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The
success achieved by Port Klang as a
regional transshipment hub as a
result of pro-active efforts in the
last five years is expected to be
come under some pressure over the
next five years as terminal
operators wrest with the demand for
cost reduction and thinning of
margins.
Making
this assessment of the critical
success factors that gave rise to
the emergence of Port Klang as
transshipment hub, the managing
director of Northport (Malaysia) Bhd,
Basheer Hassan said although
significant progress was achieved
over the last five years, the port
expects the next five years would be
even more challenging.
“Cost
reduction is becoming increasingly
difficult with the need to make huge
capital investments on port
facilities and expensive equipment
couple with soaring operating
costs,” he said.
Basheer,
who made his observation at a
conference in Bintulu last week,
said as terminal operation is highly
system-driven, the investment cost
of upgrading computer hardwares and
application softwares is becoming
increasingly costly.
“Intense
competition in the port industry
will drive down prices and margins
in the near future,” warned
Basheer.
“Therefore,
the most daunting challenge
confronting us today is how do you
continue to make all these huge
investments, pay your employees well
to keep them motivated, and yet be
in a position to offer competitive
prices to retain your customers,”
he posed.
Basheer
noted that Port Klang embarked on a
50 per cent rebate scheme in 1996
with a view to promoting
transshipment of containers for a
period of five years to enable
shipping lines to generate the
critical mass vital to sustain their
direct sailings and to enhance
frequency and connectivity.
“The
rebates offered to shipping lines
reputedly were among the lowest in
the world,” he said, adding low
transshipment rates is an extremely
attractive proposition when coupled
with improved service levels.
“This
is often said to be an important
reason for Northport’s rapid
growth,” observed Basheer.
Apart
from the aggressive pricing policy
pursued following the implementation
of the National Load Centering
Policy by the government, he said
there were other critical factors
that contributed towards the success
of Port Klang, which last year
handled 3.7 million TEUs last year.
Top
among the factors, he said various
institutional changes, especially
involving relevant government
agencies created the right
environment for the successful
transformation of the port to a
transshipment hub.
Basheer
explained that this included
striking a balance between the role
of the Customs in generating revenue
and facilitating trade.
He
also said the rapid growth of Port
Klang’s hinterland and the
improved port infrastructure,
including surface transportation
accessibility favoured the rise of
transshipment.
Basheer
also felt it was important to
attract direct calls before feeder
calls are attracted.
“Today,
Port Klang has direct connection to
more than 200 destinations globally,
with regular feeder services
extending to regional hinterland and
as far as Australia and the Indian
sub-continent,” he said.
In
addition, the implementation of the
Free Zone concept at Northport in
1994 to facilitate transshipment,
distribution and value-adding
activities, together with
customer-focused approach of
terminal operators, has helped in
creating a conducive commercial
environment to spur its growth, he
added.
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