Port Klang needs to improve ahead of an increasingly competitive environment, the recent ASEAN Ports and Shipping Conference was told by one of its own senior officials, K Subramaniam, general manager of the Port Klang Authority.
“We are bogged down with many issues,” Subramaniam told the conference, somewhat to its surprise.
One possible reason for the sharpness of his remarks is that last year Port Klang lost 1.4 million TEUs of transhipment to Singapore because of the shipping alliances. “This year we are looking a bit more positive,” he added.
Port Klang has some considerable strengths, including large industrial and commercial areas within a 100 km radius which contribute to 4.5 million TEUs of local cargo; some of these are actually within the port. Land is available for future port, industrial and logistics development, and the port is centrally located within excellent air, sea and land bridge connectivity.
Underpinning this is a total capacity of 20 million TEUs per annum between Northport and Westport, although only 12 million TEUs are actually handled at the moment. The port features state-of-the art facilities such as super Panamax cranes capable of handling 24 across and twin lift, and berths and channels capable of handling ships of 260 kT displacement with draft of 17.5 metres.
While Subramaniam listed many areas where work needs to be done, his basic argument is this is a game for Klang to lose with innovation necessary for it to capture business going through the Malacca Straits. His remarks are also as much a warning against complacency as exhortation to do better.
What will challenge Port Klang will be the rise of what he termed the “upcoming small giants”: Laem Chabang near Bangkok and Tanjung Priok in Jakarta. “Indonesia is the force to be reckoned with in the future,” he said, surprising some in attendance. “We will have to pay attention to them.”
Subramaniam outlined a package of measures that broadly fall into two strands: infrastructure and trade facilitation.
Lack of last-mile connectivity as well as the lack of road planning to cater for future traffic growth were problems he identified in his presentation, along with a local preference for road logistics rather than rail, which results in low rail volumes and other inefficiencies.
Port Klang has options for further long-term development, but none of them will be easy. “There’s a lot of land acquisition to be done and there’s a lot of reclamation to be done so I think it will take at least another five or so years for us to put this in place, before we see any operational infrastructure coming up,” Subramaniam said.
Tax policy under Malaysia’s new government is something the industry must watch, he said. The incoming and pro-business government of Mahathir Mohamad has said it will abolish the general sales tax (GST) and restore the sales and services tax (SST) – although there is some dispute about what the new tax will actually be named or what its exact contents will be.
Precedent make this something ports and shippers should pay attention to, said Subramaniam.
When the GST was introduced, it was imposed on bunker fuel, which meant bunkering went to next door Singapore. With an SST tax likely to be implemented, “we have to be sure to be engaged with the government from day one,” he said.
Trade practices also must be improved with matters such as container deposits, which he said were “still bogging down our business.” Container and damage claims and surcharges are also very much in the frame.
“These are the areas we need to work on in the next few years,” he told the conference, pointing out that Malaysia is behind other countries where insurance schemes are already in place to cover such issues.
By Michael Mackey
Southeast Asia Correspondent | Johor Bahru, Malaysia