Wednesday 15 June 2011

Vietnam eyes ambitious coal import plans


But Vietnam’s coal import target of 100m tonnes requires hefty infrastructure investment

VIETNAM has received its first thermal coal cargo from Indonesia, and has grand ambitions to import 100m tonnes of coal a year in ten years, writes Hal Brown.

However, the amount of 100m tonnes has been called a “huge number” that would require significant infrastructure investment in power stations that use thermal coal.

“I don’t know how well-built the infrastructure in Vietnam is but I don’t think it’s that well advanced,” a London-based panamax broker told Lloyd’s List.

Vietnam’s 100m-tonne target would require about 100 power stations, much more than many of the large European energy companies use for their thermal coal. Therefore, “Vietnam taking 100m tonnes by 2020 is a huge number”, said the broker.

Vietnam has said it plans to build 90 new coal plants by 2025, but “there’s a difference between planning and doing”, said the broker.

Highlighting the ambitious target, Vietnam currently imports around 700,000 tonnes of coal a year, compared with about 50m into India and 95m into South Korea.

In 2015 India will be importing around 115m, and South Korea 106m, whereas Vietnam is projected to raise imports to about 1.5m by 2015, far off the 100m target expected by 2020.

Questions surrounding Vietnam’s coal import target follow reported comments by deputy general director of state mining group Vinacomin Vu Manh Hung earlier this week.

He reportedly said the 100m coal import target is part of a master plan that still requires government approval. His comments came after Vietnam received its first thermal coal imports from Indonesia earlier this week, opening up a new supply channel as the southeast Asian country boosts imports of the fuel.

Indonesia is tipped to help drive the dry bulk market in the future.

“Its infrastructure needs improving dramatically but I believe the government has recently said that they will actually start spending money increasing their infrastructure and that’s obviously going to help both India and China on their coal basis,” said Seanergy Maritime Holdings chief executive Dale Ploughman at a Capital Link dry bulk webinar last week.

Speaking at the same dry bulk webinar, Star Bulk Carriers chief executive Spyros Capralos said: “Some analysts have started grouping the so-called MIST countries: Mexico, Indonesia, South Korea and Turkey. And MIST countries have a number of important factors in common – large populations and each and are all members of the group of 20.”

Monday 6 June 2011

PORT DEVELOPMENT: COMPETITIVE FACTOR IN VALUE CHAIN

ABSTRACT

The importance of competition factor in all areas of business has lead to the development of a country. This study is focusing on the competition factor in value chains where the case studies in choose is Kuantan Port Consortium in Pahang. This study also takes into account Kemaman Supply Base in Terengganu as a competitor in petrochemical industry, oil and gas. There are several factors where both port elected in this study. Kuantan Port Consortium and Kemaman Supply Base port are within east coast economic region or better-know as ECER. Apart from that, both ports also have similarity in manning petrochemical industry, oil and gas because petrochemical industry is one of the potential field to be developed. One of the most interesting possibility with petrochemical, oil and gas development in our country was the development will create a great opportunity in Malaysia’s port industry. With this development, petrochemical industry can move forward to ensure that national economy can face change and state fall up which often occurs in material and product demand. As such, role of each port is necessary to improve and expand our economy as well as ensuring great competition in value chain especially in petrochemical industry.

INTRODUCTION
Competitors is another instance where diligent analysis, just as they probe more deeply to ensure they understand the precise nature and purpose. Nowadays, government and private sectors are increasingly concerned about the national competitiveness in value chain. This concern has evolved about the economic competitiveness in a more general sense especially to developing of port industrialized with liberalization and adjustment. Improving competitiveness is central to raising the underlying rate of growth the economy and enhancing living standards. The intensity of rivalry between competitors in an industry will depend on the structure of competition, the structure of industry costs, degree of differentiation, switching costs and strategic objectives.

Based on the Porter's Five Forces Model, Porter has identified explains that there are five competitive forces. These five "competitive forces" are the threat of entry of new competitors (new entrants), the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the degree of rivalry between existing competitors.



These forces also determine that a corporate strategy should meet the opportunities and threats in the port development organizations and external environment especially competitive strategy within the industry. This force describes the intensity of competition between existing companies such as Kuantan Port Consortium (KPC) and Kemaman Supply Base (KSB) in petrochemical and oil and gas industry. Competition between these existing companies is likely to be high in pressures on market growth rates, price, profitability, margins, facilities, services and strategies for every company in the industry. Empirical observation confirms that resources (capital, labour, technology) and talent tend to concentrate geographically (Easterly and Levine 2002). This result reflects the fact that firms are embedded in inter-firm relationships with networks of suppliers, buyers and even competitors that help them to gain competitive advantages in the sale of its products and services. While arms-length market relationships do provide these benefits, at times there are externalities that arise from linkages among firms in a geographic area or in a specific industry (textiles, leather goods, silicon chips) that cannot be
captured or fostered by markets alone. The process of “clusterization,” the creation of “value chains,” or “industrial districts” is models that highlight the advantages of networks. Competitiveness captures the awareness of both the limitations and challenges posed by global competition, at a time when effective government action is constrained by budgetary constraints and the private sector faces significant barriers to competing in domestic and international markets. Kuantan Port Consortium Sdn Bhd (KPC) operates as a port in Malaysia. The company offers various port services, including handling break bulk cargo, such as steel pipes, round logs, sawn timber, and plywood; dry bulk cargo, including fertilizers, wheat, flour, iron ore, and coal; and liquid bulk cargo traffic, such as palm oil, other vegetable oil, mineral oil, and petrochemical products. Its facilities include multipurpose berths, liquid chemical berths, palm oil berths, mineral oil berths, and container terminals; container storage, conventional storage, storage for dangerous cargo, and tank storage; and various cranes and equipment. The company was founded in 1974 and is based in Kuantan, Malaysia. Kuantan Port Consortium Sdn Bhd is a subsidiary of Road Builder Malaysia Holdings Bhd. KUANTAN PORT is situated at Tanjung Gelang on the eastern seaboard of Peninsular Malaysia between latitude 03 58' N , longitude 103 26.4' E , some 25 kilometres north of Kuantan, the state capital of Pahang. Strategically located in the state of Pahang on the eastern seaboard of Peninsular Malaysia, Kuantan Port is developing into a major international port in tandem with the rapid expansion of the industrial and manufacturing activities of the East Coast Corridor. Supported with excellent port facilities and services, a vast market outreach and a strong network of global shipping connections have strengthen the position of Kuantan Port as a petrochemical hub port and a major container terminal of the East Coast region. Throughout the years, Kuantan Port has developed progressively towards becoming one of the busiest ports in Malaysia. Due to its top notch, state of the art facilities, KPC is able to cater to the ever-demanding requirements of the escalating petrochemical industries, spawned by the gas and petroleum industries of the East Coast. In
addition, the mushrooming of newer industries related to petrochemical manufacturing and other service-oriented sectors has made Kuantan Port the undisputed petrochemical hub of Malaysia. Today, governments are increasingly concerned about competitiveness rivalry that concern to developing countries exposing sheltered economies to global market forces. This has evolved over time to concerns about economic competitiveness in a more general sense; with liberalization and adjustment has spread to developing the countries. Improving competitiveness is central to raising the underlying rate of growth of the economy and enhancing living standards. The need to improve competitiveness is not imposed by government, but by changes in the world economy. This paper aimed to show the strength, weakness, opportunities and threats in the services that offered by Kuantan Port Consortium (KPC) and also identify products and services offered by Kuantan Port Consortium (KPC) in comparison to Kemaman Supply Base (KSB). This paper also identified what is the main factor in development of a port.

RESULT AND DISCUSSION
Competitiveness as the degree to which a country can, under free and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long term. Port competition is not a matter of just being cheap or just providing enough capacity. Ports need to offer their customers an attractive as possible package. Maritime accessibility; capacity; cost; flexibility; reliability; congestion-free hinterland connections amongst others are all part of this package where for instance high labour cost or less favourable maritime accessibility can be compensated with competitive port dues or high labour productivity. This port competition should be seen as a perpetual area of tension between ports and carriers where the former are being pushed by the latter to offer a competitive set of conditions.

Kuantan Port Consortium Sdn Bhd
Kuantan Port Consortium Sdn Bhd (KPC) operates as a port in Malaysia. The company offers various port services, including handling break bulk cargo, such as steel pipes, round logs, sawn timber, and plywood; dry bulk cargo, including fertilizers, wheat, flour, iron ore, and coal; and liquid bulk cargo traffic, such as palm oil, other vegetable oil, mineral oil, and petrochemical products. Its facilities include multipurpose berths, liquid chemical berths, palm oil berths, mineral oil berths, and container terminals; container storage, conventional storage, storage for dangerous cargo, and tank storage; and various cranes and equipment. The company was founded in 1974 and is based in Kuantan, Malaysia. Kuantan Port Consortium Sdn Bhd is a subsidiary of Road Builder Malaysia Holdings Bhd. Kuantan Port Consortium Sdn Bhd is currently operating Kemaman Port's 510 metre long West Wharf in Teluk Kalung, Kemaman.In addition to the West Wharf, we have taken interest in the privatisation of Kemaman Port to manage and operate the East Wharf and Liquid Chemical Berth under Konsortium Pelabuhan
Kemaman Sdn Bhd. Besides the Kemaman Port operations, we have 800 acre of industrial land at the adjacent Teluk Kalng Industrial Area in Kemaman. The area provides a cost effective solution for heavy, chemical and petrochemical industries.

Marine Services.
Piloting in and out of the harbour is compulsory under Kuantan Port Consortium operating regulations. The Marine Services Department of KPC operates 24 hours a day, 365 days a year to handle the continuous movement f vessels within the port’s water limits. To provide faster vessels turnaround time in addition to safe and efficient movement, the port has a team of highly-trained and experienced pilots who are supported by reliable tugs, and mooring boats.

Port-Related Logistic Services.
In line with its status as an international port and to maintain its spirit of competitiveness, Kuantan Port Consortium offers a complete range of value-added port-related logistics services such as container maintenance and repair works, container depot and reefer facilities, mobile crane and forklift rental services; and nitrogen for purging/pigging. Security. Kuantan Port Consortium Security Departments was established under the Port Authority Act 1963. It is manned entirely by port personnel having auxiliary police power to ensure law enforcement within the port’s premises, manning entry and exit gates, crime prevention, cooperating with the police and marine departments, traffic and crowd control, port pass processing and security vetting.

Fire and Safety.
Kuantan Port Consortium Fire and Safety Department was established under the
Kuantan Port Authority Act 1980. Aimed at providing a safe working environment for its staff and clients, the department is manned by highly-trained fire and safety officers who ensure that the port is accident-free. This department’s is to strive towards a safer working environment. The department’s activities include patrolling the port premises for safety infections, supervising dangerous cargo movement and storage, tackling oil spills, and providing ambulance services.

International Ship and Port Facility Security Code (ISPS).
Due to tragedy 11 September 2001, IMO (International maritime organization) have stated the revolution act A.924 (22) ‘Review of measures and procedure to prevent acts of terrorism which threatened the security of passengers and crew and the safety of ships’. This research has been done to improve international law and safety measures to protect from terrorism at world port. Diplomatic Conference in London state that for international ship safety measure must practice and follow ISPS Code during SOLAS Convention (The International Convention for the Safety of Life At Sea). Concentrate on port facility to exercise good safety measures at port based on ISPS Code (section 16.9 part b) consist of In and out port, prohibited area at port facility, cargo handling, shunting and storage movement and handling unaccompanied baggage.

Swot Analysis of Kuantan Port Consortium (KPC)
Kuantan Port Consortium (KPC) has plenty of strengths which can be exploited further to attract more investors and government agencies such as Pahang State Economic Development Corporation and Malaysian Industrial Development Authority to enter this port. However, KPC must be diligent in addressing its weakness and mitigate the threats to enhance its competitiveness to become a major player in the international shipping industry.



Kuantan Port Consortium (KPC) vital strength is the availability of an abundance of space which gives it a distinct advantage for future expansion. Opportunity-wise, KPC has the infrastructure and attractions to potentially pull more shipping lines as well as to increase its throughput. However, the over- dependence on niche cargo i.e. chemical and petrochemical as well as steel pipe is a worrying threat which it should seriously address by diversifying its services to other sectors. It is proposed that Kuantan Port Consortium undertakes some actions to enhance its competitiveness such as review incentive and investment to attract more MLOs for Far East market, establish a free zone (industrial plus commercial) to promote the port further which will subsequently increase its throughput and diversify services to other industrial sectors.

Kemaman Supply Base (KSB)
Kemaman Supply Base, better known as KSB in Terengganu, Malaysia, began its operation in 1982 as onshore support base dedicated solely to service and supplies the offshore petroleum operations. It was specially designed and developed as a comprehensive logistic supply base for Peninsular Malaysia's offshore petroleum exploration and production industries. KSB is an all weather port due to the natural shelter and the 850-meter breakwater built as a protection from the seasonal north-easterly and south easterly winds. Its 360-meter quay with a depth of 8.0 meters enables it to receive 5-6 supply vessels at any given time. All these berthing facilities are dedicated for the specialized use of the supply vessels and the oil and gas related cargo traffic. KSB is fully supported by a pool of dedicated, well-trained and experienced stevedores to handle a wide range of cargoes and to ensure quick turnaround of ship. Its management team is committed to upkeep the facilities and service to the Malaysian offshore industry. In recognizing its commitment towards satisfying customer’s needs and expectations, KSB has been awarded with the prestigious MS ISO 9002: 1994 Quality Systems - Model for Quality Assurance in
Production, Installation and Servicing in 1999. KSB also has recently being accredited with MS ISO 14001 in August 2003 for its concern over environmental management. The prospect of KSB remains promising. The rapid growth of the petroleum upstream and downstream sectors will augur well for KSB which is developing to become the leading Managed Logistic Service (MLS) provider for the oil and gas industry in this region. Being a subsidiary of Eastern Pacific Industrial Corporation (EPIC) - an investment holding company listed on the main board of the KLSE together with strong support from PETRONAS and its Production Sharing Contractors, KSB is all geared to take on the oil and gas industry with an integrated set up dedicated to - both locally and regionally.

Services that provided by Kemaman Supply Base such as Marine Services including Pilotage & Towage-Efficient Pilotage services within the Pilotage District of the approaches to Kemaman Port and when necessary, in emergency situations outside the Port. Mooring Services-Mooring and unmooring services for the berthing and unberthing of vessels at the various wharves at the Port. Port and Navigational Control-Efficient port and navigational control within the Kemaman Port Limit. Maintenance Dredging and Hydrographical Survey-Continuous maintenance dredging, works and hydrographical survey within the harbour basin and channel. Port Safety-Port safety services including fire fighting (from Tug services as and when required). Manning, Operating and Maintaining of Tug, Pilot and Mooring Boats. To provide manning, operating and maintaining of Tug, Pilot and Mooring Boat services. Stevedoring services and supplying of equipment to enable the handling of cargoes and other port activities run smoothly are also provided by Kemaman Supply Base. Other than that, there are also efficient handling and supplying of Dry Bulk Handling Equipment for vessels, reliable security services, fire fighting, rescue and anti pollution services facilities within Kemaman Port for Port users, and aids to navigation, telephone/electronic, fresh water supply, bunkering, diving, garbage collection ex-vessels, prevention of pollution, radar and vessel traffic management system.

Swot Analysis of Kemaman Supply Base KSB
Kemaman Supply Base has created a niche in catering to the oil and gas sector and steel products, and the port has done well to focus on optimizing its unique advantages and strengths on servicing these sectors. The port’s strategic location, deep water and short waiting time are attractive features that could be further promoted for larger vessels to call at the port. The new East Coast Highway could enhance the accessibility of the port to other states – a kind of initial threat that could well be turned into an opportunity instead.

Rather than spreading its resources thin to compete on untested turfs, Kemaman Port would do well to continue to focus on its core competencies in the sectors it is servicing and capitalize on existing strengths. Some undertakings would help enhance its competitiveness such as diversify into dry / liquid bulk cargo, namely chemical products and enhance the infrastructure for dry / liquid bulk cargo to support the petrochemical industry.


CONCLUSION
Products and services offered by Kuantan Port Consortium (KPC) have been discussed in this paper and factors that bring the development of KPC has been identified. KPC can increase its competitiveness by taking the following actions such as identify niche market to attract more MLOs, upgrade facility, infrastructure and road links, promote closer co-operation between mainliner and feeder services, provide efficient, reliable, comprehensive and cost effective services and increase efficiency on human resource management. From the above analysis, it can be said that KPC are generally competitive and have in place the basic infrastructure to become competitive. Given the intensity of the competition amongst the petrochemical and oil and gas industry, KPC ports are growing and enhance the competitive power of certain seaports.

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