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Malaysia Shipping Report Q1 2012
Business Monitor International, Nov 2011, Pages: 133
BMI View: Moderate to Good Growth
We expect moderate to good growth in the Malaysian ports and shipping sector in 2012. Although the global economic recovery could potentially lose its way amid fears over sluggish US growth and Eurozone debts, we note that Malaysia's domestic demand is likely to remain resilient based on a tight labour market and a government eager to boost its popularity in the run-up to national elections expected during the course of the year, and by 2013 at the latest. We are predicting Malaysian GDP growth of 4.2% in 2012, down from 4.9% in 2011. Across our five-year forecast period to 2016, GDP will expand by an annual average of 4.1%, a little lower than in the preceding five-year period.
The ports and shipping sector will see broadly above-GDP rates of cargo growth in 2012, influenced by strong trade growth and the expansion of energy demand across the Malaysian economy.
Headline Industry Data
- The real value of Malaysia's total trade will rise by a predicted 4.7% in 2012, a significant slowdown on the estimated 9.4% expansion experienced in 2011.
- Total cargo volume handled at Port Klang will rise by 7.7% to 197.695mn tonnes in 2012, while volume at the Port of Tanjung Pelepas will rise by a slightly higher 8.2% to 130.091mn tonnes.
- Box traffic at Port Klang is projected to rise 8.3% to 10.337mn 20-foot equivalent units (TEUs), while at the port of Tanjung Pelepas a 6.1% gain to 7.327mn TEUs is expected.
Key Industry Trends
Shell Boosts Petroleum Products Imports Via Westport
Shell Malaysia says it will be building three new storage tanks and associated pipelines to boost the petroleum product import capacity at its Westport Terminal in Port Klang from the current 1.67mn litres a day to 2.5mn litres a day and higher. The oil company says the investment is justified given the rising demand for fuel in Malaysia's Klang Valley area.
Illegal Ivory Shipments Coming in Through Malaysia There are increasing reports of illegal ivory shipments coming in through Malaysian ports, largely in response to increasing demand in China, where ivory is often ground up and used in traditional medicine.
In September the government said it had seized more than 1,000 African elephant tusks in two intercepted shipments in the immediately preceding months brought in through the ports of Pasir Gudang and Butterworth.
MISC Weighing Maersk LNG Ships Move
A decision by AP Moller Maersk to close one of its divisions and sell eight liquefied natural gas (LNG) ships was rumoured to have caught the attention of Malaysia's giant LNG shipping line, MISC Berhad, which was considering making a bid. We have noted previously that LNG shipping is a growth market, in contrast to the container and dry and liquid-bulk sectors, which can at best be said to be in the doldrums, and at worst sinking. With more companies setting up regasification terminals and the 'Japan effect' of countries turning away from nuclear energy looking for an alternative (not least Japan itself), LNG imports are shooting up, and with them the share price of LNG shipping companies.
PTP Reports Good First Half Box Growth
The Port of Tanjung Pelepas (PTP) said that in the first half of 2011 box traffic had grown by 16% yearon- year to reach 3.7mn 20-foot equivalent units (TEUs). The port authority believes the pace of growth will hold up in the second half, taking total throughput for the year to 7.5mn TEUs.
Key Risks To Outlook
The possibility of further cooling in the global economy remains the principal downside risk to our Malaysian ports and shipping forecast. We have three points of concern: the US, the Eurozone, and China. Of the three, China arguably faces the smallest “slowdown threat”, but it is the closest to Malaysia, as well as being Malaysia's main trading partner. So further monetary tightening as the Beijing authorities seek to control inflationary pressures will have a direct downward impact on trade with Malaysia and on demand for shipping and port services. A more domestic downside risk is the political uncertainty around the next Malaysian elections, which could lead to a temporary fall in investment in the sector.
Business Monitor International's 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.
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