MALAYSIA’S seaport segment is poised to grow further in 2021 as global trade recovery gains further momentum backed by the re-opening of economies, businesses and borders, as well as the roll-out of huge stimulus packages which will continue to support consumption and investment.
Over the immediate term, however, seaport operators will face challenges or benefit from port congestion worldwide, according to AmBank Research.
Being a transhipment port operator, the research house noted that Westports Holdings Bhd is not spared the loss of operational efficiency from the congestion.
“However, we believe it is more prepared this time around thanks to the experience gained during the similar situation at the height of the pandemic last year,” observed the research house in a sectoral report on transportation and logistics..
“During the time, Westports created additional yard space and imposed stricter storage charges to help ease the situation at the port.”
Moreover, priority berthing was given to ships with more containers to be loaded than discharged to reduce the number of containers in the storage yard.
Meanwhile, the Port Klang Authority also withdraw the additional free storage period and the exemption of Special Services Request (SSR) charges on empty export containers, as well as expedited the custom and quarantine and inspection clearance by increasing manpower and set up special lanes to facilitate the release of reefer containers process.
Therefore, the research house is of the view that the transhipment seaports under MMC Corp’s stable, ie. Port of Tanjung Pelepas (PTP) and Northport, which are largely secondary in the geographical area they serve, thus being less congested, should gain from the diversion of port calls by shipping lines from busier primary ports amid prolonged congestion.
“This should result in increased volumes and market share gains,” projected AmResearch.
“Recall that during the pandemic-induced congestion in 2020, PTP posted a record container volume of 9.85 million TEUs (+8% yoy) while Northport recorded its highest ever monthly volume in December 2020 (when Westports and the PSA (International Pte Ltd) could hardly cope with the traffic).”
On a separate note, the research house expects Westports and PTP to gain market share from the PSA following PSA’s plans to raise its port charges in two phases from Jan 1 (2022) which will widen further the gaps in port charges between ports in Malaysia and Singapore.
Looking beyond FY2021F, AmBank Research expects Southeast Asia’s port sector (Malaysia included) to remain well-positioned to benefit from the shifting sourcing patterns accelerated by the pandemic and arising from re-locations of the manufacturing base by multinational companies out of China to the region.
The research house maintained its “overweight” recommendation on the transportation and logistics sector with a “buy” rating intact for Wesports (fair value: RM5.07) and MMC (fair value: RM1.68). – April 19, 2021
