Westports expects low single-digit growth in container throughput in 2021

KUALA LUMPUR: Westports Holdings Bhd can chalk up a low single-digit growth rate in container throughput this year despite the Covid-19 pandemic showing little signs of abating.

Group managing director Datuk Ruben Emir Gnanalingam said the realistic target could be higher if the situation improved. But, if the current unprecedented crisis persisted, the global supply chain could continue to be disrupted.

“Things are not going to recover very fast. But some areas are going to recover and some will not. Therefore, I believe there will be slower growth than anticipated for 2021,” he told the New Straits Times in a virtual meeting recently.

Westports primarily manages port operations dealing with the container and conventional cargo.

It provides a wide range of port services, including marine services and rental services as well as other ancillary services.

Ruben said Westports’ container throughput had eased about 3.0 per cent to 10.5 million twenty-foot equivalent units (TEUs) last year, from 10.9 million TEUs recorded in 2019, due to lower transhipment volume.

However, he said Westports might record or surpass the pre-Covid-19 level beginning in 2022 once the country’s economy began to fully recover, backed by the government’s Covid-19 vaccines programme and containment measures to combat the pandemic.

“Previously, a lot of consumptions were being held back. I believe the recovery will be driven by consumption. I do not think consumption will bounce back as quickly in 2021, but rather it will bounce back stronger beginning 2022. Hence, we predict a small growth in TEUs this year but stronger growth next year.”

Ruben said Westports would set aside between RM400 million and RM500 million in capital expenditure (capex) for the financial year ending December 31, 2021 to acquire quay cranes and build a new yard.

The investments will raise the total terminal handling capacity from about 13.5 million to 15 million TEUs by the end of 2023 with the net addition of seven more quay cranes.

“Most of the capex will be funded via internally-generated funds and also partly from sukuk borrowing. It depends on Westport 2 expansion plan. If the plan goes ahead soon, then we might borrow some,” he said.

It was learnt that the Westport 2 expansion plans could increase Westports’ capacity by 50 per cent to 28 million TEUs per annum by 2040 from the current 14 million TEUs.

Westports had received an approval letter from the Economic Planning Unit to proceed with the proposed land acquisition of Marina Land from Pembinaan Redzai Sdn Bhd for RM394 million.

MIDF Research said Marina Land will complement the 154.2 acres (62.4ha) of land previously acquired by Westports in 2018 for RM116.2 million, as part of the Westports 2 expansion.

The research firm said the next steps included converting the category of land use and securing a concession agreement with the federal government for the container terminal expansion.

The land reclamation works could then commence, and the wharf construction could start in 2023.

With cranes’ delivery towards the end of 2024, operations at the new container terminal will begin in 2025.

Source: NST