Northport emerges stronger

While the public-listed port-operating subsidiary of NCB Holdings Bhd, Northport (Malaysia) Bhd, has emerged stronger following its merger and ready to do battle, its container road haulage subsidiary, Kontena Nasional Bhd, is negotiating a perilous path in a crowded street.

NCB Holdings Bhd (NCB), the umbrella body for Northport (Malaysia) Bhd  (NMB) – the renamed Klang Container Terminal Bhd following its acquisition of Klang Port Management Sdn Bhd (KPM) – and Kontena Nasional Bhd (KN), said the group was preparing itself to cope with more changes in the challenging operating environment.

NCB group managing director, Dr Abdul Samad Mohamed said while NMB was now in firm control to forge ahead with the various internal changes brought following the merger, KN, that once lorded the haulage industry as a monopolist, must reinvent its business strategy and posturing in the wake of new realities in the market.

Samad said this in NCB latest annual report that reveals the financial results for the year ended 31 December 2001 for the group and its subsidiaries.

In a startling revelations, KN saw its performance plunge to one of its worst in two decades with the country’s largest container haulier achieving a profit before tax totaling only RM10 million – more than 50 per cent decline from its 2000 performance and a free fall from the RM54 million profit before tax in achieved four years ago.

The subdued performance of KN was a reflection of the tell-tale signs of the vicious competition that the haulier faced in a market that was suddenly awash with more three score of new operators.

KN recorded a steep drop in its total revenue last year to RM156.4 million from RM225.5 million the previous year as it coped with intense competition that caused a 16.4 per cent decline in the volume of containers trucked.

The haulage subsidiary of NCB recorded a total of 385,078 moves in year 2001 or the equivalent of 544,204 TEUs, down from 460,214 moves or the equivalent of 659,229 TEUs carried in 2000.

“The liberalisation of the container haulage industry through the licensing of a large number of new haulage companies had a big bearing on the decline in KN’s market share,” said Samad.

The port-operating subsidiary of NCB had a better outing last year with a higher turnover of RM480.4 million (2000: RM462.1 million) although profit before tax declined marginally to RM65.3 million from RM67.5 million.

“NMB was successful in weathering the pressures from economic slow-down and peer competition and able to record an increase in the throughput volume handled in the year under review,” said NCB’s group chairman Tan Sri Datuk Ahmad Sarji b Abdul Hamid.

The container throughput at NMB rose to 2,302,839 TEUs in 2001 compared with 2,179,947 TEUs in 2000, reflecting a growth of 5.6 per cent.

The volume of transhipment containers handled at Northport rose by 22.7 per cent from 806,756 TEUs in 2000 to 989,872 TEUs in 2001, accounting for 52.5 per cent of the total transhipment containers handled via Port Klang.

Overall, the NCB Holdings group achieved a turnover of RM706.7 million in 2001, comparable with that achieved in year 2000 of RM706.9 million.

Profit before tax for year 2001 however was lower by 19.6 per cent at RM78.6 million compared to RM97.8 million in 2000.

Ahmad Sarji expressed confidence that the group’s port subsidiary would continue to play a tangible role in the country’s economic revival and contribute significantly towards the overall Group’s performance.

In anticipation of higher demand, NMB is expanding its capacity with the development of berth 12 and 13.

The first of the two berths at Northport is expected to be ready for use by August 2002 while the second is scheduled to become operational by May 2003.

The berths, which will have a draft of 15 meters, will help in pushing Northport’s annual handling capacity closer towards four million TEUs.

During the year, Northport will also take delivery of another two super post Panamax quay cranes in addition to three new super post-Panamax cranes acquired in 2001.

“In the haulage sector, the group’s subsidiary is expected to face more challenges with more players seeking a stake in the market that is not showing signs of expansion,” he noted.

Ahmad Sarji said the group was re-examining the business strategy for its haulage subsidiary in a bid to increase competitiveness and improve performance and business results in this sector.