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News / Business/ Straits Inter Logistics takes over operation and management of Labuan Liberty Terminal

Straits Inter Logistics takes over operation and management of Labuan Liberty Terminal

03 Mar 2020
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Malaysia-listed Straits Inter Logistics Berhad (SIL) on Tuesday (3 March) signed an agreement with the Labuan Port Authority (LPA) for the operation and management of the Labuan Liberty Terminal for a period of six years effective 1 April, 2020.

The Port Management Services contract will be undertaken by Megah Port Management Sdn Bhd, of which SIL holds a stake of 51% through a recent proposed shares subscription. The remaining 49% will be held by LPM Holdings Sdn Bhd.

Labuan Port is situated on an island in East Malaysia. Its berths have a total length of 355.6 meters with alongside depths of between 4.6 meters and 10 meters, and can accommodate a deadweight tonnage of 16,000. Labuan Port currently receives vessels carrying containers, dry and liquid bulk, general cargoes as well as oil and gas products.

“The new contract awarded by Labuan Port Authority serves as an opportunity for the company to venture into the Port Management Services, which shall complement our existing business, i.e. oil trading and bunkering services,” commented SIL Non-Independent and Non-Executive Director Tan Sri Mohd Bakri Bin Mohd Zinin during the event.

The Port Management Services will involve the provision of services, which include, but are not limited to, container operations, breakbulk (warehouse/container freight station/open yard), berthing and mooring, harbor tug services, stevedoring, bunkering, ship chandler to container and conventional vessels such as bulk carrier, general cargo ship, tanker, car carrier, and fishing vessel operators.

He pointed out that the port management industry in Malaysia grew from RM4.9 billion in 2014 to RM5.3 billion in 2018, as measured by the industry revenues of port management companies in the country. This represented a compound annual growth rate (CAGR) of 2.0% during the period.

Moving forward, the industry is expected to reach an industry size of RM5.6 billion in 2021 domestically, registering a CAGR of 1.9% between 2018 and 2021.

“The Labuan Development Blueprint 2030 was launched in January 2018 to drive the transformation of Labuan into a smart and sustainable city,” he said.

“One of the plans is to strengthen the island’s logistics, through the enhancements of cargo facilities and infrastructure. The initiative shall help to create demand for port management services to facilitate the seamless administration of the various port activities.”

Considering the prospects of port management industry, Tan Sri Mohd Bakri, who is also the Managing Director of Megah Port Management Sdn Bhd, noted the new business segment is expected to contribute positively to SIL.

SIL is principally engaged in oil trading and fuel bunkering services and investment holding activities. Oil bunkering services involve provision of refuelling marine gas oil and marine fuel oil through vessels to other ships and ocean faring vessels such as oil tankers, container vessels, cargo vessels and cruise ships.

As the company’s financial performance over the financial years under review has mainly relied on a single business segment, i.e. oil trading and bunkering services, the Group intends to expand its existing business to include Port Management Services to diversify its revenue and earnings through the acceptance of the contract by Labuan Port Authority.

At present, SIL’s 55%-owned subsidiary, Tumpuan Megah Development Sdn Bhd operates in eight ports in Malaysia, which include Lumut Port, Pasir Gudang Port, Tanjung Pelepas Port, Johor Bahru Port, Kuantan Port, Kemaman Port, Kuala Terengganu Port and Labuan Port, all of which are licensed under Petroleum Development Act 1974 for its bunkering services. It has an enlarged fleet size of 11 vessels with a total carrying capacity of 22 million litres.

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Photo credit: Manifold Times
Published: 3 March, 2020

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