Growth trend intact


AmInvestment Bank Research: “Westports, being one of the key transhipment ports in the region, could still be punching below its weighting amidst the port congestion. “Its operational efficiency is hurt amidst excessive traffic at the port and as shipping lines miss their port call schedules, having been held up too long during their calls in the previous ports."

PETALING JAYA: Seaport operators and logistics players, who were buoyed by the change in consumers’ purchasing habit over the past year, will continue to see strong volumes this year.

In a report, AmInvestment Bank Research noted that the pandemic-led buying habit had allowed seaport operators and logistics players to rebound quickly from the trough and sustain their volume, moving forward.

For that reason, the research house has kept its “overweight” recommendation on the transportation and logistics sector.

“The seaport segment has already emerged from the pandemic since mid-2020 and stayed resilient, underpinned by strong demand for seaborne freight as reflected in the record Shanghai Containerize Freight Index (SCFI), a barometer of the containerised trade globally.

“However, the seaport segment has not been able to realise its full potential due to the congestion at the ports that hurts efficiency,” it said.

Port congestion has been hit by the imbalance in the East-West seaborne trade, as economies in the West were reopening faster than in the East, resulting in the shortage of empty containers in the East but excess in the West.

Additionally, strong consumer goods demand from the West as well as supply chain chokes, which increased the turnaround time at seaports due to various disruptions such as Covid outbreaks or natural disasters, added to the congestion.

“Westports, being one of the key transhipment ports in the region, could still be punching below its weighting amidst the port congestion.

“Its operational efficiency is hurt amidst excessive traffic at the port and as shipping lines miss their port call schedules, having been held up too long during their calls in the previous ports.

“Not helping either is the recent flash flood caused by Tropical Depression 29W, which could add further pressure to the port’s efficiency,” said AmInvestment Bank Research.

Assuming the situation returns to normal in the immediate term, it noted that Westports should return to a stronger growth path.

As such, AmInvestment Bank Research has projected Westports Holdings Bhd’s container volume to grow by a stronger 5% in the financial year ending Dec 31, 2022 (FY22) from a flattish growth assumption in FY21.

Meanwhile, the research house is cautiously optimistic on the recovery of the air travel industry, supported by the pent-up demand from tourists both domestically and internationally, as the borders reopen in stages with more economies receiving vaccinations.

“We believe the recovery in the air travel industry will gradually take hold, as international borders reopen with more economies in the world reaching herd immunity on the back of the robust vaccine rollout,” it said.

On the other hand, AmInvestment Bank Research said the parcel delivery segment would continue to ride on the exponential volume growth, as the pandemic has changed consumers’ shopping habits to a combination of visiting physical stores and browsing online channels.

“We believe consumers have permanently shifted part of their shopping to online, having experienced the convenience and price competitiveness without a significant compromise on product quality.

“The moratorium on new courier service licences will prevent the already crowded playing field from growing bigger,” it added.

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