PORTS KICK OFF 2024 ON A GOOD NOTE AS EXPORTS RISES - AMINVESTMENT

The ports segment started the year on a positive note as the export volume index rose 5% to 156.5 points in January 2024 from 148.5 points in January 2023, said AmInvestment Bank Bhd. 

In a note, the research house has maintained its overweight recommendation on the sector due to the resilient Intra-Asian trade and potential hike in tariffs. 

“We believe that there will be a hike in tariffs for all of the ports under our coverage (Suria Capital Holdings Bhd, Bintulu Port Holdings Bhd and Westports Holdings Bhd), and Westports has initiated requests for container tariff revisions,” it said.

It also noted that Westports proposed a 50% tariff hike a decade ago but was granted only a 30% tariff increase from the Ministry of Transport, and this was implemented in two stages, a 15% increase in 2015 and another 15% hike in 2019.

“In Sabah, port tariffs have been unchanged in the past 35 years and for Bintulu, we expect the tariff revision to take place after Bintulu Port Authority has been handed over to the Sarawak state government,” it said. 

Meanwhile, on the Shanghai Containerised Freight Index (SHSCFI),  AmInvestment said the index, which represents spot rates for containers loading in Shanghai, has eased by 16% from its peak in January.

“After freight rates spiked in January, the index doubled to 2,240 pts in mid-January from 1,094 pts in mid-December as the tension in the Red Sea caused a shift in global shipping routes,” it said.

Hence, the research house opined that this was positive for Malaysian ports as the rates are likely to continue declining in the first half of 2024 as shippers reroute and reschedule cargo deadlines to cushion the impact of the Red Sea crisis.