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The growth of cargo business in Southeast Asia

The growth of cargo business in Southeast Asia
Kalmar Cargo is a container handling solutions and services provider to ports, terminals, distribution centres and heavy industries, including those in Malaysia. - kalmarglobal.com
KUALA LUMPUR: The cargo industry in Southeast Asia is poised for more growth.

With the monstrous One Belt One Road (OBOR) initiative that is to come out of China, prominent ports within Southeast Asia are set to bring in more business in the coming years.

Two ports would be at the centre of attention: the Port of Singapore, which is the world's second-busiest port according to the World Shipping Council; and Malaysia's Port Klang, which is ranked 12th in the world.

"Because of Malaysia's geographical location, it is an ideal shipment hub. The more business- and customer-efficient Malaysia can be to the shipping industry, the more business Malaysia will get," said Peter McLean, senior vice president of Kalmar Cargo (Asia Pacific) – a container handling solutions and services provider to ports, terminals, distribution centres and heavy industries.

"And once linked to OBOR, the opportunities for Malaysia are endless," he said in an exclusive interview with Astro AWANI.

MALAYSIA VS SINGAPORE

McLean said the Asia Pacific region possesses the largest container movement in the world. And Malaysia contributes 25 percent to the Asian turnover of containers.

However, although Malaysia is equally blessed as Singapore in terms of strategic geographical location, the number of shipping business that the former gets pales in comparison.
In explaining this, McLean said Singapore in the past had been one big terminal.

"The race had always been on between these two countries. At the end of the day, it is all about who offers the most cost-effective and efficient service to shipping companies that will get the most business.

"And Singapore had always been able to provide that efficiency throughout the years... and that attracts shipping clients and customers."

HSR PROJECT

The Kuala Lumpur-Singapore High Speed Rail (HSR) project is set to bring closer trading opportunities between the two cities.

McLean said it is going to attract a lot more opportunities for intermodal containers – as the timing will be more attractive – and also in terms of shipment between East and West.

OBOR INITIATIVE

OBOR that is coming out of China will connect more than 60 countries, providing better trade routes and trading opportunities, both inland and at ports.

McLean said with e-commerce growing at such a fast rate, the logistics industry would certainly be feeding on e-commerce.

"Kalmar has already enjoyed significant business growth in China where OBOR starts, on intermodal projects as well as inland. In parallel to that, we're seeing container terminals at the ports start to grow.

"It's all linking together, and that's all coming down through Asia and spreading back up to Europe," he said.

AUTOMATION IN ASIAN TERMINALS

As for the future of industrial and terminal automation in Malaysia and the Asia Pacific region, McLean said the potential for growth is huge as shipping companies and clients have the need to replace equipment.

"Automation will start automatically, because when you buy the latest piece of equipment, it is installed with some new technology.

"Shipping companies have had it tough the last three to five years, and they are now looking for more reliable customers. They need efficiency, and that means container terminals need to offer them a lot more efficient service.

"This is where automation comes in, to strive to provide that efficiency," he said.

He noted that Australia is seemingly the most automated country in the world in terms of their container handling at ports and terminals.

McLean said with so much investment taking place in the Asia Pacific region, the volume in Asia is outranking Europe and America.

"The Nordic countries undoubtedly have good shipping companies, but their economies also rely heavily on the growth in Asia-Pac.

"It's a matter of how they navigate the competition coming in from China and India," he said.

*For the full interview, watch Market Talk tonight at 11pm on Astro AWANI Channel 501.