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            november 25, 2017

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Indiaexportnews.com

Mega alliances drag Klang down despite universal port prosperity

  13.09.2017    

Malaysia's Port Klang, after years of prosperity, now faces decline in the wake of mega alliances that divert cargo to Singapore.
Of the world's top 20 ports, Klang was one of two, the other being Tanjung Pelepas on the south coast of Johor, to suffer falling volumes in the first half.
The two shipping alliances - THE Alliance and Ocean Alliance - started changing ports in April, resulting in the loss of 50 per cent of Port Klang's Asia-Europe volume.
Those two rival alliances that possess half the world's shipping capacity appear to be part of a trend of cargo diverting to Singapore.
This raises doubts about the validity of aggressive Malaysian plans to build new harbours and rail links along the Strait of Malacca, reports Singapore's Strait Times.
Plans are based on partnerships with Beijing, yet the Ocean Alliance - which includes state-owned China Cosco Shipping, the world's fourth-largest player - made a huge shift from Klang to PSA Singapore's terminal in April.
The Straits Times understands that this has added to concerns in the industry over China's commitment to supporting the logistics industry in Malaysia.
Beijing and Kuala Lumpur had been talking up joint transport infrastructure in Malaysia, such as last month's launch of the MYR55 billion (US$13.1 billion) east coast rail link to be built and financed by China.
The project will link Port Klang to Kuantan Port which faces the South China Sea, in what Prime Minister Najib Razak called an "alternative trade route" to Singapore.
But former Port Klang Authority chairman Lee Hwa Beng is doubtful. "Only Kuantan Port has Chinese equity so far because it also aids Beijing's South China Sea claims. Other infrastructure plans have either not taken off or are only loans, or worse, just Chinese companies winning construction deals," he said.
Data compiled from Klang's Northport and Westports showed that after four years of increasing volumes, throughput was down 8.4 per cent in the second quarter of this year to three million TEU, followed by a flat first quarter of 0.9 per cent growth.
Westports, which controls three-quarters of Klang's total capacity, is now forecasting a full year volume decline of 7-12 per cent. "Next year's prospects remain murky," said UOB analyst Kong Ho Meng.
CMA CGM and Cosco have naturally gravitated to Singapore as both have major investments there. PSA saw a 9.6 per cent jump in the second quarter throughput to 8.5 million TEU.



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