Maersk Sealand announced August 18 it would move to the Port of Tanjung Pelepas (PTP) in Malaysia's southern state of Johor, 45 kilometres (27 miles) north of Singapore's port -- one of the largest in the world.

The Copenhagen-based company said the move followed its acquisition of a 30 percent stake in PTP, allowing it to operate a terminal at the port. It plans to shift by December, when six new berths will be in operation.

"The move to PTP represents a quantum leap for Maersk Sealand to master its own destiny and yet another step to remain in the forefront of the industry," said its Asia chief executive Flemming Ipsen in a statement.

PTP has described the deal as a "dramatic move that changes the face of the entire transshipment business" in the region.

"The deal will also mean that Malaysia will finally move to the forefront of transshipment business in Southeast Asia after having had to play second fiddle to Singapore for the last three decades," it said.

PTP said in a statement it would be guaranteed an annual volume of two million TEUs (twenty-foot-equivalent-units) from Maersk Sealand from 2001.

Analysts said the decision was a big boost for Malaysia but may hurt the Port of Singapore Authority (PSA) Corp., which is due to list on the stock exchange later this year.

"It is a big scoop for Malaysia to actually drag away such a major client from PSA," said Sani Hamid, economist with Singapore-based Standard and Poors'

Sani said PTP's offer of a stake to Maersk Sealand was the "pull factor" behind the shift, as it allowed the shipping giant to run its own show at one of the terminals.

"PTP's offer probably fell in line with Maerk's long-term goal. But it is too early in the game to say if others will follow," he said.

Sani said it would hurt PSA over the short-term but noted that Singapore authorities had coped with such "disappointments" in the past.

"It has happened before and I expect PSA to innovate and offer better products and services to be in a better competitive position to make up for it," he said.

"If there is a threat of losing more customers, it may start a price war. It all depends on how PSA views the shift."

Janice Chua, shipping analyst at Vickers Ballas in Singapore, said it was "bad news" for Singapore's port industry which already faces fierce competition from Hong Kong.

Singapore is the world's second-busiest container port after Hong Kong. It handled some 15.9 million TEUs last year, about nine percent of the world's total, with the majority of its volume from transshipment.

Chua cited cost as the main reason behind the shift, as PTP was still new and lags Singapore port in infrastructure and technology.

"The key issue is pricing, but the fact that Maersk bought a stake in PTP caught players by surprise and shows that they are quite serious," she said.

"PSA need to improve their competitive edge to retain customers' loyalty... this could lead to a price undercutting."

The Star newspaper quoted industry sources as saying August 21 that Maersk Sealand was dissatisfied with PSA over costs and control.

It said PSA had been "inflexible" over port charges and Maersk Sealand had made clear its preference for dedicated or leased facilities, an option not available in Singapore.

The Business Times here said the Johor port had "inflicted a telling blow, with a single stroke of the pen" on both Singapore and Port Klang, Malaysia's oldest and biggest container port.

But it dismissed the notion that Singapore's transshipment business was on the wane, saying the island-state still has a "wide customer base and a reputation no port in this region can match."