Reviewing Malaysia’s port operations in the Covid-19 era


A file photo of Tanjung Pelepas Port in 2016. Early in 2020, the port deployed technology that will optimise its berth planning operations, thereby increasing berth productivity and reducing operating costs. — Pelabuhan Tanjung Pelepas Sdn Bhd

Malaysia’s port sector has progressed over the last 50 years and now comprises 30 major and medium-sized ports spread along more than 7,000km of the coastlines of Peninsular Malaysia, Sabah and Sarawak. The large number of ports is primarily due to the country’s strategic location.

The west of Peninsular Malaysia borders the Straits of Malacca, which saw a transit of 83,740 ships in 2016 – 33% of which comprised container ships. East of Peninsular Malaysia borders the South China Sea – ships pass through the area to reach the Straits of Malacca, and it is also an area traversed by a great number of vessels engaged in trade between littoral states and the Pacific Ocean.

Port operations in Malaysia, especially at the major ports, have been running efficiently since the government’s move to privatise ports in the 1990s. The Port Privatisation Act 1990 was enacted to privatise port facilities at Port Klang (Northport, Southpoint and Westports), Johor Port at Pasir Gudang, Port of Tanjung Pelepas in south-west Johor, Kuantan Port in Pahang, Penang Port and Bintulu Port in Sarawak.

The year 2000 was noteworthy; the Port of Tanjung Pelepas was commissioned and the world’s largest container carrier company, Maersk Line, became a 30% stakeholder. Soon after, Hong Kong’s Hutchison Port Holdings entered Westports as a 30% shareholder. Significantly, these developments have given Malaysian ports substantial inroads into the lucrative regional container transshipment business and the country now handles about 30% of the sector.

In the last three years, however, Malaysian ports’ container throughput and capacity improved only by small margins due to slower global economic growth. With port expansion proceeding as planned, the large capacity surplus for container handling in all major ports continued to prevail until 2020, when the Covid-19 outbreak started, in March 2020 for Malaysia. The significant drop in cargo volume in all major ports caused by the Covid-19 pandemic requires these plans to be re-examined and a stronger focus placed on cost. This includes large port development plans at Port Klang’s Carey Island and Westports, the expansion of the Port of Tanjung Pelepas, and the expansion of Sabah’s Sepanggar Container Port.

Re-examining these plans is necessary if Malaysian ports are to survive the competition for cargo and ships in the region. This is also taking into consideration the Port of Singapore – by far the largest port in the region – that is currently developing what has been touted as the most advanced port in the world, the Tuas Terminal, or Tuas Megaport, which will have the capacity for 65 million TEU containers a year, more than the region’s total container transshipment traffic. (TEU stands for 20-foot equivalent unit, a shipping container whose internal dimensions measure about 20 feet long, eight feet wide, and eight feet tall.)

Also, Malaysian ports will need to re-examine the handling of various integral parts of port operations, most importantly their shipping lines. Shipping lines experienced major changes even before the pandemic. Amidst shipping fleet overcapacity, global merchandise trade and container freight rates started falling a few years ago.

Further consolidations within the shipping industry were designed to save costs, enhance economies of scale, and obtain a better competitive position. The existing shipping alliances were reduced to only three by April 2017, after several mergers and acquisitions between troubled lines. Members of each shipping alliance share ships, networks, and port calls.

The Covid-19 pandemic caused further damage to shipping. Shipping lines will now face greater expectations from ports, and the increasing size of vessels will require greater measures to increase speed in loading or discharging operations of cargo and containers. Malaysia’s major ports will need to upgrade berths and cargo handling equipment. Towards this end, the recently reported delivery of the first four of eight new Super Post Panamax ultralarge container vessel ship-to-shore quay cranes at Tanjung Pelepas Port is a good start.

Major ports handling liquid, bulk, and break bulk (goods that must be loaded individually) cargo such as Johor Port, Penang Port, and Bintulu Port should embark on an upgrading exercise, as is being done in other major international ports.

In the post Covid-19 era, all major Malaysian ports must embrace digitalisation. The objective of digitalisation and increased investment in technology is to create smart ports that can better manage the increasing volume of cargo. Ports will increasingly have to utilise new technology, Big Data analytics, automation, artificial intelligence, blockchain technology, IoT (Internet of Things), 5G and wireless communications.

Early in 2020, Tanjung Pelepas Port made moves towards becoming the region’s most technologically advanced port by deploying Portchain’s Berth Optimisation Engine as part of its digitalisation journey. The port launched the technology to optimise its berth planning operations, thereby increasing berth productivity and reducing operating costs. With Tanjung Pelepas in position, other major ports can follow suit to become the best-equipped and most technologically advanced ports in the region.

Finally, the Malaysian government should investigate the benefits of amalgamating the various Port Authorities within the country, as past studies by the government have shown. Singapore’s model of amalgamated port and marine authorities could perhaps be emulated. The country established the Maritime and Port Authority of Singapore (MPA) in 1996 with a mission to develop Singapore as a premier global port hub and international maritime centre. MPA’s achievements are globally known and acclaimed. Lifting Malaysia’s port sector to the next level like that will need much stronger government facilitation and supervision.

Post-Covid-19, the port sector in Malaysia will mainly focus on performing its important role of reviving the country’s economy. Ports, as a gateway to international trade, will need to operate more efficiently by embracing the measures outlined. Ports are often referred to as the “engine of growth” for the economy and “multiplier” of industrial development, so there is indeed more that ports can do. This needs to be fully explored for implementation post-Covid-19.

MOHAMED AZMAN MOHD ARIS & CDR ANG CHIN HUP (RTD)

Maritime Institute of Malaysia (Mima)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

maritime , shipping , industry

   

Next In Letters

Cruel business for status and money Premium
Recasting attention to the atrocities in Palestine Premium
The measure of good health Premium
Unity through literature Premium
Behind India’s Thomas Cup success Premium
All that glitters is not gold Premium
Using a tactful approach would do a world of good Premium
Practice of victim blaming and body shaming must stop
Thoughts on fuel subsidy Premium
Familiar disease is making a comeback Premium

Others Also Read