Port Klang: Malaysia’s largest port is expected to rank among the top ten in the world
- Date: Oct 15, 2018
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The port is the starting point and pivot point of the Maritime Silk Road. The development of the port provides basic support and important guarantee for the construction of the “Belt and Road”.
The 21st Century Business Herald and the Haisi Research Institute conducted a series of in-depth interviews, research and reports on key ports along the “Belt and Road”, focusing on the analysis of the development history and operational experience of the old international ports, international trade and exchanges, and the discovery of the “Belt and Road”. How to build a “blue economy channel”, and grasp the investment and operation of Chinese enterprises on port terminals and logistics infrastructure projects along the “Belt and Road”.
In the first issue, we surveyed the “Pearl of the Indian Ocean” Colombo Port. In the second period, our reporter went to Malaysia to in-depth visit to the situation of Malaysia’s largest port, Port Klang, and to see the Huangjinggang project, which was laid in 2016 and is a major player by Chinese companies. This is also the China-Malaysia project. One of the key projects of the “Belt and Road” cooperation.
The development of the third deep-water port on the island of Kaly has become an important layout for the future of the Port Klang. The new port is expected to have a capacity of 30 million TEUs, which is higher than the current capacity of Beigang and Westport. The project aims to create an integrated seaport city covering an area of 100 square kilometers, including industrial parks and free trade zones, commercial real estate and residential properties, with an estimated total investment of RM200 billion. The project feasibility study will be launched at the end of this year and will take at least one year to complete, which is the responsibility of the Port Klang Port Authority.
Located on the northeastern coast of the Straits of Malacca, Port Klang is Malaysia’s largest and busiest port and the second largest port in Southeast Asia. Sitting in a prime location, about 65% of the goods in Port Klang are transit goods, and about 35% of the goods serve the local market.
Port Klang consists of Westport Terminal, North Port Terminal and Southpoint Terminal. The Westport Terminal is operated by Westports Holdings Berhad. The North Port Terminal and South Point Terminal are owned by North Port Limited of the Malaysian MMC Group. Northport Malaysia Bhd) operates.
With an 8.4-kilometre long berth and over 187 hectares of storage space, Westport is responsible for handling international transit cargo at Port Klang, which accounts for the majority of the Port of Klang. Beigang serves the local market and is an important gateway for the import and export of ASEAN countries in the region. Both Westport and Beigang have their respective posts, gradually developing the Port of Klang into an important shipping hub that rivals the Singapore port. However, as the cargo throughput of Port Klang has increased year by year, its processing capacity has also become saturated. At the end of August, Malaysian Minister of Transportation Anthony Loke said that the existing two terminals of Port Klang will be saturated in 2025, and that Singapore will soon build a large port. The Malaysian government must plan ahead the development direction of Port Klang to remain competitive.
Westport: Pay close attention to automatic truck driving technology
The Westport Terminal is located in the southwestern part of Port Klang and has excellent natural conditions. A small island in front of the berth serves as a natural breakwater for the Westport Pier, which not only separates the navigation channel from Westport, but also protects it from potential natural disasters such as tsunamis. “We don’t need a lot of investment to build artificial breakwaters. The natural barriers protect our berths from the strong currents, which makes our dredging work easier, which helps us a lot.” Datuk, General Manager, Westport Holdings Limited Ruben Emir Gnanalingam said in an interview with a 21st Century Business Herald reporter.
The waterway of Xigang has a water depth of 17 meters. The berth depth is 15 meters and the deepest is 17.5 meters. From the north of the Straits of Malacca, compared to the North Port, the sailing time of the cargo ship to the West Port is shorter, and the West Port can accommodate larger ships. “The deeper waterways and shorter distances have attracted many backbone operators to stop at Westport, further consolidating our transit hub status,” Ruben said. In 2017, Westport’s container throughput was 9 million TEUs, accounting for 75% of Klang Port’s total throughput and 16% of the Straits of Malacca. Among them, about 69% of the goods in Westport are transit goods, and about 31% are local goods.
Westport has a total of 30 berths and a length of 8.4 kilometers. Among them, 24 berths are connected on a straight line of 6.6 km, providing the largest available pier length for the moored vessels. The terminal container yard area is 187.1 hectares, providing sufficient space for container storage and extraction.
The reporter was informed that from the source and destination of the goods, in 2017, 57% of the goods (5.2 million TEUs) of Westport came from or were shipped to Asian countries, while the rest went to Europe, Australia and other places, mainly on international routes. .
At present, Westport is expanding the terminal. “We will not complete all expansion plans at one time, but control the rhythm according to the total throughput of the terminal every three months. Ideally, we will expand according to the demand growth, and we cannot expand too fast because we do not want to increase it. The necessary costs,” Ruben told the 21st Century Business Herald.
The reporter was informed that the current maximum capacity of container handling at Xigang Terminal is about 14 million TEUs. When the utilization rate of the terminal reaches 75% for three consecutive months, Westport will start the next phase of expansion, according to the growth rate of terminal throughput. It usually increases by 2 to 3 berths.
At the end of 2017, Westport completed the first phase of the expansion of the No. 8 Container Terminal (CT 8) and the expansion of the Container Terminal 9 (CT 9). At present, Westport has submitted an application for expansion to the Malaysian government and continues to build Container Terminals 10 to 19 (CT10 to CT19). The specific plans and provisions for the expansion are still under further consideration. If the expansion plan is successfully approved, it is expected that the processing capacity of the Westport Terminal will double to 30 million TEUs.
With the upgrade of major infrastructure, Westport Terminal is constantly updating its information technology solutions. The reporter was informed that in order to simplify the procedures for container trucks entering the terminal, reduce the vehicle stay time, and ease the occasional blockage at the entrance of the terminal, at the end of September, Westport set up a fast track at the entrance of the terminal. The cargo owner can be on the mobile platform before delivery. Complete all certification and customs clearance procedures. Once the truck arrives, you can enter the terminal directly without having to queue at the door.
In addition, various smart services in Westport have gradually matured. In 2017, Westport adopted a new port operating system designed to improve port operational efficiency. It is understood that the system can optimize port operation schedule, scheduling plan and resource allocation based on real-time monitoring of yard and dock conditions, and optimize the activity path of the bridge to reduce unnecessary energy consumption. In addition, Westport is investing in OCR item identification technology to further enhance the efficiency of cargo transportation and storage. “In the past, the port operating system was not very sensitive. After the truck delivered the container to the dock, it was empty. Under the current system command, the truck can load the goods that need to be transported immediately after unloading, without going through two shackles. This reduces costs for us,” Ruben told the 21st Century Business Herald.
It is worth mentioning that Westport is particularly concerned about the progress of electric driverless truck technology and has the ambition to apply this technology to terminal operations. The reporter was informed that the truck drivers in Westport will leave their posts within one to two years after receiving training and have greater mobility. Ruben exemplified: “We used to have a driver to go to a convenience store clerk after resigning. Even if the truck driver pays a higher salary, he still doesn’t want to do it because the work is too boring and socially low. This is The big problem we are currently facing is that lost personnel increase our training costs.”
At present, Westport has started negotiations with some companies and plans to start a pilot cooperation with a local driverless company. “Auto-driving truck technology is more complicated than regular cars, and we are waiting for this technology to be truly mature,” Ruben told reporters.
Beigang: To be the ASEAN portal
Compared to Westport, the berth of the North Port Terminal is shorter, 4.3 kilometers. The berth is shallower, with a shallower height of 11 meters and a maximum depth of 17 meters. The Beigang terminal is small in size, with a yard area of 9.9 million square feet and a storage area of 2.2 million square feet. In 2017, Beigang’s container throughput was 2.96 million TEUs, accounting for about 25% of the total container throughput of Klang Port. Among them, 1.4 million TEUs are transit goods and 1.56 million TEUs are local goods.
Dato’ Azman Shah Mohd Yusof, CEO of Beigang Co., Ltd., said in an interview with the 21st Century Business Herald that Beigang and Xigang complement each other. Most of Westport deals with international transit goods, while Beigang deals with smaller ships and pays more attention to local Transit goods within the market and within Asia.
Azman believes that the advantages of Beigang are reflected in the strong industrial base and the role of logistics hubs in the ASEAN region. It is understood that the history of Beigang has been 50 years. It started to develop port derivative business earlier than Westport. There are large industrial areas behind Beigang Terminal. There are 95 shipping companies, 300 customs brokers, 25 container storages and more than 70 freight companies set up offices here. “We are very close to local foreign trade related companies, and the relationship has become better. Even Singapore companies are planning to build warehouses in our industrial areas.”
In addition, from the perspective of Malaysia’s domestic logistics system, Beigang is closer to Kuala Lumpur than Westport and is connected to seven expressways, providing direct access to more than 13 major industrial parks in Malaysia. On the waterway system, all ports in Beigang and the east coast of Malaysia have mature feeder lines. From Beigang, there are 48 trains a week to the east coast of Malaysia. “Malaysia’s West Coast Highway is expected to be completed in 2019, and our logistics system will be more perfect,” Azman told reporters.
Beigang is an important gateway for import and export trade of ASEAN countries. There are routes in 15 major ports of Beigang and ASEAN countries, and there are 24 daily flights to ports of various countries, including Bangkok Port, Jakarta Port, Brunei Port and Manila Port.
Azman told reporters that Beigang has very efficient interconnection conditions, and its local logistics center has been established. In the future, Beigang will continue to strengthen its role as an ASEAN gateway. “This is also the reason why we are advancing the expansion plan on the island. We have considerable potential to become a regional logistics distribution center other than the Singapore port. We hope to attract more multinational companies to set up offices in Beigang. Its base in ASEAN.”
At the same time, Beigang Co., Ltd. is also opening up new business for Beigang Terminal and Nandian Terminal, focusing on Malaysia’s domestic import and export trade. Among them, Beigang Terminal also signed a memorandum of understanding with Shandong Weifang Port. The two sides will cooperate in port management to facilitate trade and transportation between Malaysia and China.
The berth at the South Point Pier is smaller, with a water depth of 8 to 10 meters and a berth length of 1.1 kilometers, which is responsible for bulk cargo transportation. At present, Beigang Co., Ltd. is planning to set a 17.84-acre area at the South Point Terminal to build it into a biomass logistics hub. “Now, Japan, South Korea and even China have high demand for materials such as palm shells, wood chips and wood pellets. They want to import these raw materials from Malaysia and process them into new high value-added materials. We hope to pass this opportunity to the south. The dock was re-launched,” Azman told the 21st Century Business Herald.
Port Klang Free Trade Zone: Will force cross-border e-commerce
In order to promote the entrepot trade of Port Klang and develop manufacturing industries that mainly produce export commodities, Malaysia has established the first comprehensive free trade zone, the Klang Free Trade Zone (PKFZ), near Westport. The Free Trade Zone covers an area of 1,000 acres and the industrial open space is 640 acres. Most of the area is currently leased, leaving only 25 acres. There are 512 standard factory buildings, and the current occupancy rate is 85%. In addition, a multi-purpose warehouse has been built in the Free Trade Zone. The Free Trade Zone is conveniently located to the three major highways and is only a 45-minute drive from Kuala Lumpur International Airport.
Close to the geographical advantage of Xigang, it has attracted many multinational companies and local enterprises to set up factories in the Free Trade Zone. The reporter saw at the scene that the free trade zone has direct access to Xigang, and the journey takes less than 10 minutes, which greatly reduces the transportation costs of the enterprises that have settled in, making the products produced here more competitively priced. The Customs has also set up an office in the Free Trade Zone to improve the efficiency of customs clearance of goods.
At present, the free trade zone focuses on the development of oil and gas, machinery assembly, automobile and parts manufacturing, halal industry, palm oil industry, green technology and other industries. The introduction of logistics industry further optimizes the supply chain. “The Klang Port Free Trade Zone is mainly used as a re-export station. Most of the companies here are engaged in entrepot trade.” The Governor of the Port Klang Free Trade Zone, Datuk Weng Zhongyi, said in an interview with the 21st Century Business Herald that “especially for some It is very convenient for countries that have not signed a free trade agreement with Malaysia to process, store and re-export to other regions in the free trade zone.”
Compared with Singapore, low cost has become an advantage of the Klang Port Free Trade Zone. According to reports, the standard factory building in the Klang Port Free Trade Zone is about one-third of the rent in Singapore. Many companies with regional headquarters in Singapore choose to set up regional warehouses in the Klang Port Free Trade Zone. “The cost of the port of Singapore is hard to come down, but the port efficiency of Port Klang can be gradually improved,” Weng Zhongyi said.
The London Metal Exchange (LME) business is one of the main sources of income from the Free Trade Zone. The agency has more than 500 delivery warehouses worldwide for off-the-shelf delivery and warehousing of metals. Port Klang is the largest delivery warehouse in Southeast Asia, storing 420,000 tons of aluminum ingots.
In 2017, the goods handled by the Klang Port Free Trade Zone exceeded 200,000 TEU for the first time, with a revenue of 78.23 million ringgit. But this is not enough in the eyes of Weng Zhongyi. He set the annual revenue target to 200 million ringgit. At present, the profit model of the free trade zone is still based on the collection of rent and property fees.
In addition to the industrial zone, there are four commercial buildings in the Free Trade Zone, a four-star hotel and a convention center. Weng Zhongyi told reporters that in the future, he hopes to vigorously develop commercial areas, attract training institutions, especially logistics training institutions, and introduce “one-stop center” cooperation in accounting, legal services and free trade zones. In addition, the Free Trade Zone will also create a duty-free shopping mall.
In his view, the free trade zone must develop more formats in the future, especially cross-border e-commerce. Currently in Malaysia, only air transport can enjoy tariff preferences for cross-border e-commerce, and the Port Klang Free Trade Zone is actively pursuing policies.
“At present, most of the goods ordered through the e-commerce platform are transported by air. If the shipping policy has relevant policies, the goods are packaged in China, and they can directly enter Malaysia through a rookie-like e-commerce platform. Through the sorting center, the entire process can be shortened. Time. After the policy is put in place, we expect to process at least 200,000 to 300,000 parcels per month, and will drive more courier companies and logistics companies to settle in the free trade zone, thus increasing the income of the free trade zone. This is what we want. The development of new business.” Weng Zhongyi said.
Weng Zhongyi hopes to use the exhibition center to develop cross-border e-commerce through online trading and offline display. For example, it is more convenient to display large machinery and special vehicles in the free trade zone exhibition hall, which can save the customs clearance process.
The reporter was informed that the development of the free trade zone also faces some challenges. On the one hand, industrial land is limited, it is close to saturation, and there is no land available for development nearby. On the other hand, the FTA policy is not enough “free.” It is understood that the early Klang Port Free Trade Zone was managed by the Dubai Jebel Ali Free Trade Zone Authority, and was later accepted by the Port of Klang Port Authority due to the “Dubai Mode”.
“Because Malaysia’s national conditions are different, many jurisdictions cannot be opened. For example, customs policy, in Malaysia, dozens of goods including tobacco and alcohol can not directly enter the free trade zone, still need customs approval. In addition, the Jebel Ali Free Trade Zone has autonomy, Can independently approve foreign workers, production certificates, import certificates, etc., but the Klang Port Free Trade Zone itself does not have much autonomy, and can only approve applications for goods entering the free trade zone from Westport.” Weng Zhongyi said. However, the Free Trade Zone has a “one-stop center” that can help companies settle in to apply for all licenses or licenses, reducing the time required for approval by half.
In addition, the reporter learned that foreign investment in the free trade zone cannot directly enjoy tax preferential policies. The free trade zone has only the function of “bonded”. Companies engaged in manufacturing and setting up regional headquarters can apply for 5 to 10 through the Malaysian Investment Development Agency. Corporate income tax relief for the year.
Driven by the “Belt and Road” initiative, many Chinese-funded enterprises are also seeking to enter the Klang Port Free Trade Zone. “At present, Fulin Tire, Chinese tea and a logistics company have settled in. We are negotiating with Xiamen and Xi’an government, and we may cooperate on cross-border e-commerce in the future.” Weng Zhongyi said.
The third largest deep-water port and digital free trade zone
The Port of Klang is currently the 12th largest container port in the world, and its top ten is its long-term development prospect. In 2016, Port Klang rose to 11th place, but its container throughput fell more than 8% in 2017 and returned to its original location. The change in route layout between the Ocean Alliance and THE Alliance’s two major shipping alliances has devastated Port Klang, with more than half of its Asia-European freight being transferred to Singapore Port.
As a transit hub for the Strait of Malacca, Port Klang faces fierce competition from the Port of Singapore and the Port of Tanjung Prapas (PTP) in Johor, southern Malaysia. Since the reorganization of the shipping alliance on April 1, 2017, the pattern of the hub port in Southeast Asia has changed, and the Port of Klang bears the brunt. In 2017, the transshipment volume handled by Port Klang decreased from approximately 9.06 million TEUs in 2016 to approximately 7.64 million TEUs, representing a decrease of approximately 15% year-on-year. “With the formation of the new global shipping alliance, we have some of the most influential customers to continue to acquire and merge, which puts some pressure on us,” Ruben said.
The new shipping alliance has moved from Port Klang to Singapore Port, and has nothing to do with Ocean Alliance leader and CMA CGM, the world’s third largest container shipping company. In 2016, CMA CGM acquired the Oriental Shipping Emperor of Singapore Shipping Company and announced that it has cooperated with Singapore International Port Group to jointly operate four large terminal berths, accounting for 49%. In order to support the partners, CMA CGM not only moved its Asian headquarters from Hong Kong to Singapore, but also decided to move one-third of the cargo volume in Klang Port, that is, 1 million TEUs, to Singapore Port.
Nowadays, the integration of the shipping supply chain is further accelerated, and the international shipping giant is extending to the upstream and downstream of the industrial chain by acquiring terminals and logistics companies. Former Malaysian Minister of Communications Jiang Zuohan said in an interview with the 21st Century Business Herald that the Port of Klang should strengthen cooperation with shipping companies to allow influential shipping companies to invest in ports and investment berths.
The route migration makes people realize that shipping companies with increasingly bargaining power bring many uncertainties to the transit business. Ports must find ways to increase import and export goods and develop local manufacturing. Jiang Zuohan told reporters that one-third of the cargo volume of Port Klang is currently import and export goods, and two-thirds are transit goods, and the ideal state is half. To increase the volume of imports and exports, it is necessary to build a large-scale free trade zone. “If we have enough local goods, the ship will definitely come and it will also drive the transit business.”
The development of the third deep-water port on Carey Island has also become an important layout for the Port Klang to emerge from the crisis and face the future. The container throughput of Beigang and Xigang is expected to be saturated in 2025, and the new port will have a capacity of 30 million TEUs, which is higher than the current capacity of Beigang and Xigang. The project aims to create an integrated seaport city covering an area of 100 square kilometers, including industrial parks and free trade zones, commercial real estate and residential properties, with an estimated total investment of RM200 billion.
It is reported that the feasibility study of the project will be launched at the end of this year and will take at least one year to complete, which is the responsibility of the Port Klang Port Authority. After the report is completed, it will be submitted to the Malaysian cabinet to decide whether or not to implement it, and will be granted private company development and operation by public bidding. The MMC Group first submitted a planning plan and is interested in participating in the investment development of the project.
Port Klang also hopes for the development of the digital free trade zone. The first digital free trade zone between the Malaysian government and Alibaba at Kuala Lumpur International Airport was launched last year. “We are currently working with the government to promote this program and to communicate with government agencies, importers and exporters, service providers and other stakeholders to see where they need to be improved.” Captain K. Subramaniam, General Manager of Klang Port Authority In an interview with a 21st Century Business Herald reporter said. After the landing of the Digital Free Trade Zone in Klang, it is expected to drive the export of small and medium-sized enterprises, thereby increasing the volume of freight.