News / Surging transhipment cargo means SE Asia ports must cooperate, not compete

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The combination of challenges posed by the Red Sea crisis and an early peak season, particularly on the Asia-Europe trades, has changed the nature of competition for transhipment traffic among South-east Asian ports.

Traditionally, the battle for transhipment cargo in the region, a vital transit point in Asia-North Europe and Asia-Mediterranean trades, has traditionally been a three-way battle between Singapore, Port Klang and Tanjung Pelepas.

At times it has been fiercely competitive and had implications beyond container supply chains – the decision by Maersk in 2000 to leave Singapore and build a new hub at Tanjung Pelepas was widely seen as the cause for PSA to abort a planned listing on Singapore’s stock exchange.

However, the huge volumes of boxes pouring in and out of the three ports since has turned competition into cooperation, Port Klang general manager Subramaniam Karuppiah told The Loadstar on the sidelines of last week’s World Ports Conference in Hamburg.

“Collectively, Port Klang, Tanjung Pelepas and Singapore handle around 65m teu a year – so we all have the challenge of handling all these ships.

“I really don’t think competition, as we would traditionally understand it, now exists between these ports. The container lines would certainly like us to think it does, but when there is so much traffic to handle it’s much more like cooperation.

“When there is a problem at one of the ports, it is left to the other two to help, which means our levels of communication are much higher than in previous years,” he explained.

According to the eeSea liner database, Singapore currently hosts 392 container services and handled just over 39m teu in 2023 – and with an annual handling capacity of 62.5m teu, that represented 63% utilisation.

Port Klang has 227 services, handled 14m teu last year and had a 72% utilisation level, with its annual handling capacity of 19.6m teu.

Port of Tanjung Pelepas, across the Johor Strait from Singapore and in which Maersk has a 30% stake, hosts 91 services and handled 10.5m teu in 2023. However, it is proportionally the busiest of the three; with an annual handling capacity of 12.5m teu, it saw 82% utilisation last year.

However, it is important to note that these utilisation levels were mostly before the Red Sea crisis and its subsequent impact on liner schedules.

Mr Karuppiah told The Loadstar: “Klang is the first South-east Asian port of call on the eastbound leg of Europe-Asia services, and if there is a delay elsewhere in the service, it is up to us to help the carrier get back on schedule. More often than not we get a lot of requests for lines to drop off cargo in Klang and tranship it there, rather than stay on the vessel and do a direct call later in the Asia loop.

“They drop the later call to get back on schedule. And a lot of this is due to delays caused by the Red Sea crisis – a geopolitical event thousands of miles away has a huge impact on us and carriers expect us to perform miracles,” he added.