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Individual Assignment

Question 1
Malaysian Ports: An assessment of current management and performance
Express your opinion on how to improve the performance of the main ports of Malaysia
with special focus on containerization (Port Klang and Port Tanjung Pelepas)

1. Introduction
Seaports have had critical roles in national economic development as well as in
international trade since the majority of goods in transit between countries have been
being transported via ocean vessels. However, seaports have also faced intense
competition, which is evidenced by the increasing number of acquisitions and mergers in
the seaport industry. Intensified competition has been mainly driven by such factors as
increases in globalization trends, containerisation, market integration, and global
reallocation of capital and labor forces. As the result, these trends have profoundly
changed the tactic seaports, particularly container ports, are governed, operated and
compete. Many Southeast Asian ports are situated in strategic geographical positions for
international shipping routes and are being influenced by business penetration of global
shipping lines(Azhar, 2019). Along with global competition trends, Southeast Asian ports
are also encountering intraregion rivalry. In order to retain and improve a port’s
competitiveness, port operators need to plan proper strategies and be able to identify
their current competitive position as well as the factors influencing their business
environment(Dang & Yeo, 2017).

2. Current Situation
The complexity arises in the seaport system because it is greatly affected by
changes in world trade development, supply chain and logistics tendencies, advancement
in maritime transport, technological development and interactions with various players
either internally or externally(Azhar, 2019). In order to preserve competitiveness in the
business, seaports may have to change the logistics and transport structure and
outsource these activities(Shah, 2020). Prior to containerization, the seaport system was
referred to as spatial evolution whereby the system consisted of a collection of seaports

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in a region that would compete or cooperate with each other. The system focused on
competition between different terminal operators, and the interaction between hinterland
and foreland. Technological improvements in multimodal transportation and better
transportation infrastructure as a result of containerization have changed the connectivity
between seaports and hinterland networks(Shah, 2020). This is referred to as a
borderless seaport because it emphasizes the functional development from a seaport to
a seaport network with various degrees of formal linkages with other parties.

3. Malaysian Ports Performance


Despite Malaysia strategic locations along the Straits of Malacca as one of the
most important waterways in the world, Malaysian ports continue to play second fiddle to
Singapore’s terminals as the race for transhipment volumes intensifies(Shah, 2020). The
slow progress of capacity expansion at Malaysian ports means that top container shipping
liners could not use them for more services, compared with Singapore. This led to many
of them choosing Singapore as a hub through joint ventures with the city-state’s port
operator PSA Singapore(Azhar, 2019). The lack of joint venture arrangements to operate
at specific terminals with global shipping companies is seen as one of the reasons why
Malaysia ports keep playing second fiddle to Singapore in Southeast Asia when it comes
to transhipment containers(Azhar, 2019). Other than that, the executive consultant at
Alphaliner, a shipping and port industry consultancy stated that there were congestion
problems at PTP and Port Klang that resulted in cargo loss to Singapore(Azhar, 2019).
According to Top 50 World Container Ports (2020), Malaysia volume decreased to 12.32
million TEU in 2018 as compared in 2017 at 13.73 million TEU while Singapore volume
increased to 36.60 million TEU as compared at 33.60 million TEU in 2017. More over
Singapore have efficient cargo management system that led by a single agency as
compared to Malaysia, it were operated by 28 different agencies(Noor, 2018).
According to Federation of Malaysian Freight Forwarders President, the delay in
processes in cargo businesses had affected the country's logistics performance, with
Malaysian ports losing out to regional ports due to the lack of uniformity in terms of
enforcement at the Free Commercial Zones (FCZ)(Walter, 2018). The country's logistics
performance has dropped and is still dropping, and this is due to the deficiency in

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enforcement activities which delay all the processes in the cargo business, especially in
the FCZ areas. Thus, most companies had turned back to Singapore and they don't mind
paying extra although Malaysia has offered cheaper rates, and Malaysian ports, as well
as free commercial zones, offered sufficient facilities and infrastructure(Walter, 2018).
Furthermore Malaysia's position slipped in the ranking of 160 countries to 32nd
position in the World Bank's Logistics Performance Index (LPI) 2016 from 25th in
2014(Walter, 2018).The LPI measures country performance every two years and the
decline was attributed to the drop in six components of the index(Walter, 2018). The
obvious decline was seen in the competitively priced international shipments' category,
which saw Malaysia falling to 32nd position from 10th in 2014; shipments timeliness to 47th
in 2016 from 31st in 2014 and customs and border clearance efficiency in 40th in 2016
from 27th in 2014(“Top 50 World Container Ports,” 2020). Regionally, Singapore was
ranked 5th in the LPI, scoring 4.14 points versus Malaysia's 3.43(Walter, 2018). While
Malaysian port operators are facing hurdles in the business, Singapore is expanding
terminals at Port of Pasir Panjang, on top of their mega plan for Tuas(Azhar, 2019).

4. Recommendation
In order to mitigate the congestion problem at Malaysian Ports, the Port Klang
Authority (PKA) has introduced online solutions to reduce the number of container lorries
on the road, as well as to improve service efficiency. The solutions, known as the
Cargomove System and Linkhaul System, are the result of the collaboration between Port
Klang Authority, Northport, Westports and two private companies (Mutiah, 2019). The
Cargomove System is a platform for haulers to pre-book trips to the ports according to
their preferred timing. The solution will continue to update the hauler's location enroute to
the port and this will ensure immediate service upon arrival, doing away with the need to
queue for pick-up or delivery(Mutiah, 2019). The Linkhaul System, on the other hand,
identifies imbalanced trips and recommend "return" jobs so that lorries do not come in or
go out empty(Mutiah, 2019). With the two systems, all delivery and collection of cargo
from the port terminals will be timed, thus ending impromptu arrivals and departure of
heavy vehicles. Moreover, haulers could increase its transportation efficiency by establish
transportation management system that could track transport current location, route and

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expected time of arrival. The system would be more valuable when it could be integrated
with Cargomove System and Linkhaul System which will show overall picture of goods
movement. The integration of all systems into a single interface will increase volume of
TEU when it is accessible to consignor and consignee.
Other initiatives that could increase efficiency of Malaysian Ports is by increasing
joint venture agreements with global shipping companies to operate at Malaysian ports.
Currently only PTP have joint venture agreement with global shipping company namely
Maersk. In 1990 when PTP started operating, it has cause panic to Singapore Port
Authority (SPA) as its container volume increased tremendously. The arrangement with
Maersk can be said to be one of the reasons PTP enjoyed strong growth over the first
decade of its operations before SPA able to increase its volume of TEU tremendously in
2010 until now by having joint venture agreement with global shipping companies namely
CMA CGM, Pacific International Lines, China Shipping Container Lines, Ocean Alliances,
Ocean Network Express and many more shipping lines to operate at Singapore ports.
Having joint venture agreement with many global shipping companies would enable
Malaysian Ports increase its volume TEU provided efficient management, modern
technology and facilities in processing cargo, competitive prices as well as efficient
customs clearance.

5. Conclusion
In conclusion, Malaysian ports need to innovate in order to keep up with its
competitors especially in terms of digitalization and automation. The Malaysian
government has set the creation of a single integrated port community system as a priority
in its port strategy. The main idea is to simplify and reduce the formalities, documentary
requirements and procedures on the arrival, stay and departure of ships in Malaysian
ports. This system should streamline and integrate all the digital services of the terminal
operators, shipping agents, depots, hauliers, merchants, forwarding agents, the customs
and other services present. Moreover, Malaysian government and port authorities as well
as other parties involved at seaports have to work together to mitigate weaknesses facing
by Port Klang and PTP towards of joint venture agreement with global shipping lines
specifically. There is still a room for improvement in term of policy specifically in joint

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venture policy, reducing time of processing cargo and customs clearance as well as
facilities expected from global shipping lines. With strong coordination and cooperation
between Malaysian government and port authorities as well as other related parties, Port
Klang and PTP will be the most effective and efficient ports in South East Asia and will
be an attraction to global shipping lines to joint venture and operate widely from Malaysian
Ports.

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References:
Azhar, K. (2019). Lacking a national strategy, Malaysian ports lose out to Singapore.
The Edge Malaysia. Retrieved from
https://www.theedgemarkets.com/article/lacking-national-strategy-malaysian-ports-
lose-out-singapore
Dang, V. L., & Yeo, G. T. (2017). A Competitive Strategic Position Analysis of Major
Container Ports in Southeast Asia. The Asian Journal of Shipping and Logistics,
33(1), 19–25. https://doi.org/10.1016/j.ajsl.2017.03.003
Mutiah, W. (2019). Port Klang turns to online solutions for efficient container lorry
management. New Straits Times. Retrieved from
https://www.thestar.com.my/news/nation/2019/07/04/port-klang-turns-to-online-
solutions-for-efficient-container-lorry-management
Noor, M. H. M. (2018). Port Klang can become among world’s 10 best ports: Transport
Ministry. New Straits Times. Retrieved from
https://www.nst.com.my/news/nation/2018/10/427007/port-klang-can-become-
among-worlds-10-best-ports-transport-ministry
Shah, S. A. (2020). Malaysia seeks to boost ports capacity to rival Singapore. The
Malaysian Reserve. Retrieved from
https://themalaysianreserve.com/2017/12/22/malaysia-seeks-boost-ports-capacity-
rival-singapore/
Top 50 World Container Ports. (2020). Retrieved from World Shipping Council website:
http://www.worldshipping.org/about-the-industry/global-trade/top-50-world-
container-ports
Walter, F. (2018). Pressing need to improve logistics, cargo processes at Malaysian
ports. The Sun Daily. Retrieved from https://www.thesundaily.my/archive/pressing-
need-improve-logistics-cargo-processes-malaysian-ports-guarch564183