed a long-term sub-lease agreement Thursday with Westports Malaysia Sdn Bhd at Port Klang for storing, supplying and distributing petroleum products.

The 14-year agreement enables Shell to operate and manage liquid bulk cargo at Westports Liquid Bulk Terminal (LBT).

Products to be stored initially are diesel and petrol.

“Westports is proud to have one of the largest companies in the world operating at the Westports LBT terminal,” said Westports’ Executive Director, Ruben Emir Gnanalingam in the statement released here, Friday.

He added that Shell, emerging as a conventional client, certainly speaks volume of Westports’ strength, especially its strategic location to attract leading industries to undertake commercial activities at the port.

The terminal spans 9.71 hectares and includes access to Westports’ jetty that is medium range/long range vessel capable, cargo lines, fuel and chemical tanks and gantry facilities.

Source: BERNAMA (July 30, 2010 15:59 PM)

Rays of recovery..

… or rays of illusion? to have a clearer picture of the situation, reports of such should come with breakdown of:
1) empty containers being imported / exported
2) laden containers being imported / exported
3) transshipment containers - laden and empty

2009 was a period where there were heaps of empty containers being sent by shipping lines into countries with cheap storage costs - i.e. Malaysia being one of the popular destination.

Throughput volumes include all above and as such cannot be a good indication that we’re heading for recovery. Although there’ve been a general feedback that exports have started to pick up compared to last year this time. it’s the percentage that’s not easy to be determined. Ports, i believe, should play an important role here to give us all an idea and it should be broken down as above for comparison instead of just a throughput number.

By malaysiashipping.info

=quote=
Rays of recovery - Westports Malaysia H1 box volumes up by 30pct YoY
Wednesday, 14 Jul 2010

It is reported that Westports Malaysia has recorded its highest ever first half throughput as volumes jumped 30% in the first 6 months of 2010.

Westports handled 2.65 million TEU in the first half of 2010, up a hefty 30% on the 2.03 million TEU throughput at the terminal in the first 6 months of 2009. As global container markets bounced back the terminal enjoyed a record month in June handling 484,000 TEU.

The terminal operator said that it was on target to achieve a throughput of 5.4 million TEU this year. Westports is expanding to meet the rapid rebound in growth.

Mr Ruben Emir Gnanalingham executive director of Westports “We will be investing in container terminal six that comprises an additional 300 million berth, 1,500 more ground slots of yard space and four new quay cranes. The new terminal is expected to be ready by the second quarter of next year and will increase the port’s capacity to 7.5 million TEU.”

Source: www.seatradeasia-online.com
=unquote=

CPC Corporation to set up oil shipping venture

Reuters reported that Taiwan’s CPC Corporation will join private firms U Ming Marine and Chinese Maritime Transport to set up an oil shipping venture with a total investment of TWD 29.7 billion.

State owned CPC said in a statement that it will have 48% of the venture, which will either order its first ship or buy one by end of this year.

Source: reuters (Tuesday, 13 Jul 2010)

Macroeconomic indicators - Asia has emerged as a global powerhouse - IMF MD

The International Monetary Fund said that Asia has emerged as a global powerhouse in the process of recovering from the worldwide economic crisis, and its economic performance will likely continue to grow down the road.

Mr Dominique Strauss Kahn MD of IMF said that “Asia has emerged as a global economic powerhouse from the recent worldwide financial crisis. Asia’s time has come. No one can doubt that Asia’s economic performance will continue to grow in importance.”

His emphasis on Asia’s role in the international community comes after the IMF recently projected that the economy in the Asian region will grow 7.75% in 2010, a much faster rate compared with the around 4.5% predicted for the global economy.

Mr Strauss Kahn, however, noted that countries in the region should guard against future possible outside shocks at a time when downside risks linger, such as the recent fiscal debt problems in Europe.

He also emphasized that Asia should nurture its domestic investment and consumption as its second engine of growth, saying that it would be more crucial when its traditional means of growth, such as exports to advanced nations, are now facing a slump.

Touching on the IMF’s reform issue, he said that Asia’s role in the global economy needs to be reflected in voice and representation in global financial institutions, adding that his organization is now working to complete the realignment of voting power by the end of November this year.

He said that “We are now working on a second stage, to be completed by the G 20 summit in Seoul in November 2010 that will do even more to help align Asia’s representation in the Fund with its economic weight in the world.”

At the same conference co hosted by the IMF and the government here, Mr Yoon Jeung hyun finance minister of South Korea said that the IMF’s role should change in Asia, calling for more efforts to be made in reflecting the region’s increased clout and responsibilities in the global community.

Mr Yoon said that “Up until now, it seems that the IMF has not fully assumed its role of ensuring macroeconomic stability and supporting economic development in Asian developing countries. I believe the IMF has an important contribution to make by proposing and enacting concrete and realistic measures to strengthen financial safety nets around the globe.”

Mr Strauss Kahn still noted that now is the time to focus more on the future, not on the past, adding that the IMF is seeking to redefine its relationship with Asian countries based on the lessons learned from the crisis a decade ago.

Source: www.yonhapnews.co.kr (Tuesday, 13 Jul 2010)

Top 5 steel companies in 2009

The World Steel Association has published the 2010 edition of World Steel in Figures.

The largest five steel producing worldsteel member companies in 2009 were:

In million tonnes

They accounted for 15.7% of global output

Source: worldsteel (13 Jul 2010)

Top 5 crude steel producing countries in 2009

The World Steel Association has published the 2010 edition of World Steel in Figures.

In 2009 the five major steel producing countries were

In million tonnes

They account for more than 68% of global crude steel output

Total world production was 1,226.5 million tonnes in 2009, down from 1,329.0 million tonnes in 2008.

Source: worldsteel (13 Jul 2010)

Malaysia External Trade Statistics May 2010 (Updated : 09/07/2010)