KUCHING: Sarawak logistics industry is well poised to capture the growth opportunities in Malaysia given that the outlook for the industry globally, and in particular for the Asia Pacific region, remains vibrant, driven by the growing logistics outsourcing market.
The logistics sector in Malaysia had enjoyed buoyant times for the past 12 months amid the global slowdown and signs indicated that the coming year would be just as productive, Sarawak Shipping Association (SSA) executive secretary Lee Kim Kwang told BizHive Weekly in an interview recently.
“To meet these new demands for global supply chain management, Sarawak logistics companies are looking beyond the traditional freight, warehousing and transportation segments to offer specialised logistics in niche sectors like electronic high-tech products, oil and gas, marine, pharmaceuticals and perishables,” observed Lee.
The logistics industry assumed a prominent role in supporting both manufacturing and services sectors as it facilitated the movement of goods and services and also international trade. To focus on developing this sector, the government had set up the Malaysia Logistics Council (MLC) in 2007 for overall planning on policies, regulations, rules and strategies for the sector.
Last year, the major transport subsectors in the country showed positive achievements following continuous improvement by the government as the transport ministry provided a conducive environment to draw foreign investors and spur economic development.
The air sector recorded a 7.9 per cent growth in terms of aircraft handled by all airports in the country, from 535,793 in 2009 to 577,985 in 2010. Cargo landed by all airports nationwide also rose 14.55 per cent to 927,414 metric tonnes last year from 809,624 metric tonnes in the previous year.
In the maritime sector, handling of containers increased from 16,040,142 twenty foot equivalent (TEUs) in 2009 to 18,407,853 TEUs in 2010, a hike of 14.8 per cent.
In Sarawak, an interview carried out with supply chain players such as shipowners, freight forwarders and the port authority concluded that the shipping sector in the state remained intact despite the economic slowdown.
“As far as sea transportation is concerned, we believe that it is quite substantial as sea transportation is the most economical link between East Malaysia and West Malaysia. Even within Sarawak itself, bulk cargo transportation between each division by water is a very crucial means of transportation,” Shin Yang Shipping Corporation Bhd (Shin Yang) chief financial officer Richard Ling responded in an email interview.
He further pointed out that the outbound cargo from East Malaysia to Peninsular was also showing signs of an increasing trend through the use of containers as a means of shipment, especially for commodity products.
“The logistic industry in Sarawak is growing steadily especially with the projects kicked off under the Sarawak Corridor of Renewable Energy (SCORE),” he added. “Furthermore, existing oil palm as well as reforestation plantation and timber downstream processing industries are continuously growing and hence, the need of sea transportation that provides a vital link to the international markets, since we are still a net exporting country.”
Prime Minister Datuk Seri Najib Tun Razak mentioned during Budget 2012 that the strength of the domestic demand would propel the nation’s economy forward. “With this in mind, we believe that sea transportation to and from West Malaysia, especially consumer goods and daily food products to the domestic markets are still an integral part of the system,” said Ling.
Sinar Mekar Sdn Bhd (Sinar Mekar) managing director Augustine CH Wong in an interview said, with the state government’s continuous efforts in pushing Sarawak to become an industrial state, there were vast potentials lying ahead for logistic industry players.
“This is evident with the development of SCORE in central Sarawak region that many new industries are expected to mushroom such as aluminium smelting plants, pulp and paper mills, Tanjung Manis Halal Hub, Samalaju Industrial Park and so forth,” Wong commented.
“All these activities are creating new opportunities for logistics players as these manufacturers need to import raw materials to support their productions and export their end products internationally or for domestic consumption. Either way air, land or sea transportation is crucial,” he added.
According to global research and consultancy firm Frost & Sullivan, the logistics industry in Malaysia was expected to grow by 11.5 per cent in 2011 to RM121 billion compared with RM108.5 billion in 2010, spurred by strong external trade that was expected to increase by 10 per cent to RM1.28 trillion this year.
Gopal R, vice president, Transportation & Logistics Practice, Asia Pacific and country head for Malaysia at Frost & Sullivan said the investment-friendly environment created by the Malaysian government would also boost subsectors of the logistic industry, such as import-export forwarding, shipping and airfreight-related businesses.
Market research revealed that Malaysian ports were expected to achieve a seven per cent growth in cargo handling, whilst the International Air Transport Association (IATA) predicted global air cargo volume to increase by 6.1 per cent to a total of 46.2 million tonnes this year.
However, he cautioned that growth in the Malaysian logistics industry could be hampered by the lack of skilled logistics professionals, fragmented nature of the logistics sector and lack of emphasis in value-added services by logistics service providers.