Related:
Asian rivalry turns into a ship fight

SINGAPORE is overhauling its shipping strategy, with the government saying it was open to the entry of new port operators and offering liners to run their own berths in a bid to remain Southeast Asia's leading transhipment hub.

PSA Corp, the island-republic's main port operator, also announced that for a year starting Monday, clients will enjoy a 50-percent cut in handling charges for empty containers and a 10 percent rebate on all bills as its cargo terminals.

Prime Minister Goh Chok Tong, who outlined the new shipping blueprint, said the changes were needed because of the emergence of tougher competition from new regional players.

"We cannot continue competing using the business model of yesteryear," Goh said in a speech marking 30 years of containerisation in Singapore, one of the world's busiest ports.

"No matter how successful this model has been, it will not bring us to greater heights in this changed environment," said Goh, a former shipping executive before he joined politics.

The government would expand Singapore's port capacity and was prepared to open up the sector to more players, he said.

Jurong Port is already offering container services in competition with PSA and there was room for a third terminal if needed, Goh said. The Maritime and Port Authority of Singapore has been tasked to draw up a competition framework.

Some shipping lines have asked to operate their own berths instead of the current setup where they pay PSA and Jurong Port to use their facilities.

PSA and Jurong managed their respective facilities as part of a strategy to maximise the use of space in land-scarce Singapore.

But Goh said that the government was ready to depart from the strategy.

"If shipping lines find it more profitable to run their own dedicated berths, instead of using the services of PSA or Jurong Port, we should allow them this option," he said.

"If other port operators think they can outrun PSA or Jurong Port by managing a third terminal in Singapore, we should hear them out," he added.

PSA chairman Yeo also said that aside from the rebates and lowering handling fees, PSA is in talks with shipping lines "to discuss other opportunities for partnerships or collaborations, including very long term agreements, joint ventures and dedicated terminals in Singapore."

PSA handles about 25 percent of the world's total container transhipment throughput and 7.4 percent of the global container cargo. In 2001, it managed 19.12 million twenty-foot equivalent units (TEUs) of containers worldwide.

But the reforms came too late for two of PSA's prized customers -- Danish liner Maersk Sealand and Taiwan's Evergreen Marine Corp. -- which have jumped over to Malaysia's Port of Tanjung Pelepas.

Malaysia had offered sharply lower rates to the two shipping lines. Maersk was also reportedly offered a 30 percent equity stake in the port as part of the package.

Industry players said the shift in Singapore's strategy showed that the city-state is becoming more sensitive to its clients' needs.

Alan Tan, the Singapore managing director for Japanese shipping line Kawasaki Kisen Kaisha (K Line) described the reforms as a "generous offer that came at the right time."

K Line, which had earlier been reported to be Malaysia's next target for defection, would save a few million dollars, he said.

Fleming Jacobs, chief executive of government-linked Neptune Orient Lines, said the impact of the reforms went beyond monetary savings.

"The point here is not so much the discount but that the message was heard loud and clear, including from the prime minister, that we will fight back with all our resources and PSA will do what it takes," he said.

The maritime and logistics industry -- excluding shipbuilding and repair -- contributes about 8.0 percent to Singapore's gross domestic product, and accounts for about 90,000 jobs.

                                                    Home