Launch of iCargo+

November 24, 2017 at 6:02 pm

24 NOVEMBER 2017

Ladies and Gentlemen,

A very good evening,

1. The shipping industry is undergoing disruptive changes. The container market is set for further consolidation after an eventful year in 2016, marked by the collapse of Hanjin.

2. According to the Drewry Financial Research Services, the Global shipping lines were reported a loss of estimated $5.2 billion in earnings before interest and taxes in 2016, the worst since 2011.

3. However, it has been estimated that world trade will climb 3.8 percent in 2017 after expanding last year at the slowest pace since the global financial crisis.

4. The challenging environment has spurred many shipping companies to find ways to remain competitive through the consolidation of the business.

5. Consequently, the massive business consolidation among the shipping lines witness the births of the mega vessels and the mammoth shipping companies, who own them are able to deploy fewer vessels and move more cargo on a single journey to optimize economies of scale.

6. In this regard, mega vessels will have an impact on port infrastructure. Ports will have to upgrade their facilities in order to accommodate and service these vessels.

7. Container vessels are not only becoming larger; they are becoming larger at a faster pace. It took close to 25 years for vessels to double in size from 3,000 to 6,000 twenty-foot equivalent units (TEUs). Another 20 years from 6,000 to 11,000 TEUs. But it took only half that time – a mere 12 years – for vessels to double again to 22,000 TEUs.

8. This development presents significant impacts whereby policy makers will have to work harder to ensure the national ports keep pace with the industry by providing expandable port facilities.

9. I am pleased to note that despite the global trend, Malaysian ports are able to maintain our global competiveness. In 2016, total container throughput at Malaysian ports was recorded at 24.81 million TEUs with a total of 158,640 ship calls, putting two of our Malaysian ports in the top 20 of the world’s busiest container ports. (Port Klang at 11th while PTP is ranked 17th)

10. These achievements did not come by chance. To maintain our competitive edge, we continue to invest in infrastructure and manpower development. Such investments are necessary but insufficient.

11. For Malaysia to distinguish ourselves as a leading maritime hub, it is critical that we also leverage on technology and innovation as a force multiplier to surmount our land and manpower constraints, and improve our efficiency. This will give Malaysia a competitive advantage that others would find hard to replicate.

Ladies and Gentlemen,

12. Containers are valuable assets to shipping liners. The price of container fluctuates and has wide variations depending on geographical location, market demand and the build of the container itself. A new standard 20’ container can cost above USD3000 while a standard 40’ may cost more than USD4000.

13. Since containers are valuable assets, ship liners may demand container deposit before releasing containers to consignors or freight forwarders in some countries. Container deposit is often not required in developed economies.

14. High level of professionalism and industrial competency within all players in the supply chain: consignors, freight forwarders, haulers, warehousing operators, ship liners etc. in combination with proper legal environment ensure a secured transport environment between stakeholders.

15. However, in some developing economies, there are higher risks of containers being stolen, damaged, abandoned or detained for prolong period. Therefore, ship liners impose container deposit as a risk diminutive measure.

16. For Malaysia, container deposits have been an issue for shippers since 2004 when shipping lines began demanding deposits from customers for the use of their containers, on top of the freight for carrying the goods and handling charges, as a security for any damage to the containers.

17. The container deposits apparently increase on the cost of doing business especially to the Small Medium Enterprises (SME) and escalate hurdles within the logistics and supply chain.

18. Therefore, the initiative by the Quantum Ivory Sdn Bhd – which has developed a solution through i-Cargo+, the 1st ever marine insurance product to covers the cargo and container risk for shippers is highly commendable. This will prevent potential disputes on the container damage repair cost, demurrage, and detention charges which has been an on-going issue for many years in the logistics industry.

19. I believe that i-Cargo insurance can be used to replace the container deposits charges which have been imposed by the Shipping Liners.

20. I also believe that by using a i-Cargo insurance it will reduce a cost of doing business in the country and it will improve the competitiveness of Malaysia as a trading nation since the risk of damage is now transferred to and managed by professionals, so importers and exporters will have a fixed cost in doing business.

21. I wish Quantum Ivory great success in bringing this programme that supports local businesses, enhancing Malaysia’s competitiveness as trading nation, while creating economic growth and opportunities for the country.

With that, I now declare iCargo+ launched!

Thank you.