Borneo Post, Photo Credit to Borneo Post
clock 26-05-2017
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SSSA Calls for in-Depth Study on Cabotage Exemptions

Sarawak Sabah Shipowners Association (SSSA) has urged the state government to revisit the cabotage policy and conduct an in-depth study on the impact of the exemption before implementing permanent changes that may cause damage to the local shipping industry without benefiting Sarawakians' welfare and livelihood.

It stated that freight rates, which have been on a steady decline, have forced at least four listed companies on Bursa Malaysia to exit the industry over the years.

"The freight trend from Port Klang to East Malaysia has been on a steady decline for the past decade where companies such as MISC Group, PDZ Holdings Berhad, Swee Joo Coastal, Hub Line and Geniki Shipping were forced to exit the container shipping trade, four of which were listed companies on Bursa Malaysia.

SSSA pointed out that if the state government were to abolish cabotage policy permanently at the end of the six-month trial period, the remaining companies are likely to slowly phase out of business.

"The exemption of cabotage will likely lead to larger shippers/exporters fixing their own charters on foreign flagged ships whenever they have bigger parcels. Over time, these break bulk operators will lose their base cargo and be unable to sustain the continuity of their service and eventually exit the trade.

"When that happens, shippers will then have major problems shipping smaller parcels because they are unable to fix charters on small parcels of goods. This will result in major interruption of the supply chain" said SSSA.

The interruption of the supply-chain ecosystem will cause problems for populations of Sarawak and Sabah, as the connectivity of essential consumer goods will be disrupted to smaller/remote parts of our country, it added.

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