KUALA LUMPUR: Westports Holdings Bhd is keeping its forecast of a 5% to 10% growth in container volume this year, its chief executive officer Ruben Emir Gnanalingam said, supported by export figures for August that are still “holding up”.

Last Friday, Malaysian exports in July 2015 were reported to have increased 3.5% year-on-year  (y-o-y)and 5% compared with the previous month. The 3.5% growth was above market consensus of 3.2%.

“Based on what we have seen in August, exports are still holding up amid the current economic weakness and a slowdown in China’s economy,” Ruben told the digitaledge DAILY in an interview.

“However, we feel that the overall consumption will be slowing as a result of uncertainty over how the goods and services tax affects consumers’ pockets,” he said.

For the first quarter of 2015 (1Q15), Westports achieved an exceptional 17% container throughput growth from the year-ago period due to one-off factors before moderating to 3% in 2Q15.

The port moved 4.42 million 20-foot equivalent units, the standard measurement for shipping containers, in the first-half period (1H15), up 10% year-on-year on favourable growth momentum in both the trans-shipment and indigenous throughput.

Ruben said, however, he has yet to see a strong pickup in Malaysian exports due to the weakening ringgit, which is Asia’s worst-performing currency this year. “There is usually a lag effect and we will probably see it later. But on average, the balance between import and export (which makes up Westrports’ indigenous cargo) cargo is 50:50, which is very balanced.

“What we tend to see when the currency goes one way like in the weakening ringgit, it will tilt in favour of exports and less on imports. So, we expect it to go to 51:49, but it (indigenous cargo volume) doesn’t change dramatically,” he explained.

Ruben noted that Westports has also yet to notice a marked slowdown in imports, which is typically the result of lower orders due to the ringgit’s weakness causing overseas goods to become more expensive. Imports grew 5.9% y-o-y in July 2015, but contracted by 1.5% compared with June 2015.

According to Ruben, other than in 2009, world container volumes have been on the uptrend. “It isn’t a good idea to use the historical trend in 1997 when the local currency last reached these levels as a benchmark either,” he said, adding that any prediction based on a noticeable slowdown in trade is hampered by lack of data of periods of marked slowdown in trade.

Trans-shipment cargo makes up 70% of Westports’ container throughput, while indigenous cargo accounts for the rest.

Ruben pointed out that the weakening of the ringgit does not have any effect on trans-shipment cargo as these are goods which arrive in the country and are immediately transferred to another ship before continuing to their final destination.

Meanwhile, Ruben said while Westports remains open to potential mergers and acquisitions (M&As), it has yet to find a suitable target.

“We would like [to acquire] a container port in a brownfield location, but I think we also have to be realistic ... anything that is outside Malaysia now is probably going to be determined in the US dollar and will be more expensive for us,” he said.

As to how the Asean Economic Community (AEC) will benefit Westports, Ruben said the progress made on this front will have limited impact on the port.

“A lot of the trade barriers have already been effectively reduced to zero among Asean trading nations.

“We expect more trade in general, but it will not be a big jump in trade from this year to the next just because we are in AEC,” he said, adding that the AEC hasn’t translated into how it has affected the average man on the street.

This article first appeared in digitaledge Daily, on September 7, 2015.