Rise in port charges will not hurt shippers

Star Maritime 26 March 2007

By SHARIDAN M.ALI
 
PORT Klang can increase port charges by 10% and it will not hurt shippers, says Baltic Maritime Advisor president Prof Hans J.F. Peters.
 
He said tariff offered by the terminals (Northport and Westports) was one of the lowest in the region and a small hike would not be felt by its users.
 
Currently the rate for a 20-footer container is RM230 per container and it cost RM345 for a 40-footer box.
 
For transhipment, it cost RM140 for a 20-footer box and RM210 for a 40-footer.
 
The tariff falls under the Klang Port Authority (Scale of Rates, Dues and Charges) By-Laws 1966 and the container rates were introduced in 1973.
 
Operators however, are free to give tariff rebates and volume discounts as incentives to their customers.
 
“I cannot see how an additional of about RM20 will hurt any exporter who ships valuable commodities in a container that can easily be worth RM50,000 to RM60,000.
 
“The trend now is for increasing prices in many locations for a number of important factors,” said Peters.
 
He said terminals were being pressured to review their tariff owing to rising capital cost of providing new capacity.
 
“This will be more apparent especially if dredging and environmental issues are involved as well as planning inquiries,” said Peters.
 
The idea was well illustrated in his presentation where ships would be growing in size and with the healthy growth of world container traffic throughput that recorded 442 million TEUs last year, ports must gear up to accept to handle the rising volume.
 
“Also, the labour cost that is rising over time and workers remain as the biggest operating cost element.
 
“Supply-demand balance will remain tight in most locations and downward pressure on tariffs has been the norm until recently due to privatisation and labour rationalisation.
 
“But, the idea of increasing Port Klang tariff is open for any contention from those who are directly involved,” he said in a paper entitled The Path to Privatisation at the Port Privatisation Seminar in conjunction with the 21st anniversary of Northport Bhd in Kuala Lumpur last week.
 
The Baltic Maritime Advisor is a multi-disciplinary international partnership that comprises a global network of investment bankers, project advisers, and industry specialists who assist clients worldwide in various shipping and port sectors.
 
Following his presentation, the issue was debated by panel members and participants at the event who had expressed their disagreement with the suggestion to increase port charges. Polygon Services Sdn Bhd director Datuk M. Rajasingam said the port tariff issue was beyond the concern of any businesses and it was of national interest.
 
The former general manager of Port Klang Authority said the Government had invested and subsidised a lot in the process of privatisation of the port and the freedom of pricing the rates should take into consideration of its impact on the national economy and agenda as well.
 
Similarly, Federation of Malaysian Manufacturers vice-president Tan Sri Datuk Clifford F. Herbert said the move to raise the tariff would have a negative spin-off on containers carriers which would also raise their rates.
 
“This will surely burden our manufacturers and inadvertently consumers,” he said.
 
One of the two port operators in Port Klang, Northport (M) Bhd managing director and chief executive officer Datuk Basheer Hassan Abdul Kader said as much as the port operator was in favour to increase the tariff, the current situation where the supply exceeded demand impinged the intention.
 
“It is just basic business logic, when supply exceeds demand, of course the price will be low and we cannot risk losing our customers if we fight for raise of the tariff.
 
“Presently, we are still making great profit although the rates are low as we strive on to reduce our cost by strategising efficient operation at the port.
 
“Our approach is to reduce cost but if one day the rates are affecting our bottom line, we will pursue the matter to the authority,” he said.

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