Northport blazes the trail

Northport Malaysia Bhd (formerly known as Klang Container Terminal Bhd), created following the injection of Klang Port Management Sdn Bhd into the public-listed Klang Container Terminal Bhd, stands on the threshold of a new destiny with its new corporate structure, strengthened management, renewed resolve as well as a more focused approach in its development ahead.

In an industry, which has, in recent years, been increasingly characterized by lack of focus in investments or care for equitable (and accountable) returns, Northport stands apart and ahead as a one of the most viable port operating companies in for a long haul.

Driven by the need to conserve its resources in the face of an emerging and a reckless inter-port competition, the ultimate majority shareholders of KPM and KCT, involving direct and indirect interests of Permodalan Nasional Bhd (PNB), forged to integrate the two companies.

The move was not only aimed at bringing about better shareholders’ value from the economies of scale, rationalization of costs and elimination of competition but chart a clear an unambiguous path of growth for the largest port operating companies in the country.

At a time when corporate vultures are only interested in stripping assets and devouring healthy outfits, PNB has moved responsibly by adding value to Northport (Malaysia) Bhd whose total shareholders’ fund exceed RM1 billion and a total turnover of about RM500 million.

The move by PNB was no doubt precipitated by the dim long term prospects which KCT faced largely through obstacles placed before it. KCT, which maintained a sterling performance since its privatization in 1986, faced a dead-end with no scope for expansion and growth owing to a physical limitation at the port as the remaining facilities and services were privatized to KPM in 1992.

It made little sense for PNB that KCT, a formidable operator to compete with a fledging sister company, KPM which, nevertheless, had good potential for growth. The seeds for the merger were thus sown.

The merger move, which gathered speed ever since Westport emerged as the third operating company in Port Klang six years ago, is seen not only as a positive development that benefits KCT and KPM in the longer and larger interests but as a also a logical development in a marketplace that had become somewhat destructive.

The merger is thus a response to intra-port competition in the national ports system as well as a countervailing move to cope with the rising inter-port competition in the region.

Northport now accounts for about 62 per cent of the container traffic volume handled at Port Klang and has a capacity to handle four million TEUs (Twenty Foot Equivalent Unit) on its 2.75 kilometer quayline decked with 25 shoreside gantry cranes. Its total quayline runs over five kilometers.

Northport, which now controls the entire mainland port facilities and services at Port Klang, offers considerably greater flexibility to shipping lines. With more capacity now made available, including from the re-development of a new 356 metre long container berth that is specially being constructed to cope with the bigger post-panamax containerships, there is no longer the anxiety from the shipping lines.

Fully developed the new berth will enlarge Northport’s container handling capacity to over 4.5 million TEUs. This will be a comfortable capacity for Northport, which last year handled a total of 2.1 million TEUs, to push ahead aggressively with its wider market outreach.

As the most matured port in the country Northport is blessed with the leadership the most experienced team port management team headed by Basheer Hassan Abdul Kader.

Northport has the cutting edge which most users look for – reliability and consistency. Shipping lines would prefer to deal with ports that are consistent in the level of performance and provide greater reliability than others viewed as a “fortnight’s flavour”.

Northport now stands on firm ground as it mounts an aggressive corporate re-branding to announce its new status.

New as well as continued focus of development of the new company is expected to revolve around four areas, namely

• Greater horizontal and vertical integration of activities

• Re-development of neglected non-core activities

• Skill development and training of manpower

• Customer-retention and outreach

As major thrust in the integration exercise will be the development of a logistics and distributive hub by Northport following its full acquisition of the Port Klang Distripark Sdn Bhd (PKDP) which was the sole provider of consolidation services at the Free Zone in North Port at Port Klang.

PKDP, which was previously owned by Port Klang Authority and Peremba Sdn Bhd, is expected to turn into a hive of activity for distributive activities that will form a very important downstream migration of activities for Northport.

While Northport is expected to remain focused on the handling of container traffic, efforts are being renewed to strengthen its non-container cargo handling operations that include the handling of both liquid bulk cargo and dry bulk cargo that will broaden the product base of the company.

Northport is also focusing on conventional cargo handling which did not receive much attention in the past. The port has dedicated terminals to handle cargoes such as palm oil, chemicals, fertilizers, cereals and others.

Measures are in place to revitalize the older facility at South Port which the company wants to develop a consolidation and distributive center for regional cargo, particularly from Sumatera, Indonesia.

The entry of AFTA is also seen as a positive development by Northport to reap the benefits of the trade creation effects of the free trade environment and expand the scope of trade at the port.

The designation of South Port as a free zone is expected to boost the prospects for increased distributive trade at the port.

One of the biggest challenges Northport will come from the deployment of its human capital. With a labour force exceeding 3,800 workers, Northport is the largest port labour employer in the region and this is expected to bear considerable pressure on the company that have to focus on employee value-adding in a dramatic way.

A blue print for human resource development has thus been identified that would involve the re-deployment of the workers to new areas of port-related growth activities.

Customer-retention will be challenging for Northport, which has the largest number of shipping lines after Singapore in the region. With the market now become extremely competitive, Northport has to put up with pressures from its neighbour, Westport, as well as Port of Tanjung Pelepas and Singapore in its bid to retain its long list of clients.

There is no doubt that Northport has the resourcefulness and the resilience to remain a major force in the port industry following the merger that has suddenly made it potentially an attractive company.

An attractive company, like an attractive bride, cannot, however, avoid the roving eyes of corporate vultures.