A Kuching-based Malaysian shipping company has come out strongly in support of the Malaysian Shipowners Association (Masa) against any move to abolish what is known as the Cabotage Policy favouring Malaysian flag vessels.

Firstly, the law was not only introduced in Malaysia to support the development of the national maritime industry but also in many other countries such as Indonesia, Thailand, Philippines, China and Vietnam as well as other many other developed countries such as Japan and US.

container cargo ship 260209 The Cabotage Policy was introduced in January 1980 in line with the practice in many other countries to reserve the transportation of goods in the domestic trade to ships flying the national flag.

"Lifting the Cabotage Policy will also have further huge invisible payment on our country's balance of payment," said Dennis Ling, chief executive officer of the public-listed HUBLine.

An example, he added, was in the earlier days when abolishing the Cabotage Policy had killed all the West Malaysian feeder operators.

There is no cartel to control the domestic or coastal shipping trade but there exists keen competition among local shipping owners which itself determine freight rates, he pointed out.

Ling said it is not correct for certain quarters to blame the shipping charges between Peninsular Malaysia and Sarawak/Sabah for the higher cost of consumer goods in the two states.

He said the existing freight rate for a TEU (20-foot-equivalent unit) from Port Klang to Kuching is around US$200 and from Port Klang to Kota Kinabalu slightly higher.

"The freight rate collected has to take care of the container repositioning costs due to the trade imbalance," he said, adding that there are other add-on charges such as terminal container handling charges (imposed by ports).

"You cannot fault the shipping companies for the costlier consumer goods in Sarawak and Sabah,” he said. “Freight cost component is normally less than five percent of the total costs of goods of shippers."

Consult shipowners for feedback

Ling also voiced his support for Masa chairperson Nordin Mat Yusoff's statement earlier this week that the association will resist attempts to remove the Cabotage Policy as it will cause what he described as collateral damage to the national shipping industry and undermine national interests.

There are about 3,400 Malaysian-registered vessels operating the coastal trade.

Certain quarters, especially manufacturers in Sabah as well as some local political parties, have called for the removal of the Cabotage Policy to help transform the newly-completed Sepanggar Bay Container near Kota Kinabalu into a regional hub port.

It is learnt that Suria Capital Bhd, the state-owned listed company that owns and operates ports in Sabah following a privatisation exercise four years ago, has not been happy with the performance at its container port in Sepanggar Bay, as many shipping lines operating from ports in Peninsular Malaysia, Bintulu, Singapore and Muara in Brunei bypass KK by proceeding straight to other ports such as Sandakan, Tawau and Lahad Datu to unload and load cargo.

It is also learnt that are plans still being discussed by the port operator in KK and a KK-based transport-related company to handle barging between KK and the other ports in Sabah on a regular feedering service using barges.

Commenting on this, Ling said there are rumours that the feedering service will commence on April 1 and that if this is true, it will mean even more costlier consumer goods in Sabah.

He said what the port should do is consult shipowners first to get their feedback before making any such move because of the likely implications on costs of shipping and cargo handling and consumer goods.

"Direct calls to Sandakan and Tawau augur well for the local shippers as this translates to lower costs as there will be savings on handling costs if bypassing transshipment at KK," he added.