Penang aims to become strategic port on Mideast- Far East Route

10 APRIL 2015, BY
Penang Port, the main port of the northwestern Malaysian island of Penang, a tourism and electronics manufacturing hub, is working on positioning itself as a major strategic port on the Middle East–Far East shipping route, according to Steven Yoogalingam, the port’s chief operations officer.

The port is the oldest and longest established in Malaysia and is strategically located at the entrance of the Malacca Strait, one of the busiest shipping routes in the world. While it used to serve as the main gateway for shippers in the northern states of Malaysia and also the southern provinces of Thailand, Penang Port is now strengthening its role as a port of call especially for East Asian shipping companies on their mainline services to India and the Middle East.

This April, Taiwan’s second-largest shipping line Yang Ming Marine Transport Co and China’s Cosco Group, one of the largest container ship operators and dry bulk carrier worldwide, will drop anchor in Penang Port on their long cargo trips to the Middle East and back.

Another two direct services from Penang will commence by the second quarter of this year, reports say.
Adding to that, French container transportation and shipping company CMA CGA, the third largest container company in the world, and India’s OEL Shipping added a second weekly call, while Thailand’s Regional Container Lines and Japan’s Mitsui OSK Lines launched a joint Southeast Asia service in March.

Singapore’s Pacific International Lines, one of the largest ship owners in Asia, and Thailand Straits Chennai Container Service Network began operations in December 2014 and January 2015, respectively.

Penang Port is fully equipped to handle all types of cargo such as containers, liquid, dry bulk, break bulk and other goods and operates various terminals and facilities. It also runs a ferry service between the island’s capital Georgetown and Butterworth on the mainland using iconic historical ferries, and operates a cruise ship terminal capable of handling the largest cruise vessels in the world. As per latest figures, in 2013, the cruise terminal handled 1.3mn passengers.

The then state-run port, however, has accumulated losses over the previous two years mainly due to the unprofitable ferry operations and its medium-term loan obligations of around $370mn. Thus, the government decided to privatise the port in June 2014 in an attempt to bring it back to profitability  and a turnaround plan was immediately implemented. Since then and after an “optimisation of its assets”, as well as new shipping contracts, productivity at the port rose by 30%, Yoogalingam said in a statement on March 23, adding that the port is expected to be in the black by the end of 2015.

He is also positive on further growth potential. The port currently handles just above 1mn twenty-foot equivalent units (TEUs) in container capacity per annum, but has the capacity for 2mn TEUs. Thus, there are plans to approach more shipping lines from the Middle East and the Indian sub-continent to strengthen Penang Port’s position as a strategic shipping hub in the region along the route from the Arabian Gulf to the Far East with its important connections to the Bay of Bengal and the south of Thailand.