THE STAR, September 2nd, 2002 - NORTHPORT and Westport are offering low prices and high quality service to combat the pressures from the Port of Singapore Authority (PSA), which is losing cargo to major Malaysian ports.

Northport (M) Bhd CEO and managing director Basheer Hassan Abdul Kader and Westport executive chairman Tan Sri G.Gnanalingam have both agreed to co-operate on tariff and cost issues.

The terminal operators have also begun co-operating on issues concerning the industry and achieving synergies in the area of marine services and inter-terminal transfers for the benefit of port users.

Reacting to Deputy Prime Minister Datuk Seri Abdullah Ahmad Badawi's recent call to port operators to strategise themselves to meet the increasing pressures from Singapore and shipping lines, the terminal operators have developed measures to tackle the situation.

Basheer said competition among ports was not something new.

"If you look at ports in Europe, the Middle East, USA and South America, there is intense competition," he said, adding that in the past, Port Klang was quite contented with being a feeder port because handling normal growth was itself a problem.

"But with the advent of privatisation, improvements and capacity expansion as well as Government policy changes, Port Klang is positioned to vie for some of the business lost to neighbouring ports.

"Port Klang's rapid growth in the last five years is testimony to the fact that we are capable of handling large volumes of transhipment cargo," he said, adding that they have created a sustainable environment for this growth.

Basheer said this included prudent and business-like approach to handling the growth.

"There is some over-reaction now in the industry and when this settles the port that is well-structured and customer-focused with a win-win strategy will have the edge.

"We realise that we have to create wealth and share it with all our stakeholders and in the long term this is a better policy than short-term over-reaction to competitive positioning of neighbouring ports."

Over the past few years following the development of more direct calls, Basheer said less cargo were feedered especially to Singapore.

He said such traffic was fairly captive if it originated from the Klang Valley and for containers originating in the south, the boxes would exit via Pasir Gudang and the Port of Tanjung Pelepas (PTP) or PSA by conventional lorries through the- causeway.

For cargo originating from the north it can exit through Penang port on mainline calls or feedered down to Port Klang or Singapore.

On Singapore's aggressive stance to safeguard transhipment boxes from going to Malaysian ports, Basheer said PSA was aware of the cargo flow but its own volumes were growing despite the loss of transhipment traffic to Port Klang and it was unwilling to reduce prices to Port Klang levels

"But now there is a change in approach and PSA does not want to lose any more traffic, especially after the loss of Maersk Sealand and Evergreen to PTP.

"The reality is transhipment traffic flow is a question of logistics and economics for lines. The box traffic is growing with the growth of regional economies."Given cost pressures, shipping lines find price an extremely important determinant in selecting the port for transhipment containers and they do not-want service failures in the process.

"Northport has proven it can do both," he said.

"The port that succeeds in offering low price and high quality service would be able to see sustainable growth in handling transhipment containers in the future," said Basheer.

On the Northport-Westport co-operation, Basheer said: "We have a good Working relationship with Westport where daily a large number of containers are being transferred from there to Northport and vice versa on inter terminal transfers. "If any of us breach out part of the bargain the whole port will suffer. In the long term it may be necessary to improve this level of co-operation if there is conviction that unity is strength," he Raid.

According to Gnanalingam, Westport has strategise itself to build the capacity, prove the capability, to have berth on arrival and achieve a fast turnaround time for the shipping lines with or without PSA's pressures.

"We believe that customers will value productivity and the total cost of operations.

"Most of all, more shipping lines are aware that we have achieved zero inflation whether they use Port Klang or Singapore

"Port Klang has never competed with PSA. Our objective from day one is to provide the facilities for our cargo owners to ship their cargo efficiently and economically."

Gnanalingam said they did not believe the issue was about main line operators or port operators.

"The issue must always be the benefit of ports to cargo owners," he said, adding that cargo owners must find the cheapest and fastest way to send their boxes including to Singapore.

"The issue must always be the benefit of ports to cargo owners," he said, adding that cargo owners must find the cheapest and fastest way to send their boxes including to Singapore.

"All that we need is for manufacturers not to feel disadvantaged by a lack of their own port facilities: As such there is nothing to win back or defend Malaysian cargo." He said Westport and Northport have been working together to be the nation's Load Centre.

On price war, he said everybody gets hurt and quality of services and efficiency would drop especially when they become unviable.He said even in the freight war practised by shipping lines today,the strong would survive and the weak would disappear.

"When this happens, virtual monopolies will take over to the detriment of customers," he said.

"There is a marketing theory that any fool can have 100% or 0% market share. He can have 100% by offering the cheapest tariff and becoming unviable.

"However if you charge excessively, you will drive away the customers and achieve zero percent market share," said Gnana1ingam.

He said when Westport first entered into the port business in 1995,the world container throughput was 165 mil TEUs.

Currently, he said there were 230l mil TEUs and soon there would be 300mil boxes

"As such there is enough for everybody to share especially by those who can afford to build the capacity and provide the facilities."

In July, PSA announced that it is giving customers 50% discount on handling charges for all empty containers in Singapore for a 12-month period and also 10% rebate off all bills at PSA's cargo terminals.