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Malaysia Shipping Report Q4 2010
Business Monitor International, Aug 2010, Pages: 96
The Malaysia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's shipping industry.
There may be doubts over the strength of the recovery across Malaysia's main ports but things are pretty clear in Penang. Major expansion plans in Penang are set to be realised in 2010 as the port expands to cater for growing demand. The port managed to defy the downturn and we project that volumes there are on track for further growth over the mid term. Expansion at the port's North Butterworth Container Terminal (NBCT) is due to be completed by the end of 2010. The project will see the port's infrastructure expanded along with the facility's capacity. Six new ZPMC cranes were delivered to the port at the end of 2009 and these are due to commence operations, allowing the port to cater for greater numbers of boxes. Off the back of this, productivity at the port is due to be increased, with the terminal setting a target throughput of 25 crane moves per hour per crane.
The terminal is also expanding its infrastructure with a project to increase NBCT's existing 900m wharf by a further 600m. The expansion project is part of the port's strategy to appeal to more container lines as a major port of call, not just in Malaysia but in Asia. The port is the country's third largest container facility after the port of Klang and the port of Tanjung Pelepas, handling 958,476 20-foot equivalent units (TEUs) in 2009. We predict that the port will break the 1mn TEU milestone in 2011 and that box volumes at the port will grow by an annual average of 3.7% over the mid term (2010-2014).
The Malaysian macro-economic environment is improving, to the benefit of the ports and shipping sector. What is perhaps not yet clear is whether the improvement will be vigorous, or merely satisfactory. On the 'vigorous' side of the equation we can point to some signs of a V-shaped economic recovery after the recession of 2009. After falling by 1.7% last year, we now predict that GDP will come back strongly with 4.9% growth in 2010, led by the wholesale and retail trade and a resumption of private sector investment. Looking forward across out five-year forecast horizon, we expect GDP to grow by a respectable annual average of 4.8%. On the 'satisfactory', or even 'disappointing' side of the equation, the government will have to do some fiscal tightening, cutting back its expenditure, and the threat of a 'double dip' global slowdown in 2011 seems to be suggesting exports will not lead growth as strongly as they have in the past. That is significant as it means shipping demand and port activity may be somewhat more muted.
The current trade recovery is making itself felt on the docks at the Port of Klang (POK), Malaysia's largest terminal for general cargo. The authors are projecting a vigorous increase in volume there, up by 20.7% more than offsetting the 9.6% contraction during the slump last year. At the Port of Tanjung Pelepas (POTP), we see this year's volume gaining by 13.9%. Unlike POK, here there was no contraction last year. The Port of Klang is expected to see 21.2% container handling growth this year, reversing the 8.3% fall experienced in 2009. The Port of Tanjung Pelepas will see growth of 10.0%
In real terms, we expect Malaysia's total trade (imports + exports) to recover this year, following the sharp 11.3% fall in 2009. In fact, the authors are projecting a 10.5% growth rate, almost recovering all the ground that was lost in 2009. However, next year, in 2011, as we expect a 'double dip' global economic slowdown originated by both China and the US to come into play, Malaysian trade growth will slow to 2.6%. Looking forward across our five-year medium-term forecast, we expect annual average trade growth in real terms of 5.1%. Imports will lead the way with average growth of 6.1%, ahead of exports at a slower 4.3%.
We believe there are two major risks to our Malaysia shipping and ports forecast, both on the downside. The first is if a deeper-than-expected recession emerged in 2011, particularly in China, which would have a negative ripple-effect throughout Asia, reducing trade growth and shipping demand. The second risk is political and concerns any developments which could take the government's focus off the management of the economy and the gradual reduction of the fiscal deficit. Both the ruling coalition and the main opposition party have been suffering from internal disagreements, so a 'destabilisation' scenario could originate in various different ways.
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