This article first appeared in The Edge Financial Daily, on April 27, 2016.

KUALA LUMPUR: Westports Holdings Bhd expects its container throughput to continue to grow in the single digit this financial year ending Dec 31, 2016 (FY16), albeit at a lower rate than in FY15, amid sluggish global trade demand.

Last year, Westports handled 9.1 million TEUs (20-foot equivalent units) of containers, a growth of 8% compared with 8.4 million TEUs in 2014. Trans-shipment containers constituted 72% of the 2015’s total at 6.6 million TEUs, while indigenous boxes made up the remaining 28% at 2.5 million TEUs.

“In general, the market is not so good, you don’t see everybody growing. But we are going to have a good year with regard to the alliances that we have tied up, and seeing how the first quarter has shaped up so far,” its chief executive officer Ruben Emir Gnanalingam told reporters after the group’s annual general meeting yesterday.

Still, Ruben said Westports container throughput for FY16 is not expected to exceed the 8% growth it achieved last year.

“The market was concerned about slower China growth before this, but so far data shows that China’s economy is still growing. What we feel in the beginning of the year is positive, but we’ll probably do slightly under what we did last year, in my opinion,” Ruben said.

“The container shipping industry had a transformative change last year, with the emergence of four global shipping alliances and members of the Ocean Three Alliance choosing us as their regional hub.

“As we have continuously been investing in container terminal expansion, we are able to accommodate and support our clients’ requirements,” he added.

Meanwhile, Ruben said Westports’ FY16 revenue will be supported by the new tariff regime.

“Our revenue this year will be boosted by the new container tariff, which was given to us last year in November,” he said.

As for Westports’ Container Terminal 8 (CT8) development, Ruben updated that the cost of the project is expected to be higher than the initial RM1 billion mark, due to the fluctuation of the ringgit to the US dollar.

“Most of our cranes, we buy them in US dollars. Overall, we started off with RM1 billion, but the cost now is expected to be slightly higher because of the exchange rate, maybe about RM1.05 billion to RM1.1 billion,” he said, adding that the group has allocated RM750 million as capital expenditure for FY16.

“Last year we spent about RM252 million for CT8, [it will also account for the] bulk of the investment that will be spent this year, and the remainder for 2017, so we expect CT8 to be completed by the end of 2017,” he added.

Westports’ utilisation rate now stands at 83%. Subsequent to the completion of CT8, the rate is expected to be moderated to 76% to 77%.

“Depends on the growth rate, our triggering point for the next expansion is 75% of utilisation rate in CT8. Once we reach that, we will immediately start CT9,” he said.

Westports’ current capacity stands at 11 million TEUs. With CT8, the port operator will have an estimated 13.5 million TEUs.

Westports shares closed five sen or 1.19% lower at RM4.15 yesterday, with a market capitalisation of RM14.3 billion.