FOCUS: Singapore’s port faces new competition from Malaysia

SINGAPORE, Aug. 24 Kyodo

Singapore, one of the world’s busiest container ports, is now facing fierce competition from Malaysia where a rival port has sprouted along the busy Malacca Strait to lure the world’s shipping giants.

The world’s biggest container shipping line, Maersk Sealand, a Danish company, recently decided to shift its transshipment hub from Singapore to the new port of Tanjung Pelepas in Johor on the southwestern tip of peninsula Malaysia — just stone’s throw from Singapore.

Maersk Sealand finalized a deal Aug. 17 to buy a 30% stake from the holding company that operates the port.

A spokesman for Tanjung Pelepas port said it is also negotiating with a major Japanese shipping line to get it to use its services.

Japan’s Mitsui O.S.K. Lines Ltd. started calling on the port with one service in April while retaining most of its services in Singapore.

But the growing rivalry between Tanjung Pelepas and Singapore’s port is obvious.

With the deal, ”Malaysia will finally move to the forefront of transshipment business in Southeast Asia after having had to play second fiddle to Singapore for the last three decades,” a statement from Tanjung Pelepas port said when it announced the Maersk deal.

Shipping lines say the Tanjung Pelepas port offers cheaper rates than Singapore, and is more flexible in its operations.

Singapore’s container port is run by the government-owned PSA Corp. It handled 8.6 million containers of 20-foot equivalent units (TEUs) at its terminals in the first half of this year, up 12.8% from the same period last year.

Maersk Sealand’s ”move will slow our growth rates by a couple of percentage points or so, but will not significantly impact PSA’s profitability” said Wong Fong Tze, vice president for corporate development at PSA.

Also posing a threat to Singapore, however, is Hutchison International Terminals, which is part of Hong Kong tycoon Li Ka-Shing’s Hutchison Whampoa stable. It is currently in talks to buy a 30% stake in Klang Multi-Terminal, a Malaysian company that operates Westport at Port Klang further up the west coast of Malaysia.

As Hutchison controls 10% of global container traffic through its interest in 18 ports in different parts of the world, the move could lead to diversion of significant container business from Singapore to Westport, reports suggest.

Malaysian ports enjoy the advantages of cheaper costs than Singapore and have room for expansion. Their standard of efficiency is also improving.

In contrast, shipping companies complain of rising costs in Singapore and operational inflexibilities.

”The cost of overall port charges is about 30% cheaper than in Singapore,” a Tanjung Pelepas port spokesman said.

The port currently has four berths, but this is expected to expand to six by the end of this year. It is targeting handling 450,000 TEUs this year and 2 million TEUs next year and eventually the wharf length will be extended to between 20 and 30 kilometers.

”The main reason we decided to move to Tanjung Pelepas is that over there we can be in control of our destiny because not only are we becoming a part owner, but we are operating the port terminal, which means we can bring in our own procedures and (information technology) systems,” said Flemming Ipsen, the Asian chief executive officer of Maersk Sealand.

”Singapore is efficient, but PSA is the only (operator) available. It is a kind of monopoly and that makes things less flexible,” Ipsen said, adding ”The cost will be substantially cheaper (in Malaysia).”

He said Maersk Sealand will move 80-85% of its business to Tanjung Pelepas port and this could result in a reduction of the TEUs handled by Singapore by 11-14%.

COPYRIGHT 2000 Kyodo News International, Inc.

COPYRIGHT 2000 Gale Group

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