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Performance Prospects
PERFORMANCE AND PROSPECTS
A J Keyes assesses how ports in Indonesia, Malaysia and Singapore are coping with the COVID-19 pandemic and looks at future trading potential and infrastructure plans
As identifi ed in the July/August 2021 edition of Port Strategy, the cost of doing business in China is rising, with higher labour costs, lower profi ts, and various trade/ political issues seeing a shift to a number of locations in South East Asia.
In addition to Cambodia, Thailand and Vietnam the countries of Indonesia, Malaysia and Singapore complete the geographic area – although representing widely divergent levels of development. With increasing exports from the region often running ahead of dedicated port capacity another round of transshipment growth is clearly on the cards.
SINGAPORE DOMINATES
As Figure 1 shows, Singapore is the dominant regional container facility and enjoyed strong growth in 2017 and 2018, before activity levelled off in 2019 and dropped by 0.9 per cent in 2020 due to the initial impacts of the COVID-19 pandemic.
Yet the 36.87 million TEU recorded for 2020 is still considerably higher than the next busiest container ports of Port Klang and Port Tanjung Pelepas (PTP), which saw 13.24 million TEU and 9.80 million TEU, respectively.
Singapore, in particular, is showing signs of improving its full-year 2021 throughput. For its year-to-date July 2021 period, a total of over 21.85 million TEU was recorded, which if the same growth continues could see around 37.46 million TEU moved by the end of December – reflecting a positive increase over 2020 and potentially surpassing the record high of 2019.
Likewise, Port Klang recorded just over 7.0 million TEU for H1 2021, meaning that it could well exceed the 2020 total.
Of the listed ports, Penang has suffered the most due to the COVID-19 pandemic, with a drop of -6.9 per cent between 2019 and 2020, primarily due to the port’s reliance on importexport activity in the tourist-dominated north of the country. Port Klang also saw a decrease equivalent to -2.5 per cent.
By comparison, there were increases in total volumes handled by Tanjung Pelepas (+7.7 per cent), Johor (+6.4 per cent), Tanjung Priok (+3.0 per cent) and Tanjung Perak (+4.0 per cent). Clearly, these ports were not impacted by the COVID-19 in 2020, although growth would likely have been much stronger without the pandemic occurring.
IMPORTANCE OF TRANSSHIPMENT
It is important to pull out the dominant activity at the main regional ports in more detail to better understand the trends from the data. This means looking at the transshipment the larger ports are handling.
In 2020, the transshipment incidence at the three ports handling substantial volumes of this type of cargo was 85 per cent in Singapore, 61 per cent for Port Klang and 95 per cent for Port Tanjung Pelepas. Port Klang has the benefit of more gateway demand potential for the Klang Valley industrial region supplementing transshipment.
Figure 2 confirms the recent development of activity since 2011. Volumes have fluctuated in Singapore, although strong growth did occur between 2016 and 2018 before levelling off.
By comparison, activity in Port Klang has not been able to reach the 2016 peak while Port Tanjung Pelepas has maintained consistent growth over the the assessment period. Yet it is clear that transshipment demand in the initial stages of the COVID-19 pandemic only grew in Tanjung Pelepas (at 7.7 per cent between 2019 and 2020), while Singapore (-0.9 per cent) and Port Klang (-5.0 per cent) saw declines.
TRADE POTENTIAL AND CONCERNS
While some Asian manufacturing economies have evolved into global leaders in advanced industries, large parts of Southeast Asia are still viewed primarily as a location for lowwage assembly work.
A new trade arrangement, known as the Regional Comprehensive Economic Partnership (RCEP), was signed in November 2020 and is aiming to significantly accelerate the flow of finished goods and investment between Southeast Asia and trade partners such as China, Japan, South Korea, and Australia. Collectively there are 15 member countries with a combined population of 2.2 billion people (a 30 per cent share of the global total) and around 30 per cent of total worldwide GDP.
The new arrangement unifies a number of existing agreements and is targeting greater access to Asia’s biggest and developed markets, and will present opportunities for the shipment of containerised goods on the intra-Asia regional trade route. Indonesia, Malaysia and Singapore are all members and will clearly benefit.
Source: dataand.com, ports 8 Figure 1:
Development of Total Container Volumes at Select Ports 2011-2020, by TEU
8 Figure 2:
