Boston, MA -- (SBWIRE) -- 07/17/2012 -- BMI View: Moderate Growth, Downside Risks Inching Up
Two forces appear to be pulling the Malaysian ports and shipping industry in different directions this year. On the downside, the world economy remains somewhat troubled, and global demand has weakened. This means that Malaysian GDP and foreign trade growth is slowing down in 2012 compared to 2011. BMI predicts GDP growth at 3.3%, down from 5.1% last year, for example. But on the upside, the country's major ports (Port Klang and Port Tanjung Pelepas) continue to outperform for a variety of reasons. These include greater reliance on intra-Asian and local trade, which have performed better than global long-haul trade routes; the impact of fairly aggressive capacity expansion programmes; and relative success in attracting and retaining the custom of major shipping lines. As a result of these countervailing forces, we are holding our main projections unchanged compared to our last quarterly report. At both ports we see bulk cargo and container traffic staying up in the high single digits in percentage growth terms.
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Headline Industry Data
- The real value of Malaysia's total trade will rise by a predicted 3.4% in 2012, a slowdown on the estimated 4.5% expansion experienced in 2011.
- Total cargo volume handled at Port Klang will rise by 7.7% to 197.70mn tonnes in 2012, while volume at the Port of Tanjung Pelepas will rise by a slightly higher 8.2% to 130.09mn tonnes.
- Box traffic at Port Klang is projected to rise 8.3% to 10.34mn twenty-foot equivalent units (TEUs), while at the Port of Tanjung Pelepas a gain of 6.1% to 7.33mn TEUs is expected.
Key Industry Trends
Westports Expects To Handle Over 7mn TEUs
The chairman of Westports Malaysia has delivered an upbeat message despite the sluggish global economy, saying he expects the privately-owned terminal will handle 7mn twenty-foot equivalent units (TEUs) this year, up from 6.5mn in 2011. He also underlined the importance of the company's US$1bn investment programme, which among other things involves the completion of four new terminals by 2016, to add to the five already in operation.
Maybulk Experiences Hard Times
Malaysian Bulk Carriers (Maybulk) has been hit by plummeting dry bulk freight rates. In 2011 net profit was down 61.7% to MYR91.3mn due to lower charter rates, while revenue fell to MYR256.3mn from MYR404.2mn in 2010. Revenue from the company's dry bulk segment was down 39% year-on year, reflecting the fact that the Baltic Dry Index averaged US$1,549 in 2011, versus an average of US$2,758 in 2010. BMI believes operating conditions will remain very tough for the company in 2012.
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