Westports to focus on digitisation

  • Corporate News
  • Saturday, 16 May 2020

Lower volume: Westports has started to see a real decline in volumes from April onwards and expects that volumes for the year could decline between 10% and 20%.

IF there is a benefit of the coronavirus (Covid-19) pandemic amidst its onslaught on global economies, businesses will agree that it forces the adoption of fourth industrial revolution (IR4.0) measures upon them.

The unprecedented pandemic has brought about a change in work operations from what was previously deemed unconventional to what will now be the new norm.

This has also driven companies to digitise their businesses as much as they can to enjoy a smoother ride on the wave of economic rebound, which experts believe to be by next year.

Case in point, accelerating innovation projects is on the forefront of Westports Holdings Bhd’s focus during the pandemic.

The port operator is no doubt impacted by the disruption in the global supply chain and trade activities but it chose to look at the greener side of things, that the economic slowdown is giving it a window to take a step back to upgrade its operations and train its employees.

“We have many innovation projects in the pipeline and we just have more time to implement them now.

“Newer roles will be created with innovation so we will spend a lot of time training and retraining all of our people during this crisis, ” group managing director Datuk Ruben Emir Gnanalingam (pic) tells StarBizWeek.

With unemployment expected to rise in the second quarter as some businesses look at lowering headcounts to trim their costs, Westports is determined not to retrench anyone.

“We didn’t do that in 2009 (during the global financial crisis) and we are hopeful that we won’t need to this time around as well, ” he says.

He adds that the projects include the digitisation of Westport’s conventional terminal, remote stowage capabilities and also using global positioning system (GPS) to monitor all internal and external trucking.

Most businesses came to a complete standstill from March 18 to May 4 due to the movement control order (MCO) imposed by the government to flatten the curve of Covid-19 cases but ports, being an essential service, were allowed operated throughout to ensure essential goods were delivered to and from Malaysia.

The government only started to allow non-essential goods to start moving on April 29.

Ruben says the group has been operating with new normal standard operating procedures (SOPs) even before the MCO and operations ran as usual during the period, with some workers allowed to work from home where applicable.

Asked about Westports’ plans in the event of a worsening pandemic, Ruben says the port will still need to run as essential goods need to move.

“A lot of our costs are variable in nature and so most will adjust accordingly. We just have to focus on innovation and training, so we are ready when the economy and consumption recovers, ” he said.

Westports posted its results for the first quarter this year recently, where it recorded a 9.22% year-on-year (y-o-y) jump in net profit to RM152.81mil on the back of a flattish container throughput of 2.52 million 20-foot equivalent units (TEUs) with a noticeable 8% reduction in transhipment containers to 1.58 million TEUs.

Compared to fourth quarter 2019, container throughput saw a decrease of 10.64% from a record breaking 2.82 million TEUs while transhipment containers slid 14.13%.

Revenue came in 14.04% higher y-o-y for the quarter to RM473.47mil on the back of the implementation of the container tariff hike from March 1.

While the first quarter results were within the group’s expectations, what concerns Ruben is how the group will fare in its second quarter as it handles 80% of Port Klang’s overall container throughput.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, after his recent visit to Port Klang had said that Covid-19 had a huge impact on port activities, as it disrupted both the local and global supply chains.

He said the unprecedented situation reminded everyone of how interconnected the global economy was.

As for Westports, Ruben says it has started to see a real decline in volumes from April onwards and expects that volumes for the year could decline between 10% and 20%.

“Second quarter will take the biggest hit and we should start growing back in third quarter and fourth quarter. We also feel that 2021 will be better than 2020 but we doubt that it will be better than 2019.

“I think shipping will be hit for the next two years. Consumption is a big driver that determines the flow of cargo.

“With all the lockdowns and social distancing, worldwide consumption is unlikely to reach the levels of 2019 for a while. We will start to truly recover once consumption starts to recover, ” he says.

Westports handled a record throughput of 10.86 million TEUs last year, making it the first and only terminal in the country to handle more than 10 million TEUs a year.

On the group’s capital expenditure this year, Ruben guides that it would be between RM350mil to RM400mil, mainly to expand its yard and also for the development of an additional liquid bulk jetty. Both projects were started last year and will be completed this year.

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