News / Malaysia invests $86.2m in access to Port Klang as vessel size increases

20/04/2015

The Malaysia government has earmarked RM300M ($82.6M) to upgrade last-mile connectivity at Port Klang, the country’s biggest port and gateway to the capital Kuala Lumpur. Prime minister Najib Razak announced the plan to improve road access to the port under the Logistics and Trade Facilitation Masterplan on 16 March.

According to Ruben Emir Gnanalingam, CEO at Westports, the upgrades are badly needed and long overdue. Westports, a private terminal operator, enjoys 76% share of the container volume in Port Klang, with a throughput of 8.4M teu recorded in 2014.

“The road networks leading to both ports in Port Klang have been badly in need of upgrades for the last eight years,” Mr Gnanalingam told The Loadstar.

He added: “There is a need for motorcycle lanes to reduce the accident rate and for expansion of some roads. The main idea is to reduce congestion. Operationally, it should help ease the road traffic of gateway cargo going to or coming from the ports.”

Thai feeder operator Regional Container Lines (RCL), a key customer at Port Klang, indicated it too welcomed the upgrades and noted the importance of improvements considering the mega carrier alliance now calling at the port.

“RCL supports investments that can improve inter-terminal connectivity at Port Klang, especially with the Ocean Three alliance hubbing in Port Klang today. If the money is spent wisely, the productivity improvements will benefit all port users – carriers, terminals and customers alike,” said RCL vice president Charlie Chu.

Each of the carriers in the Ocean Three, CMA CGM, UASC and China Shipping Container Lines, were calling at Westports before the formation of the alliance. Mr Gnanalingam indicated that although there has been vessel upsizing as a result of the alliance, this is not a new problem for the terminal operator.

“The main challenge is when vessel sizes get larger, but that is something we have experienced when they went from 8,000 to 10,000 teu. Now the trend is 14,000 to 19,000 teu. It is a challenge but not something that Westports and the alliance members are not used to. There is a huge desire for cooperation to provide efficiencies to help each other,” he said.

Recent research by Alliance DBS Research noted that Westports has become one or the most profitable ports in the region, with a favourable location on the Malacca Straits and low port tariffs giving the operator a competitive advantage for transshipment cargo.

Indeed, Westports has started building a new terminal (CT8) to capitalise on further projected growth in transshipment volumes. Shifting manufacturing and socio-economic patterns in the region mean although operationally the new terminal could handle gateway cargo, Westports expects volumes to slow down.

“Manufacturing is certainly not growing as fast as it used to in the Klang Valley and its surrounding areas, which is our main catchment area for gateway cargo,” said Mr Gnanalingam.

He continued: “However, as Klang Valley matures into a thriving Metropolis, its growth of cargo is coming from other areas such as construction and consumption in general. The overall growth pattern for gateway cargo has generally slowed down over the last 20 years. What used to be double digits is now more mid to high single digits.

“This is also usually a natural consequence of progress. This is also why we feel that transshipment will generally play a larger role in our volume growth for the future.”