THE SHIPPING industry has revolutionised world trade. Ever since mankind learnt how to build boats, they have been used to transport goods.
Instrumental in spreading civilisation,sailing has allowed humanity to achieve greater mobility than travel over land for activities as varied as fishing, migration, warfare, transport and trade.
According to the history books, the earliest discovered remains of sea-going reed boat found in Kuwaitare are 7,000 years old.
Today, the shipping industry continues to be vital to world trade despite occasionally encountaering choppy seas and is one of the biggest industries in the world.
More recently, the shipping industry has been projected to decline between 5% and 10% due to oversupply and volatile fuel prices brought about by the economic turmoil during the last few years.
All this has not stopped Straits Auto Logistics Sdn Bhd (SAL) from investing US$20mil (RM64.55 million) to acquire its sixth roll-on roll-off (ro-ro) vessel. which can carry 5,340 vehicles per trip.
SAL is part of the Nippon Yusen Kaisha (NYK) Group, one of the biggest names in shipping. SAL’s acquisition of the ro-ro vessel is part of NYK’s strategy to ride out the current challenging business environment.
In its last fiscal year, the NYK achieved its target of climbing out of the red, and now it is now back to reporting a recurring profit.
NYK was able to post a profit of ¥11.4bil (RM356.2mil) for the first quarter, and it is forecasting ¥24bil (RM 7.6 billion) for the first half of its fiscal year.
In a statement to the media, NYK said it is actively expanding its offshore business, including drill ships, shuttle tankers, floating production storage and offloading (FPSO) units, and floating storage and offloading (FSO) units.
NYK has also started expanding into the liquefied natural gas (LNG) shipping business under the scope of its “More than Shipping” programme.
NYK, through its subsidiary SAL, is also a primary vehicle mover across shores in South-East Asia. The company says that in the car transport business, long-term contracts are almost non-existent but since the business uses a special type of vessel that carries absolutely no cargo other than cars, when cargo movements decline and recovery is not expected for some time, old surplus vessels are scrapped.
This enables NYK Group and SAL to remain competitive and keep operating costs low. This also results in a unique business environment where the supply and demand gap does not arise.
Despite signs that global trade levels are recovering, it could take some time for the shipping industry’s chronic overcapacity to improve but SAL is banking on South-East Asia’s growing car market.
With Japanese carmakers using Thailand as a manufacturing hub, production has reached 2.45 million vehicles a year, of which 1 million are exported. This put Thailand in the position of being the seventh largest car exporter globally last year.
Toyota, Isuzu and Honda are Thailand’s “big three” manufacturers, but others are quickly catching up. Last year, Ford added a new plant there and it aims to raise its annual capacity to 445,000 units.
With major manufacturers rushing into Thailand, companies like SAL are hoping for a windfall.
“We need to move vehicles in the region effectively and efficiently,” said SAL chief operating officer Captain M Hairi Ho Abdullah.
“Our cycle is every 10 days and we set sail three times a month, berthing at Kota Kinabalu, Sabah and Kuching, Sarawak,” he explained.
Routes are planned tightly to ensure that the ships are on schedule without burning excessive fuel.
NYK takes fuel saving and environmental issues very seriously.
Recently, the company received the highest award at the 2013 Nikkei Global Environmental Technology Awards, organised by Nikkei Inc.
The award was presented in recognition of the NYK Group’s use of an energy-saving “air-lubrication” system for its vessels.
The air-lubrication system effectively reduces carbon emissions by use of bubbles generated released from the hull of the vessel to lessen the frictional resistance between a vessel and the seawater.
SAL moves vehicles across the region by land and by sea, and also runs a 50ha car terminal under its subsidiary, Giga Car Terminal.
“We can store approximately 10,000 cars in our terminal at any one time. This is a value-added service that we provide our customers and it is important for a company like ours to provide total solutions,” said Hairi.
Moving forward, with the implementation of Asean Free Trade Area to leverage on the huge potential trade synergies that exist in the region, by reducing or eliminating import duties, the regional auto-manufacturing industry is expected to boom in 2015.
And with Brazil, Russia, India and China manufacturers are heading for South-East Asia as a hub to enter more mature markets elsewhere, companies such as SAL can expect demand for for its services to rise.