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Home > Business/Finance > Diversified Services > Shipping & Logistics
Malaysia Freight Transport Report Q3 2007
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Shipping has been given a boost since the August 2006 decision by Lloyd’s London insurance market to
lift the war-risk insurance rating on shipping in the Malacca Strait. More recently MISC, Malaysia’s
tanker fleet that specialises in oil and liquefied natural gas (LNG), has acknowledged that freight rates for
crude oil, along with container rates, will remain soft over the next two years, increasing competitive
pressures but not holding back the company’s fleet expansion plans. MISC reported a 5.3% rise in fourthquarter
profit on May 10, boosted by gains on the sale of ships. Malaysia’s sixth-biggest listed firm,
valued at US$10.6bn, posted a net profit of MYR702.59mn (US$206.6mn) for the three months ended
March 31, including an exceptional pre-tax gain of MYR94.5mn. Excluding the exceptional gains, profits
were lower than the MYR667.13mn a year earlier due to softer shipping rates and a higher cost of
operations, MISC said. ‘The prospect for the shipping industry is softening due to the additional capacity
from newbuildings and the delay in scrapping of old tonnage,’ it said.
BMI still sees the net effect on our Malaysian shipping forecast as being positive. Our newly released
Malaysia Freight Transport Report concludes that in terms of freight carried, shipping traffic will grow
by an average 7.3% per year in 2007-2011. The total number of containers handled at Malaysia’s ports
will grow more strongly at 11.1% per year. This forecast takes into account our view that the global
shipping boom has cooled. Despite the mixed outlook for freight rates, the continuing export drive and
the dynamism of China and other regional trading partners will underpin strong demand.
We now expect total freight carried, measured in million tonnes-km (mntkm), to grow by an annual
average of 7.1% over the 2007-2011 period. Total road freight turnover is expected to grow at an average
annual rate of 6.6% in 2007-2011. The cross-Malaysia railway link project is being revived, but will not
become operational until after 2011. We expect rail freight traffic to perform reasonably well, with annual
growth averaging 6.5%. Malaysia scores reasonably well on our overall freight industry business
environment ranking. The total score of 43.0 out of a theoretical maximum of 70.0 places it close to the
average for the regional peer group (44.8). It is at the top end of the spectrum in terms of expected freight
transport growth and scores well as far as long-term economic risk, transport infrastructure growth and
the regulatory and competitive environments are concerned.
The outlook for the freight industry is encouraging. For the 2007-2011 forecast period, we expect the
transport and communications sector to continue outpacing the economy as a whole in value terms. It will
achieve average annual growth of 5.7%, versus 5.4% for overall GDP. The total value of transport and
communications GDP will rise to US$18.1bn in nominal terms by 2011, representing 7.4% of Malaysia’s
GDP.
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