POST PANDEMIC CHALLENGES TO MARITIME LOGISTICS

Capt. K. Subramaniam
General Manager
Port Klang Authority
 GLOBAL TRADE 2021 (IMPORTS & EXPORTS)
USD 28.5 TRILLION
GLOBAL CONTAINER VOLUME
(Million TEUs)
SEA 2021
849
2019
80%
Containerized : 70%
Non Containerized : 30%
AIR 807

2017
7% 754 2020
798

2018
LAND 2016
792

13% 2015
688
700
ASEAN DEFYING TREND 2021 - 2023

• Global real GDP growth

Real GDPGrowth Rate
slashed for 2022 mainly
9
8.1 driven by major
8
economies.
7 6.8
6.1 • The ASEAN region is still
6 5.7
5.3 5.1 anticipated to experience
5 4.6 strong growth.
3.9 2021
3.6
4
3.2 3.3 3.4 2022 • Emerging market and
2.9
3
2.3
2023 developing economies
2 are facing challenges.
1.0
1 • ASEAN to grow at
0 5.3% in 2022 and
World US China Emerging market
and developing
ASEAN-5 5.1% in 2023.
economies
Source: The International Monetary Fund (IMF)
ASEAN-5 : Indonesia, Malaysia, Philippines, Singapore & Thailand
Shipping, Ports & Logistics
BEFORE COVID-19
01 Weak but Stable Freight
Rates

02 Occasional Weather &

Labour Related Disruptions
to Scheduled Service & Port
Calls

03 Standard Safety & Security

Requirements
Before Pandemic
04 Less Reliance On
Digitalisation
Source : UNCTAD Trade and Development Report 2021

05 Minimal Disruptions to
Supply Chain
Shipping Trend CONTAINER SHIP TRENDS & IMPACT ON PORTS
EVOLUTION OF CONTAINER VESSELS (SIZE) IMPACT ON PORTS

EXPANSION OF
PORTS

DREDGING

INVESTMENT
IN NEW
EQUIPMENT

PRODUCTIVITY
Shipping Trends – Then & Now
STATE OF GLOBAL SHIPPING
Before COVID-19 During & Post COVID-19

1 RATIONALIZATION OF SHIPPING SERVICES

Strategic alliances will increase service frequencies and
carriage capacities between hub ports on the long hauls.
1 SUDDEN DEMAND FOR SHIPPING
SERVICES

HUB AND FEEDER PORTS

Feeder networks and feeder vessel sizes have also grown as shipping
alliances most often choose 1 or 2 major hub ports in the region.
2 2 TRADE IMBALANCE AND SUPPLY
CHAIN DISRUPTION

PRIMARY / SECONDARY HUBS

3 Port Klang has been chosen secondary hub by many lines
as they experienced delay due to congestion in Singapore.
3 SHARP INCREASE IN FREIGHT
RATE

IN REALITY - EXCESS OF SHIPPING

CAPACITY 4 4 CREWING ISSUES ON BOARD
SHIPS

5 LOW FREIGHT RATES

 GLOBAL DEMAND - Global Container Vessel Fleet Data Trend
30,000,000 5,700 FINANCIAL WINDFALL FOR SHIPPING LINES
Capacity TEU (Sum)
5,610 • Diversification into logistics business: Air
Number of Vessels (Sum) 5,600 Freight , Total Logistics
5,587 (LF Logistics – Maersk , CEVA Logistics - CMA CGM , Bolloré Logistics – MSC)
25,000,000 25,487,000

23,632,000
24,702,000

5,500
• Investment into new buildings (1,311 Ship
22,012,000
22,954,000
Orders from 2020 to 2023)
20,000,000 20,714,000

19,677,000
20,003,000
5,370 5,431 5,400 • The capacity of the global container vessel
fleet growing gradually year by year.
15,000,000 5,265 5,300 • Between 2015 to 2021, the carriage capacity
5,234
of the global container vessel fleet grew 20%.
5,167 5,200
10,000,000
5,158 • It is projected the growth of global container
fleet will reach 7.5% in 2023, reflecting the
5,100 spike in orders of container ships in 2021.
5,000,000 • Increasing ship tonnage may out number
5,000
tonnage to be scrapped that are no longer
environmentally sustainable.
0 4,900
2015 2016 2017 2018 2019 2020 2021 Aug • Possible excess of tonnage capacity in
2022
Graphic depicts the number of vessels and total capacity in twenty-foot equivalent units (TEU) 2023/2024 with container volume shrinking.
annually.
Source: Alphaliner Report
Container Freight Rate Index
• WCI has dropped by 28%
World Container Index(WCI) compared to last year.
11,000
10,000
• Although currently 35%
9,000 below the peak of $10,377 in
8,000
7,000
September 2021, recent WCI
6,000 composite index of $6,762
5,000
4,000 per 40-foot container still
3,000 89% higher than 5-year
2,000
1,000 average of $3,574.
0
• Current freight rates have
enabled container shipping firms
Freight rate (US$/40ft container) Average (2012-2022) Average (2017-2022) to make high profits, which has
raised scrutiny.
Note:
World Container Index (US$/40ft container) is composite freight rate of eight major container trade route.

Source: Drewry Shipping Consultants

Shipping, Ports & Logistics
ISSUES DURING COVID-19
1 3 5

Congestion at Port
Health Risk & Restrictions Shortage of Containers
• Stringent quarantine and health controls
• Congestion/closure of destination ports • Disruption in logistics services in Europe & US
• Port workers face risk of infection
• Increase in cargo dwell time • Backlog of undelivered containers in ports
• SOPs imposed reduced workforce productivity
• Port efficiency & productivity affected • Detained containers at customer’s premise
• Risk of infection of new variants from ship crew
• Inland Cargo distribution disrupted • High demand from exporters in China

2 4 6

Freight Rate Increase

• Freight at all time high
Shipping Demand Increased
• 90% of the world goods are carried by sea Crew Change & Medical • China exporters willing to pay premium
• Increase in consumer consumption Evacuation • Shortage of vessel slots at other ports
• Alternate spending in lieu of lifestyle and travel • Fluctuating & Mismatch in supply & demand
• Increase in demand for port & logistics services • Normal crew change affected especially between Asia/ Europe/ North
• Increase in demand for digital services • Limited resources on board America
Post Pandemic Challenges in Shipping, Ports & Logistics

Slow Recovery from Disruptions In Supply Chain Shortage of Capacity

COVID-19 Pandemic – Long Staying Containers
- Congestion at Port Terminals

IMPACT
- Freight Rate Increase
- Congestion at Port
- Shortage of Containers
Russia – Ukraine War Fuel Price Increase - Freight Rate Increase
- High Detention & Demurrage Charges
 Impact of Russia – Ukraine War On Global Trade

Rise in
Global Fuel Increase in
Price Food Prices

• Disruption in Higher Dry • 1/3 global wheat

production & Bulk Freight supply.
supplies. Rates
• Significant food
shortage and price
increase.
• February 2022 to
May 2022 Baltic Dry
Index increased 59%
due to higher freight
rate and longer
distance.
 POST PANDEMIC – OVERVIEW OF MALAYSIAN PORTS’ STRATEGIES
Ports Overview WORLD CONTAINER PORT RANKING 2021
MALAYSIA PORTS
RANK PORT VOL’ 2021
Teluk Ewa Port Kota Kinabalu
(Mil TEUs)
Port Sandakan Port
Kertih Port 1 Shanghai 47.0
PenangPort Labuan Port
Miri Port 2 Singapore 37.5
Kemaman Port
3 Ningbo 31.1
Tawau Port
4 Shenzhen 28.8
Bintulu Port

LumutPort
Kuantan Port
5 Guangzhou 24.2
Rajang Port
Kuching Port
6 Qingdao 23.7
Port Klang
Sungai Udang Port
7 Busan 22.7
Malacca Port 8 Tianjin 20.3
Tg Langsat Port 9 Hong Kong 17.8
Johor
PTP Pangerang Port
Port
10 Rotterdam 15.3
MINOR PORTS
Under Marine Department
FEDERAL PORTS
Under Port Authority STATE PORTS 11 Dubai 13.7
6

12 Port Klang 13.7

5 10

GLOBAL CONTAINER THROUGHPUT 2021 MALAYSIA CONTAINER THROUGHPUT 2021

849 MILLION TEUs 28 MILLION TEUs 13 Xiamen 12.0

Ports Action Plans RESILIENCE & SUSTAINABLE DEVELOPMENT

INFRASTRUCTURE / REGULATORY DIGITIZATION & TRANSFORMATION

CAPACITY BUILDING GOVERNANCE DIGITALIZATION OF WORKFORCE DECARBONIZATION
• CONTINUOUS CAPACITY • EMISSION & GHG REDUCTION
• PORTS & LOGISTICS • CENTER OF EXCELLENCE
BUILDING • INSTITUTIONAL COMMUNITY SYSTEM
FRAMEWORK • ALTERNATE FUEL. eg: LNG FOR
ACROSS SUPPLY CHAIN • IN-HOUSE TRAINING &
• HINTERLAND TERMINAL TRUCKS
INFRASTRUCTURE • LAW & LEGISLATION • E-COMMERCE CERTIFICATION
DEVELOPMENT • E-EQUIPMENT – RTG, QUAY
• DIGITAL FREE TRADE ZONE • UPGRADE SKILL & CRANE
• POLICY & STRATEGY
• CHANNEL & WHARF (DFTZ) MULTITASKING
• LED LIGHTING / SOLAR POWER
DREDGING • GUIDELINES & SOP / ENERGY EFFICIENT COOLING
• BIG DATA ANALYSIS FOR • COLLABORATIONS WITH
FORECASTING & FUTURE SYSTEM
• SAFE & SECURE • INITIATIVES & HIGHER LEARNING
PLANNING INSTITUTIONS
WATERWAY – VTMS PROGRAMS • ONSHORE POWER SUPPLY FOR
• EFFICIENT HAULIER SHIPS AT NEW BERTHS
• AUTOMATION (FOR MOVEMENTS –
FUTURE TERMINAL) • WATER RESOURCE
- CARGOMOVE,
MANAGEMENT
- LINKHAUL
• 3R (REDUCE, REUSE, RECYCLE)
Ports Action Plans
CONTINUOUS CAPACITY BUILDING
PORT KLANG
NDSB NDSB2

• NORTHPORT RE-ENGINEERING PLAN • LPG STORAGE & DISTRIBUTION HUB • 3RD TERMINAL (CAREY ISLAND)
✓ NDSB2 Integrated Logistics Hub ✓ Dedicated berth at LBTS to cater both LPG & ✓ Natural deep water of 20-metre
✓ Regional Distribution Centre LNG ships ✓ Basin design for land optimization
✓ Total net-lettable area: 350k sqft ✓ Integrated Port City Development
✓ Development of new container yard • WESTPORTS EXPANSION ✓ Manufacturing Hub & Logistics
to increase capacity by 560,000 TEUs ✓ To add 4.8km berth Distribution Centre
✓ Additional handling capacity 13 million TEUs
✓ Dedicated green area
✓ Garden port & Green construction operations
Ports Action Plans REGULATORY GOVERNANCE

PORT AUTHORITY ACT

FREE ZONE ACT

CUSTOM ACT
PORT PRIVATISATION ACT
CARRIAGE OF GOODS BY SEA ACT

ENVIRONMENTAL QUALITY ACT

FEDERAL LIGHT DUES ACT

HEALTH ACT

AELB ACT

Customs & Port Authority Today Law & Legislation / Policies / Strategy
- Harmonization of Policy & Law which is not inline with current trend practices.
- Simplified regulations for more business friendly environment.
Ports Action Plans DIGITALIZATION

SINGLE MARITIME WINDOW

Deliverable 1
Vessel Clearance System

Deliverable 2
Cargo Tracking & Tracing System

Deliverable 3
Trade Exchange Portal to be Incorporated
with Custom Clearance System
Ports Action Plans DIGITIZATION & DIGITALIZATION
Example of Digitization & Digitalization Activities at Terminals
Before 2014
Other Activities:
- Smart Card Security System (SCSS)
- Centralised Berth Allocation System (CBAS)
- Document Management System (DMS)
- Internal Trucking System (WIT)
- Conventional Gate System (iTap)
Queueing for submission Hardcopy submission
- Remote Gate System (RGS)
NOW - Remote Reefer Monitoring System (RMS)
- CargoMove & Haulier Booking System

AND MANY MORE…..

Online Application E-gate Pass
Ports Action Plans TRANSFORMATION OF WORKFORCE

• Provide training and development programs. • IT centric towards digitalization with • IT & Technology Driven.
• To enhance corporate strategies and continuous training through workshops. • Continuous Training to upgrade staffs
organization values. skills and knowledge.

TO UPSKILL KNOWLEDGE & ABLE TO PERFORM BEYOND SCOPE OF WORK

Ports Action Plans DECARBONIZATION
ISSUES RELATED TO HANDLING OF NATURALLY OCCURRING RADIOACTIVE MATERIAL (NORM)
Radiation Portal Monitor Advance Spectroscopic
MEGAPORTS INITIATIVES (RPM) Portal
• A component of the US DOE’s 2nd Line of Defense
Programme.

• To detect, deter and interdict illegal trafficking of nuclear

and other radioactive materials including transhipment .

• Jointly administered by Atomic Energy Licensing Board Hand-Held Equipment

(AELB), Royal Malaysian Customs Department & Port
Authorities.

• Port Klang & Port of Tg. Pelepas are equipped with

Radiation Portal Monitor since 2010 under this program. CONCEPT OF OPERATIONS
• Primary Inspection
• SOP established with AELB for Naturally Occurring • Primary Response
Radioactive Material (NORM) to expedite release if • Secondary Inspection
detected. • Investigation
International Maritime Solid Bulk Cargoes (IMSBC) Code
Primary aim of the International Maritime Solid Bulk Cargoes Code (IMSBC Code) is
• To facilitate the safe stowage and shipment of solid bulk cargoes
• To provide information on the dangers associated with the shipment of certain types of solid bulk cargoes
• To provide instructions on the procedures to be adopted when the shipment of solid bulk cargoes.

International Maritime Solid Bulk Cargoes Code (IMSBC Code) is categorized into 3 groups:

Liquefied Nickel Ore Sulphur UN 1350 Iron Ore Pellets

Group A Group B Group C
Cargoes which may liquefy if shipped Cargoes with chemical hazards in solid Cargoes which are neither liable to liquefy nor
at a moisture content exceeding their form in bulk (under IMDG Code) and possess chemical hazards but they can still
Transportable Moisture Limit (TML). Materials hazardous only in bulk’ . carry risks. Example : Iron Ore Pellets
Cement, Cement Clinkers, Bauxite
 IMSBC Cargo Handling At Port Klang
01
Dangerous Goods in the
IMSBC Code must be declared
electronically or by
application letter for Material
Hazardous In Bulk [MHB]
cargoes without IMO Class /
UN Number at least 48 hours
03
prior to vessel arrival.
Among the IMSBC Code Cargo
handled in Port Klang:
- Coal in bulk

02 - Seed cake (PKE) in bulk

- Wood chips in bulk
- Iron ore
Procedures for sampling, testing
and controlling the moisture and many more
content for solid bulk cargoes
which may liquefy shall be
developed and approved in
accordance with the guidelines
issued by Marine Department of
Malaysia through Malaysian
Shipping Notice.
 CONCLUSION

Port Industry in Malaysia poised to Covid-19 exposed vulnerability Continuous development of infrastructure
transform into Regional 1 of ports, shipping & logistics 2 and services towards meeting 3
Maritime Centres. industry future needs

Commitment to reduce CO2 & GHG emission to

Strategies to face future challenges & disruption
4 protect the environment towards developing 5
using digital technology & automation
a sustainable industry for the future
@pkamalaysia @myportklang www.pka.gov.my

THANK YOU