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The Government should liberalise port tariff to be more market driven
and enhance the competitiveness of local ports.
“Local port operators seem ready, willing to
stand on their own two feet to compete on a
level playing field,” said Nazery Khalid, a
senior fellow of the Maritime Institute of
Malaysia who undertook the study entitled, To
liberalise or not to liberalise? An assessment
of port tariff in Malaysia.
Nazery said most senior officials of port-
operating companies interviewed in the study
agreed with the idea that tariff rates be
determined by market forces.
“As it stands, some federal ports are already
performing very well, the emergence of Port
Klang among the world’s top 20 container ports
is a reflection of that. I am confident that
they can do a lot better if they can be more
competitive tariff-wise,” he told StarBiz.
While the idea to enhance ports’ competitiveness
via tariff liberalisation is promising, certain
quarters wondered whether a liberalised tariff
milieu would merely be a “bottom line-oriented
exercise” and lead port operators to charge
higher tariff without a corresponding
improvement in their services.
“Despite the pledge of port operators to improve
their services with higher tariff, there is no
telling if their interpretation of ‘better
services’ would match the expectation of their
users,” Nazery said.
“Some port users are anxious that a relaxed
tariff environment would lead to port operators
arbitrarily and unilaterally imposing higher
charges and introducing new ones.”
He suggested that to protect port users, port
operators could consider differentiating or
itemising various chargeable services if they
were allowed to fix their own tariff.
“As it stands, different port operators package
their ‘service menu’ differently in order to
create differentiation in their service
offerings and in their marketing mix,” he said.
The use of port tariff as a potent tool for port
operators to gain competitive edge was
demonstrated to its full effect when Port of
Tanjung Pelepas (PTP) managed to pry Maersk and
Evergreen away from the Singapore Port when PTP
began operating. This triggered a “pricing
competition” between the two ports, which
underscores the importance of tariff as a key
“strategic weapon” in the armoury of port
operators to attract port users.
Nazery also said that regional ports were
expanding their capacity to offer quality
services at competitive prices to attract main
line operators (major shipping lines) and to
enlarge their share of the lucrative
intra-regional trade.
This has become a matter of priority as regional
ports jostle for position to capitalise on the
prospect of greater regional trade volume once
the Asean Free Trade Area is fully implemented
and trade in the Asean region is completely
liberalised.
Nazery said most of the operators of
privately-owned ports in Malaysia felt that
their current tariff structures were at the
right level, while operators at federal ports
thought their charges were too low. “The reason
for this is simple – private ports have the
liberty of fixing their own tariff according to
their capacity and clientele, while federal
ports are bound by tariff structure fixed by the
Government many years ago,” he said.
In support of a more market-driven tariff, it
can be argued that inefficient port operations
may lead to an increase in terminal charges.
“This is due to the fact that terminal operators
need extra funds to cope with various costs,
including port charges, to attain break-even
points,” he said.
Nazery also cautioned that low tariff might lead
to inefficiency not only to port users but also
to port operators, and might even extend across
the trade supply chain.
“Port users will have to invest in additional
capital to cope with inefficiency at ports where
tariff is low and their operators do not have
the motivation to invest in extra capacity and
improve service.
“In short, when it comes to ports, good services
are not cheap and cheap services are not good,”
he said.
“For a country like Malaysia which depends
heavily on its ports to facilitate much of its
trade, tariff liberalisation must be judiciously
applied to ensure that its ports are competitive
and will continue to enhance their
competitiveness.” |
