Malaysia's largest port to double capacity
to chase Singapore
Supply chain diversification adds to logistics competition in Southeast Asia
KUALA LUMPUR -- Malaysia's largest port, on the major sea route of Malacca Strait, plans to
double its capacity over the coming decades, chasing neighboring hub Singapore as the shift in
global supply chains adds to the competition in Southeast Asia's logistics sector.
Port Klang, the world's 12th-largest port and second only to Singapore in Southeast Asia in terms
of capacity in 2021, plans to increase its annual capacity from 14 million twenty-foot equivalent
units -- a standard measure for container volume -- to 27 million TEUs, with operator Westports
Holdings investing 39.6 billion ringgit ($8.34 billion) over the coming decades.
"The whole expansion will take over 40 years, and the starting point is 2024," Ruben Emir
Gnanalingam, the executive chairman and group managing director of Westports, told Nikkei
Asia in an interview. "Funding comes mostly through internally generated funds first, and then
we've upsized our sukuk (Islamic bond) program to about 5 billion ringgit."
Westports is a prominent port operator in Malaysia, with its net profit increasing 11% to 779.43
million ringgit in 2023. In December, Westports extended the concession period at Port Klang by
58 years, from 2024 to 2082.
The federal government approved Westports' Port Klang expansion plan last August. The project
at the port just southwest of Kuala Lumpur will include land reclamation along the coast to
increase container terminal facilities from the current nine terminals to 17.
Reflecting Malaysia's position as one of Asia's manufacturing and commodity hubs, Port Klang
handles products from electronics and palm oil to petrochemicals and automobiles. Its strategic
location along the Malacca Strait is a significant advantage due to its proximity to the region's
main shipping route and its ability to accommodate large vessels owing to natural deep-water
berths.
The expansion comes as companies rebuild their supply chains, including diversification away
from China, to minimize risks arising from geopolitical tensions. "We believe the realignment
will be focused on Southeast Asia, so the focus here is to expand [Port Klang] and to make sure
we have the capacity for that growth," Gnanalingam said, stressing that the region is one of the
destinations for "China plus one" strategies of adding options outside China.
Gnanalingam noted the growing competition from neighboring countries along the strait like
Singapore and Thailand. For example, Singapore's Tuas Port was officially opened in 2022 and
is set for completion in 2040 with a capacity of 65 million TEUs annually.
"We've been competing with [Singapore and Thailand] for the last 30 years. It's no difference
going forward. We have our advantages, they have their advantages," he said, stressing that ports
in Malaysia are more affordable in terms of the cost per container than some of their rivals.
The planned 665-kilometer-long East Coast Rail Line (ECRL), which will be completed by the
end of 2026 and connect the port and the east coast of the Malay Peninsula, could also make Port
Klang a more important hub in the country. On April 3, Malaysian Transport Minister Anthony
Loke said the construction of the line is 64% complete.
To Gnanalingam, the ECRL will help spur the growth of the east coast states in peninsular
Malaysia by placing more industries there. "Those industries will then have an outlet to send the
cargo to Port Klang," he said.
"We see the growth coming from ECRL, mainly from the industries that we'll be setting up along
the lines of the tracks. It will create lots of jobs but also create cargo, which can then be sent out
to Port Klang," he added.
With regard to Thailand's land bridge proposal, which could potentially change the logistics
landscape in Southeast Asia if realized, Gnanalingam said the project is not relevant and none of
his customers seems very interested, so he does not believe it will pose any threat to the shipping
market at the Malacca Strait.
"To use that as a ... mode of logistics is totally illogical. The time it takes to unload, transport
across and load again will take seven to eight days, so saving time is not there. The cost of
unloading and reloading on the other side ... is far more expensive than the vessel going around
the peninsula," he said.
"From a sustainability perspective, the carbon emissions you create by unloading, railing and
reloading again is multiple times higher than the savings across. ... None of our customers seem
to be very bothered, because it won't save them time, costs and carbon emissions."
SUMMERISE
The largest port in Malaysia, Port Klang, is set to double its capacity over the next few decades
to compete with Singapore as global supply chains shift and diversify. The expansion plan
involves a significant investment of $8.34 billion by port operator Westports Holdings. This
move aims to capitalize on Southeast Asia's growing logistics competition, fueled by changes in
supply chain dynamics.
Port Klang, strategically located along the Malacca Strait, plans to increase its annual capacity
from 14 million to 27 million twenty-foot equivalent units (TEUs) by 2024. The expansion
project, approved by the Malaysian government, includes land reclamation and the development
of additional container terminal facilities.
The region's growing importance in supply chain realignment, particularly with the trend of
diversifying away from China, underscores the need for expanded port capacity. Port Klang's
proximity to major shipping routes and its ability to accommodate large vessels are highlighted
as advantages.
Competition from neighboring countries like Singapore and Thailand is acknowledged, but Port
Klang aims to maintain its competitiveness through factors like affordability and strategic
location. The completion of the East Coast Rail Line (ECRL) by 2026 is expected to further
enhance Port Klang's connectivity and position it as a key hub for industries in peninsular
Malaysia.
Regarding Thailand's land bridge proposal, Port Klang's chairman dismisses it as impractical and
not a significant threat, citing logistical inefficiencies and higher costs compared to maritime
shipping. He emphasizes that customers are not showing much interest in the proposal due to
concerns about time, costs, and carbon emissions.
REFLECTION
The decision to double the capacity of Malaysia's Port Klang reflects a strategic move to assert
its position as a key player in the global logistics network. Positioned strategically along the
Malacca Strait, Port Klang aims to capitalize on shifting supply chain dynamics, particularly the
trend of diversification away from China. This expansion is not merely about increasing capacity
but also involves significant infrastructure development, including land reclamation and rail line
extensions. Port Klang faces stiff competition from neighboring hubs like Singapore and
Thailand but highlights advantages such as affordability. Moreover, the dismissal of Thailand's
land bridge proposal underscores the importance of considering environmental sustainability in
logistics decisions. Overall, Port Klang's expansion signifies Malaysia's ambition to enhance its
role in the global logistics landscape through strategic positioning, infrastructure investments,
and environmental consciousness.
SOURCE: https://asia.nikkei.com/Spotlight/Supply-Chain/Malaysia-s-largest-port-to-double-
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Word bank:
Word IPA MEANING EXAMPLE
Strategically(AD) /strəˈtiː.dʒɪ.kəl.i/ In a way that helps to Central Asia is a
achieve a plan, for fragile region,
example in business politically weak but
or politics strategically
important.
Equivalent(AD) /ɪˈkwɪv.əl.ənt/ Having the same She's doing the
amount, value, equivalent job in the
purpose, qualities, etc. new company but for
more money.
Reclamation(N) /ˌrekləˈmeɪʃən/ the activity of making On closing the mines
land that is under they hired a forestry
water or is in poor expert to improve
condition suitable for their reclamation plan.
farming or building
on
Diversify(V) /daɪˈvɜː.sɪ.faɪ/ To start to include Millions of years ago,
more different types changes in the earth's
or things climate caused animal
and plant life to
diversify.
Accommodate(V) /əˈkɒm.ə.deɪt/ To provide with a New students may be
place to live or to be accommodated in
stored in halls of residence.
Peninsular(AD) /pəˈnɪn.sjə.lər/ Consisting of or Conditions on
relating to a peninsula peninsular coastal
(= a long piece of land areas can be very
that sticks out from a different from the
larger area of land interior's higher
into the sea or into a ground and valleys.
lake)
Maritime(AD) /ˈmær.ɪ.taɪm/ Connected with Make sure you visit
human activity at sea the maritime museum
if you're interested in
anything to do with
ships or seafaring.
Emphasizes(V) /ˈem.fə.saɪz/ To show that You can use italics or
something is very capitals to emphasize
important or worth a word in a piece of
giving attention to writing.
Federal(AD) /ˈfed.ər.əl/ Relating to the central The federal
government, and not government
to the government of a
region, of some
countries such as the
US
Commodity(N) /kəˈmɒd.ə.ti/ A substance or The country's most
product that can be valuable commodities
traded, bought, or sold include tin and
diamonds.
Cargo(N) /ˈkɑː.ɡəʊ/ The goods carried by The ship was carrying
a ship, aircraft, or a cargo of wood.
other large vehicle
Perspective(N) /pəˈspek.tɪv/ A particular way of Her attitude lends a
considering fresh perspective to
something the subject.
Expansion(N) /ɪkˈspæn.ʃən/ the increase of Expansion into new
something in size, areas of research is
number, or possible.
importance
Concession(N) /kənˈseʃ.ən/ Something that is Both sides involved in
allowed or given up, the conflict made
often in order to end a some concessions in
disagreement, or the yesterday's talks.
act of allowing or
giving this
Rivals(N) /ˈraɪ.vəl/ A person, group, etc. The companies
competing with others produce rival versions
for the same thing or of the toy.
in the same area
