KTMB approves RM10m container yard expansion
National rail operator KTM Bhd (KTMB) has approved a RM10 million expansion of its road haulage subsidiary's container yard operations in Padang Besar.
The expansion will more than double the size of the existing 4.86ha container yard to 8.91ha during the next two years.
Multimodal Freight Sdn Bhd general manager Azman Ahmad Shaharbi said half of the funds will be used for infrastructure development and the rest to buy equipment.
"We plan to turn a 4.05ha railway land into a container stacking area. At the moment, the area consists of bushes and scrubs," he told Business Times in an interview.
Today, Multimodal operates five container yard facilities in the country, with Padang Besar generating about 70 per cent of the business.
Last year, container yard operations brought in RM11.97 million or 15 per cent of Multimodal's revenue. It is targeting revenue of RM13.5 million this year, up 13 per cent.
Azman said the expansion is part of KTMB's plans to move Multimodal away from being just a road haulage operator to that of a total logistics provider.
"Since the liberalisation of the local container haulage industry in 2000, our profit margins have fallen from 5-6 per cent to 3-4 per cent of revenue during this period.
"This is not good. By industry standard, the profit margin should be at least 10 per cent of revenue. As such, our board has set a target to improve profit margins to 8 per cent by 2010," he said.
To date, Multimodal has developed other businesses including container yard, freight forwarding, depot and warehousing to help to reduce risk exposure in the haulage market.
Still, haulage operations will continue to account for more than half of the company's revenue this year.
"We don't expect that to change in the immediate future," said Azman, adding that the company is expected to benefit from the industry's new flat-rate haulage tariff this year, which sees a rate hike in 20-foot container deliveries to that of 40-foot container deliveries.
Multimodal expects revenue to grow by 12 per cent this year, driven by its haulage and container yard operations.
The company expects revenue to reach RM87.50 million this year, from RM78.20 million last year.
Pre-tax profit is likely to increase 5 per cent to RM3.40 million, from RM3.25 million in 2006.
In addition to the RM10 million financed by KTMB, Multimodal will itself fork out RM30 million to modernise its equipment this year.
It plans to buy 50 new prime movers to replace 82 prime movers which are above 11 years of age. It currently has a fleet of 264 prime movers and 1,484 trailers.
"Part of the funds will also be used to upgrade our existing container yards in Port Klang, Butterworth and Pasir Gudang," said Azman.
It will also open a satellite office in Port of Tanjung Pelepas, Johor, next month to support its sales and marketing activities in the southern region.
"We are also looking to set up a branch and facility in Mentakap, Pahang next year. But first, we have to gain KTMB's approval as the facility will be on railway land and we want to know whether the land is suitable (for logistics operations)," said Azman.
The expansion will more than double the size of the existing 4.86ha container yard to 8.91ha during the next two years.
Multimodal Freight Sdn Bhd general manager Azman Ahmad Shaharbi said half of the funds will be used for infrastructure development and the rest to buy equipment.
"We plan to turn a 4.05ha railway land into a container stacking area. At the moment, the area consists of bushes and scrubs," he told Business Times in an interview.
Today, Multimodal operates five container yard facilities in the country, with Padang Besar generating about 70 per cent of the business.
Last year, container yard operations brought in RM11.97 million or 15 per cent of Multimodal's revenue. It is targeting revenue of RM13.5 million this year, up 13 per cent.
Azman said the expansion is part of KTMB's plans to move Multimodal away from being just a road haulage operator to that of a total logistics provider.
"Since the liberalisation of the local container haulage industry in 2000, our profit margins have fallen from 5-6 per cent to 3-4 per cent of revenue during this period.
"This is not good. By industry standard, the profit margin should be at least 10 per cent of revenue. As such, our board has set a target to improve profit margins to 8 per cent by 2010," he said.
To date, Multimodal has developed other businesses including container yard, freight forwarding, depot and warehousing to help to reduce risk exposure in the haulage market.
Still, haulage operations will continue to account for more than half of the company's revenue this year.
"We don't expect that to change in the immediate future," said Azman, adding that the company is expected to benefit from the industry's new flat-rate haulage tariff this year, which sees a rate hike in 20-foot container deliveries to that of 40-foot container deliveries.
Multimodal expects revenue to grow by 12 per cent this year, driven by its haulage and container yard operations.
The company expects revenue to reach RM87.50 million this year, from RM78.20 million last year.
Pre-tax profit is likely to increase 5 per cent to RM3.40 million, from RM3.25 million in 2006.
In addition to the RM10 million financed by KTMB, Multimodal will itself fork out RM30 million to modernise its equipment this year.
It plans to buy 50 new prime movers to replace 82 prime movers which are above 11 years of age. It currently has a fleet of 264 prime movers and 1,484 trailers.
"Part of the funds will also be used to upgrade our existing container yards in Port Klang, Butterworth and Pasir Gudang," said Azman.
It will also open a satellite office in Port of Tanjung Pelepas, Johor, next month to support its sales and marketing activities in the southern region.
"We are also looking to set up a branch and facility in Mentakap, Pahang next year. But first, we have to gain KTMB's approval as the facility will be on railway land and we want to know whether the land is suitable (for logistics operations)," said Azman.