The three-year courtship between Konsortium Logistik Bhd (previously known as Konsortium Perkapalan Bhd) and Diperdana Kontena Bhd has finally brought the two to bed.

Although the two had in the past frequently denied rumours of their courtship, the manner of recent consummation raises more question than answers have been provided.

In a recent announcement, the two companies listed in the KLSE said they have entered into a MOU that would result in Konsortium taking over Diperdana’s entire existing business encompassing container haulage by road, rail, forwarding, management of container depots and warehousing.

Under the proposed agreement, Diperdana which last year reported a pre-tax profit of RM16 million (on the back of a turnover of RM136 million) would turn over the assets including about 400 prime movers and 1,600 trailers to Konsortium.

In exchange, Diperdana, will get a controlling stake in Pelikan Holding AG from Pelikan Holdings Sdn Bhd which holds the franchise to supply the Pelikan stationery products worldwide through associates and subsidiary companies.

The exchange will considerably strengthen Konsortium over all other operators in the country and enhance its capability to serve a larger and an increasingly competitive market although the same cannot be said of Diperdana.

Under the MOU, the companies are expected to finalise the agreement over the next three months.

The proposed arrangement would make Konsortium, which itself owns and operates more than 550 prime movers and 2,500 trailers, the largest container haulier in the country with a fleet of 1,000 prime movers and 4,000 trailers and give it a control over 50 per cent of the market.

The enlarged operation would also give Konsortium a better geographical spread and important links to a network of inland facilities and depots.

The move by Konsortium is seen as structural market response to the intense competition that lies ahead in the container haulage industry that witnessed the unprecedented increase in the licensing of 50 new companies being offered licenses to haul containers.

Acting on frequent complaints from shippers, including the Federation of Malaysian Manufacturers (FMM), the government last year decided to liberalise the licensing of hauliers (which has been limited to five until the beginning of last year).

The licensing of the unexpected large number of operators however took the haulage industry by surprise.

The industry, which has often been described as the bane in the transportation chain in the country, has often been plagued with inconsistent customer service level and dubious status of its capacity.

The five hauliers – Kontena Nasional Sdn Bhd, Konsortium Logistik Bhd, Diperdana Kontena, MISC Haulage Services Sdn Bhd and Multimodal Freight Services Sdn Bhd – as members of the Container Hauliers Association of Malaysia (CHAM) responded to the liberalization of the sector by increasing their fleet strength to forestall competition.

CHAM also questioned the government’s decision to license so many operators.

“CHAM feels the decision to licence such a large number of new players is based on faulty reasoning and will actually result in an overall deterioration in customer service levels rather than an improvement,” it said in an immediate response to the government’s move last year.

However, there was little to deny that their market shares were under pressure and a noticeable casualty in this regard was MISC Haulage Services which has seen an erosion of its market in the last two years.

The move by Konsortium (to expand its scale of operations) is also timely in the wake of attempts by Kontena Nasional to strengthen itself including  from its recent fleet expansion and association with Northport Corporation Bhd (under a merger exercise that brought Kontena Nasional, Klang Container Terminal and Klang Port Management together).

The haulage market is expected to witness further structural developments in the years head, especially with the entry of several new operators as well as new perception in demand for haulage services.

Some of the operators are already adopting an arrangement that offers users to block book their fleet requirement on long term for a dedicated service.