The Port Klang Authority (PKA), regulator of Northport and Westports, has decided to stop the subsidy on inter-terminal transfer (ITT) of containers between the two ports from July 1, despite protests by shipping lines and terminal operators.
The subsidy was initiated 13 years ago by the Government to attract transshipment cargo to Port Klang. The ITT charges involve the transfer of containers, either by rail or road, between Northport and Westports to secure onward transshipment connections provided either by mainline or feeder vessels.
PKA general manager Datin Paduka O. C. Phang told Business Times that the subsidy has helped Northport and Westports to attract shipping lines to tranship via Port Klang and it is now time for the two terminal operators to work with their customers (shipping lines) to absorb the ITT costs.
"We cannot be helping them perpetually," she said, adding that ample notice has been given to both parties on this matter.
Phang declined to reveal how much money the port authority spends on ITT, except to say that it is "quite significant".
International Shipowners of Malaysia (ISOAM) vice-chairman Ooi Lean Hin said the association will meet with the respective terminal operators and plans to bring the matter up to the Transport Ministry to reconsider continuing the subsidy.
It is understood that the current ITT subsidy is RM80 per 20-foot container and RM160 per 40-foot container. However, its removal is expected to see shipping lines paying as much as RM120 to transfer a 20-foot container and RM240 for a 40-foot container by rail between Northport and Westports.
KTM Bhd (KTMB) general manager (freight division) Abd Radzak Abd Malek said the amount of ITT cargo it carries between Northport and Westports totals some 1,400 TEUs (20-foot equivalent units) to 1,600 TEUs per month, a small fraction of the total transhipment volume.
"We do not make money with this service, but enough to generate an operational surplus," he added.
Jardine Shipping Services country manager Thum Hoong Yip believes that removal of the subsidy will make Port Klang less conducive to transshipment activities.
"The ITT service between Northport and Westports should remain free like that of between Jurong Port and Pasir Panjang in Singapore, because this is an internal issue. You (Port Klang) have two terminals and thus, we (shipping lines) should not be charged for it," he said. CMA-CGM Malaysia managing director Simon Whitelaw agrees.
When contacted, a Westports spokesman said the port is still studying the situation with its customers. Meanwhile, Northport has urged PKA to reconsider withdrawal of the ITT subsidy.
"We have requested PKA to reconsider its proposed move which was devised as part of a broader policy instrument to further a national agenda and therefore, an unilateral decision to withdraw the subsidy should be avoided and must take into account sentiments of all stakeholders in the port," said Northport (Malaysia) Bhd deputy chief executive Haris Abdul Aziz.
"The development of the national load centre at Port Klang has been a cornerstone of the Government's national port policy and therefore the proposed move to withdraw this subsidy for haulage services provided by KTMB and nominated hauliers could have serious implication on the development of the national policy," he added.
Northport last year handled 2.7 million TEUs, of which 37 per cent comprised transshipment cargo, while Westports handled 3.7 million TEUs, of which 62 per cent were transhipment cargo.
The subsidy was initiated 13 years ago by the Government to attract transshipment cargo to Port Klang. The ITT charges involve the transfer of containers, either by rail or road, between Northport and Westports to secure onward transshipment connections provided either by mainline or feeder vessels.
PKA general manager Datin Paduka O. C. Phang told Business Times that the subsidy has helped Northport and Westports to attract shipping lines to tranship via Port Klang and it is now time for the two terminal operators to work with their customers (shipping lines) to absorb the ITT costs.
"We cannot be helping them perpetually," she said, adding that ample notice has been given to both parties on this matter.
Phang declined to reveal how much money the port authority spends on ITT, except to say that it is "quite significant".
International Shipowners of Malaysia (ISOAM) vice-chairman Ooi Lean Hin said the association will meet with the respective terminal operators and plans to bring the matter up to the Transport Ministry to reconsider continuing the subsidy.
It is understood that the current ITT subsidy is RM80 per 20-foot container and RM160 per 40-foot container. However, its removal is expected to see shipping lines paying as much as RM120 to transfer a 20-foot container and RM240 for a 40-foot container by rail between Northport and Westports.
KTM Bhd (KTMB) general manager (freight division) Abd Radzak Abd Malek said the amount of ITT cargo it carries between Northport and Westports totals some 1,400 TEUs (20-foot equivalent units) to 1,600 TEUs per month, a small fraction of the total transhipment volume.
"We do not make money with this service, but enough to generate an operational surplus," he added.
Jardine Shipping Services country manager Thum Hoong Yip believes that removal of the subsidy will make Port Klang less conducive to transshipment activities.
"The ITT service between Northport and Westports should remain free like that of between Jurong Port and Pasir Panjang in Singapore, because this is an internal issue. You (Port Klang) have two terminals and thus, we (shipping lines) should not be charged for it," he said. CMA-CGM Malaysia managing director Simon Whitelaw agrees.
When contacted, a Westports spokesman said the port is still studying the situation with its customers. Meanwhile, Northport has urged PKA to reconsider withdrawal of the ITT subsidy.
"We have requested PKA to reconsider its proposed move which was devised as part of a broader policy instrument to further a national agenda and therefore, an unilateral decision to withdraw the subsidy should be avoided and must take into account sentiments of all stakeholders in the port," said Northport (Malaysia) Bhd deputy chief executive Haris Abdul Aziz.
"The development of the national load centre at Port Klang has been a cornerstone of the Government's national port policy and therefore the proposed move to withdraw this subsidy for haulage services provided by KTMB and nominated hauliers could have serious implication on the development of the national policy," he added.
Northport last year handled 2.7 million TEUs, of which 37 per cent comprised transshipment cargo, while Westports handled 3.7 million TEUs, of which 62 per cent were transhipment cargo.