Sources: Suspension of consignment services decided by main line operators

General view of the Senari Port in Kuching. – File photo

KUCHING (April 28): The decision to suspend consignment services from India and Pakistan to Kuching has been made solely by the main line operators and/or international carriers (MLOs), said shipping industry sources.

The service suspension has nothing to do with element of cabotage as international carriers have always been allowed to call ports in East Malaysia, the sources said in a statement yesterday, in response to Sarawak Livestock Breeders Association’s (SLBA) recent claim that international shipping line cannot come into Kuching because of the cabotage policy.

A key restriction of cabotage is the prohibition of international carriers to load and discharge cargo to and from domestic ports but international ports of origin have never had an element of cabotage.

However, the cabotage policy for domestic movement of goods between Peninsular Malaysia and Sabah, Sarawak and Labuan has been exempted since June 1 2017, therefore the blame on cabotage is incorrect and irrelevant, the shipping industry sources pointed out.

“Upon checking, there is also no current backlog of Kuching containers stuck at Port Klang. For clarification, foreign ships do direct calls to Kuching and/or Bintulu ports. Currently no cabotage is applied to East Malaysian states and Labuan.

“The suspension of services from ports such as India and Pakistan to Kuching, we believe relates to the international carriers policy with regards to their acceptance policy based on yield management,” they said.

“In fact, since the Covid-19 pandemic we have noted suspension of international carriers services on the domestic trade between Peninsular Malaysia and Sabah, Sarawak and Labuan due to the diversion of capacity to higher yield service routes.

“Fortunately for populations in East Malaysia, domestic operators remain committed and continue to provide essential maritime services to East Malaysia despite being able to earn much higher yield if they were to transfer their capacity to other regional trades or simply to charter out their tonnage in the market,” the sources added.

The current congestion and low productivity in ports in both Sabah and Sarawak have caused severe delays and expanded voyage turnaround times effectively eating away more than 25 per cent of domestic operators’ effective capacity which is the fundamental reason why shipping capacity is currently tight to East Malaysia.

It is also not viable for domestic operators to charter in additional capacity to cater for the current capacity disruption as the current ocean freight rate structure for the domestic trade between Peninsular and East Malaysia is unable to support the prevailing vessel charter hire which has surged more than three folds due to global demand, they said.

Despite a significant increase in operating cost brought about by the congestion and low productivity which resulted in expanded voyage turnaround for both vessel and container equipment, domestic operators have tried very hard to keep ocean freight rates at competitive levels in order not to put too much pressure on rising shipping costs, they added.

On April 21, SLBA said members were hoping that the federal and state governments would look into the issue of the non-functioning feeder shipping service to Kuching which has left containers of imported livestock feed stuck in Port Klang for months.

SLBA representative Dr Ng Siew Thiam also said that small farms in the livestock industry usually buy feed corn from Pakistan and India as it is cheaper.

However, he said international shipping lines have suspended consignment service to East Malaysia and their containers have been left in Port Klang with no further movement to Kuching.

“For few months there is no one to pick them up because the feeder shipping line (from Klang) to Kuching is not functioning.

“Because of the cabotage policy, the international shipping line cannot come into Kuching while the feeder line hasn’t brought the goods to us here so everything is stuck. We have hundreds of containers that cannot come in,” he said.

Ng said association members now have to resort to more expensive corn from Argentina, which comes in via a chartered vessel.

He said the feed corn from Argentina costs US$432 per metric tonne while from Pakistan it is US$320 per metric tonne.

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