Evergreen's move a blow to Singapore

Evergreen's move a blow to Singapore

Reuters, Kuala Lumpur

Malaysia's Port of Tanjung Pelepas (PTP), barely two years old, is giving larger, more established rival Singapore a run for its money as it courts Taiwanese shipping giant Evergreen Marine Corp with lower fees.

With Denmark's Maersk Sealand International already a PTP convert, Malaysia's capture of Evergreen would mean it had lured two of the world's top three container shippers from the Singapore port, a swing of the rudder across the Johor Strait.

An Evergreen company spokeswoman quoted group chairman Chang Yung-fa as saying on Wednesday the planned move to Malaysia's new port, located in the southern state of Johor, was cost-driven.

The spokeswoman told Reuters in Taipei the switch would save the company T$100-200 million (US$2.86-$5.72 million) a year. Evergreen's contract with PSA expires in August.

PTP is dwarfed by its southerly rival, handling just two million twenty foot equivalent units (TEUs) last year to the 17 million or so TEUs at Singapore's port. That said, it has taken a big bite out of PSA's business during its brief existence.

PSA officials declined to comment on the possible loss of Evergreen, though a source close to the port operator insisted negotiations with its client were continuing.

Malaysian Prime Minister Mahathir Mohamad, asked by reporters to comment on the possible move, was upbeat.

"We are as strategic as Singapore. So there's no reason why we cannot be a hub for trade and shipping in the region."

The Singapore port sees 250 shipping lines with connections to 600 ports in 123 countries.

PTP, which opened for business only in October 1999, dealt the city state's port operator PSA Corp its first big blow just 10 months later, as Maersk Sealand International jumped ship.

The deal saw Maersk, part of the Danish oil and shipping conglomerate A.P. Moeller Group, transfer an annual 1.2 million twenty foot equivalent units (TEUs) to PTP.

The Danish firm, the world's largest container shipper, also bought a 30 percent stake in Pelabuhan Tanjung Pelepas Sdn. Bhd., the private company which owns the Malaysian port.

P&O Nedlloyd, a joint venture between Dutch group Koninklijke Nedlloyd Groep NV and Britain's P&O, is the other member of world's big three container shippers.

Transport and communications contributed nine percent to Singapore's gross domestic product in 2000, up from 7.1 percent in 1999, the Ministry of Trade and Industry said.

Singapore's ultra modern port operation lies cheek-by-jowl with business and residential areas on the city state's southern shore, playing a major role in the tiny nation's transformation into a world trading power over the centuries.

PSA has been looking toward China for new business, signing on customers like shipping giant COSCO last October.

Obstacles it face at home are limited, pricey real estate and a dearth of cheap workers among its citizenry.

Confronting it over the water in PTP is a custom-built rival nestled among mangroves at the mouth of a deep draught river, with 1,935 acres (783 hectares) of greenfield land to play with.