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,”
“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
“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.”