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Report: Singapore ports will rule, despite Malaysian mega port projects

 | October 13, 2017

Asean Today says one reason is the questionable support from China for the port projects that it is financing, as it has allowed shipping giant Ocean Alliance, in which it has interest, to shift from Port Klang to Singapore.

singapore-flag-port-1KUALA LUMPUR: The port projects and the East Coast Rail Link project planned by Malaysia may not be able to stop Singapore’s ports from becoming the preferred choice of those in the shipping trade.

This is largely due to the better facilities and systems in place, and planned for introduction, in Singapore and the strategic geographical position of Singapore.

Another reason, a report in Asean Today suggests, is the questionable commitment from China for the Malaysian projects.

The report noted that Malaysia had begun construction on the RM55 billion East Coast Rail Link project which will link Port Klang with Kuantan Port on the South China Sea.

Malaysian Prime Minister Najib Razak, it said, had expressed the hope that this would establish Malaysia as an “alternative trade route” in the region.

The report noted that there were plans for a RM800 million expansion project of Port Klang, part of a wider RM5 billion project to expand the three largest ports in the country.

However, it noted that in April, Ocean Alliance, the largest consortium in the container shipping industry, announced it was moving operations away from Port Klang to Singapore.

Chinese state-owned Cosco Shipping is part of Ocean Alliance.

The Asean Today report said: “With China financing the (Malaysian) projects, the decision to move Ocean Alliance to Singapore raises concerns about Chinese commitment to the projects.

“If the Chinese government were serious about bringing these projects to fruition and generating revenue from them, it would not have endorsed the move to Singapore which has been so damaging to the Malaysian shipping industry.”

It added that so far, only a project to expand Kuantan port had received the promised Chinese financial backing.

“The sustained Chinese commitment to Kuantan is likely only because the port lies on the South China Sea and could help China further their territorial claims in the region,” the Asean Today report said.

The report said this year the Singapore government began construction of the new Tuas mega-port which is due for completion in 2040.

It noted that innovation and a clear strategy were at the core of Singapore’s mammoth shipping industry.

It said more industry giants were moving their operations to the island state. Apart from Ocean Alliance, another consortium, Alliance, has also shifted its operations from Malaysia to Singapore.

According to the report, Ocean Alliance and Alliance make up almost half of the global shipping capacity between them, and their transitions to Singapore have greatly damaged Port Klang. The only significant global shipping provider left in Port Klang is APM-Maersk, which has an office in the port.”

The biggest loss to Malaysia will be in transhipment revenue, it said, as companies such as UASC and CMA CGM, part of Ocean Alliance, previously stored their cargo in Port Klang before shipping it on.

It added that the loss of significant industry players to Singapore would cause a significant loss in Port Klang’s revenue.


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