PETALING JAYA: While ports and logistics operators are benefiting from stronger trade flows and booming eCommerce activity, escalating Middle East tensions, shipping disruptions and rising fuel costs are tempering optimism.
According to Kenanga Research, the conflict in the Middle East continues to pressure the sector through sustained increases in energy prices with potential spillovers for food security, coupled with cost pressures on consumers and businesses.
“The high energy price scenario would see world merchandise trade volume growth slow to 1.4% from 1.9%.
“Moreover, the shipping diversion from the Red Sea continues to weigh down on global trade, especially the Asia-Europe routes,” it noted.
For instance, Kenanga Research said that 80% of Westports Holdings Bhd
’s shipping lines still arrived outside of scheduled time.
The diversion from the Suez Canal to the Cape of Good Hope resulted in a longer voyage for the Asia-Europe route (which contributes 30% of global container volume), reducing the frequency of calls that shipping lines could make at Westports’ ports.
“Fuel costs rose 17% year-on-year to RM5mil and 18% quarter-on-quarter in the first quarter of financial year 2026 (1Q26), as Westports uses unsubsidised diesel, with the Middle East conflicts expected to have a full-year impact of about RM50mil,” it said.
Kenanga Research noted Westports is efficiently managing the fuel cost hike with a 10% replacement of its fleet with electric trucks by 4Q26, cost pass-through to customers and eyeing government assistance.
The research house also pointed out that local players such as Swift Haulage Bhd (Swift) are facing intense competition within the domestic logistics sector from Chinese players, constraining the ability to fully leverage Malaysia’s strong total trade growth.
It said the group’s warehousing operations were affected by the loss of major customers due to shifts in customer demand and start-up costs from its new warehouses.
Moreover, Kenanga Research explained that the backdrop is attributable to the irrational pricing set by Chinese logistics players despite the rising logistics operating costs.
“Chinese logistics players typically come in as a package following the new entrant of China’s foreign direct investment (new plants),” it added.
“Swift said that the majority of its operations are based in Malaysia, whereby it continued to be supported by diesel subsidies under the Sistem Kawalan Diesel Subsidi programme,” Kenanga Research cited.
In line with its carbon reduction agenda, Swift will continue expanding its electric vehicle Prime Mover fleet and the rollout of charging infrastructure at key operational sites throughout the year.
Nevertheless, Kenanga Research said the overall sector’s first quarter of calendar year 2026 earnings season broadly met expectations, although two companies under its coverage reported disappointing results.
Swift’s 1Q26 results remain subdued due to the loss of operational scale at its core segments, partly offset by the surge in freight forwarding segment margin and increase in container haulage rate by 12% to 13% starting July 2025.
