South-east Asia faces the threat of potential container transshipment hub overcapacity if current expansion plans go ahead, industry analysts have warned.
Carrier consolidation and the increasing propensity to take equity stakes in existing terminals to secure port capacity, mean that plans to build new port facilities in the Straits of Malacca were unlikely to be commercially viable, delegates at the TOC Asia Container Supply Chain event were told.
“A fourth entrant to the south-east Asia transhipment business is completely unwarranted. All the major lines in the region have their own facilities with equity takes in them, while volume growth in the region has stalled in recent years,” said Jason Chiang, director of consultancy Royal Haskoning.
He said that with the huge expansion ongoing in Singapore, which is building the vast 60m teu-capacity terminal at Tuas, as well as third development phase of Malaysia’s Port of Tanjung Pelepas (PTP) and possibly a third container terminal in Port Klang, the need for a fourth port was virtually non-existent.
Last November the Malaysian government, with Chinese backing, began building a new $3bn port at Kuala Linggi in Malacca, around 200 km north of Singapore, which is initially slated to receive oil imports from the Middle East, and plans to build container handling facilities have also been tabled.
“There is a geopolitical element to this – the real concern for the Chinese is what would happen to their oil supplies if the Malacca Straits were closed to shipping. An oil pipeline is being built across Malaysia to a port at Kuantan on the eastern coast of the country.
“But a container terminal is not commercially viable,” he said, adding that most business cases for a transhipment port contained a strong element of gateway cargo.
Port Klang’s throughput consists of 31% gateway cargo and 69% transhipment while Singapore’s is 15% gateway and 85% transhipment.
PTP, built less than 20 years ago, is the exception to this rule – it is 94% transhipment traffic and just 6% gateway, but its construction was partially funded by Maersk line after it failed to secure a dedicated terminal in Singapore.
Tan Hua Joo, executive consultant at Alphaliner, said: “It’s simply not possible to have that many transhipment hubs in this region; there just aren’t the volumes to justify all these hubs.”
He argued that carrier consolidation is set to “significantly change the port landscape”, and called on south-east Asian governments to take a coordinated approach to port planning.
“Even the third terminal at Port Klang is highly likely to fail,” he said, explaining that the Malaysian port stood to lose the most out to the recent alliance reshuffling.
“Port Klang is set to lose five calls which will translate into 15-20% of its volumes – they will find it very difficult to replace that in the short-term and it is a direct result of the creation of three alliances.
“Singapore is the winner as it takes a chunk of CMA CGM and Cosco volumes, which were the first and second largest customers of Klang, while the reshuffle is neutral for PTP, as its carriers – Maersk and Evergreen – are not moving,” he said.
