Consider broader supply chain when revising port handling fees

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From Chandra Mohan Sinnandavar

The transport ministry’s recent approval of a three-phase increase in terminal handling charges (THC) at Port Klang, announced by the Port Klang Authority on June 13, marks an important policy decision. The increase, about 30% in total, will be rolled out in stages starting July 15.

While adjustments in THC may be necessary to maintain port infrastructure and services, it is important to also consider how this affects the rest of the container supply chain. This is a good time for the ministry to play a bigger role, not just in managing ports, but in supporting the full supply chain that keeps Malaysia’s trade moving.

Stakeholder engagement and industry feedback

News of the THC revision had been circulating earlier in the year, indicating that the matter was not entirely unexpected.

However, public statements from key industry groups such as the Federation of Malaysian Manufacturing suggest that some stakeholders may not have felt fully engaged in the process. If discussions were held, they might have been more focused on announcement rather than dialogue. Moving forward, a more consultative approach that allows for broader industry input could help strengthen policy acceptance and support.

Policy should support container supply chain and broader ecosystem

The container supply chain is an ecosystem which is not limited to ports. It’s complex, and includes players such as local manufacturers, exporters, importers, transporters, container depots, freight forwarders, shipping agents, SMEs and many more. All of them are parts of what keeps our trade system running.

If there is a need to revise the THC, the process should also consider how it affects these local businesses, especially those directly based in Malaysia, unlike transshipment cargo that simply passes through. These businesses are already facing rising logistics costs, and any new charges will add more pressure.

Why the increase now?

Ports in Malaysia remain financially healthy. Westports reported RM898 million, a 38% margin, in net profit for 2024, and MMC Ports is preparing for a major IPO worth about RM25 billion.

These are signs that the port industry is doing well. One reason for the THC increase may be concern over a possible drop in transshipment volumes due to new trade risks, especially scrutiny from the US on Southeast Asian trade routes. This could affect port revenues in the short term.

However, solving a transshipment issue by increasing costs for local businesses is not the right approach. Importers, exporters, and manufacturers with operations in Malaysia should not be penalised for changes in global trade. If the transport ministry wants to help ports stay competitive, it should also make sure that domestic businesses are not left behind.

Don’t focus on ports alone

Recent steps like offering off-peak entry incentives for hauliers show that the ministry is trying to improve port usage, but such measures must be carefully reviewed. In some cases, they may shift the burden to other parts of the supply chain, such as hauliers who already face challenges like driver shortages and tight profit margins.

The goal should be a more balanced approach. Focusing only on ports can unintentionally hurt the broader system. Policies should support everyone involved in moving containers, not just those at the gate.

Policies must be clear and fair

Ports may be run by private or listed companies, but they serve a national role. Any increase in cost should be explained clearly, including how it will benefit users.

For example, will the increase lead to better services, faster handling, or easier coordination? These are fair questions for businesses to ask, especially SMEs that operate with limited resources.

A one-size-fits-all approach may not work. Different users have different needs, and a more flexible policy could help ease the impact.

What the transport ministry can do

Here are some practical ways THC changes can be better managed:

Link cost increases to improvements: If THC is going up, users should see better services such as faster clearance or better tracking.

Give SMEs more time: Small businesses may need a longer time frame or some support to adjust to the new charges.

Explain how the extra money will be used: Show clearly whether the added revenue will be invested in facilities, digital tools, or better access.

Conclusion

Ports are important, but so is everything that comes before and after them. The transport ministry is in a good position to lead not just port development but the entire container supply chain.

A more complete and inclusive approach can help Malaysia build a stronger and more reliable logistics system. This will benefit not only the ports but all the businesses that rely on them.

Chandra Mohan Sinnandavar is a logistics and supply chain professional with over 25 years of industry and academic experience. He is also the founder of CNG Synergy, a logistics consultancy firm.

The views expressed are those of the writer and do not necessarily reflect those of FMT.

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