The port sector outlook in the region is resilient, analysts observed, and port operators such as Westports are expected continue to thrive.
KUCHING: The port sector outlook in the region is resilient, analysts observed, and port operators such as Westports Holdings Bhd (Westports) are expected continue to thrive.
In fact, AmInvestment Bank Bhd (AmInvestment Bank) believed seaport operators have emerged from the pandemic as economies, businesses and borders reopen, translating to a recovery in global trade, and hence improvement in seaports’ throughput.
“Looking beyond the pandemic, the outlook for the port sector in the region (Malaysia included) is resilient, underpinned by global trade and investments in the manufacturing sector that generate tremendous inbound (feedstock) and outbound (finished product) throughput for ports,” AmInvestment Bank said.
“There have been significant relocations of the manufacturing base by multi-national companies out of China to the region due to the rising labour and land costs, exacerbated by the US-China trade war.
“Westports has charted a long-term expansion plan to capitalise on these.”
Meanwhile, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) continued to view Westports positively.
This was due to Westports’ lower transshipment tariffs amongst the group’s peers such as Port of Tanjung Pelepas and Port of Singapore even after taking into account of the second phase of tariff hike in March 2019 and the extension of the Ocean Alliance to 10 years (initially five years) until 2027 will mitigate the effects from the reshuffling of alliances profoundly seen in financial year 2017 (FY17).
“Nevertheless, the contribution from intra-Asia and Asia-Europe trade lanes may face temporary downward pressure from the coronavirus in FY20.”
The research arm gathered that on a longer term horizon, Westport 2 expansion plan is still expected to increase capacity by approximately 28 million twenty-foot equivalent units (TEUs) per annum by 2040 from the current approximately 13 million TEUs to 13.5 million TEUs.
“This would allow Westports’ to compete more effectively for transshipment volumes against Ports of Singapore which has plans to raise capacity from around 40 million TEUs to 65 million TEUs by 2040.”