Labuan not spared from downtrend in cargo handling

LABUAN: Labuan has not been spared from the decline in cargo handling volume, chiefly due to the implementation of the zero-COVID-19 policy implemented during the pandemic.

Labuan Freight Forwarders Association (LFFA) president Prunella Phoong said Labuan’s port traffic was significantly reduced due to the implementation of the policy.

"The zero-COVID-19 policy diverted Labuan’s import and export movements from Labuan Port to Sabah Ports and air traffic movements from Labuan Airport to the Kota Kinabalu International Airport,” she said.

She said due to the global slowdown, freight charges which increased by three to four folds in the last six months had also impacted import and export movements.

Phoong said 60 - 70 per cent of Labuan’s import and export of goods are related to the oil and gas (O&G) service industries based in Labuan, while the balance of imports is for local consumption.

"Due to the rise in freight charges for imports between Port Klang and Labuan where the rates may come up to between RM 8,000 and RM 10,000 per twenty-foot equivalent unit (TEU), many importers for local consumption have moved their imports via Kota Kinabalu Port as it was cheaper although the transit time has increased by five to seven days,” she said.

She noted that since November 2022, following the reopening of trade lanes to Labuan and the vast improvement in service by Labuan port operator, Megah Port Management Sdn Bhd (MPM) in terms of turnaround time for vessels calling at the Labuan Port, vessel operators have become more confident to call on the port.

She said O&G-related service industries account for 60 - 70 per cent of all Labuan’s imports and 80 per cent of Labuan’s exports by air and sea, with land connections to Brunei and Sarawak.

Meanwhile, Phoong said ports like Port Klang and Port of Tanjung Pelepas also saw a decline in transhipment volume in 2022 compared to 2021, mainly due to the economic slowdown in many countries, rise in inflation and cost of living.

"The zero COVID-19 policy to contain outbreaks in Shanghai and Ningbo also affected intra-Asian volumes.

"Though there were some blank sailings at these ports, it was not as many as those at China’s ports. The number of shipping services did not change much,” she said, adding that ports like Penang which have less transhipment volume fared better on the back of intra-ASEAN and intra-Asian trade. - Bernama