Step 1: Identification of the issue
The developing of the Kra Canal is a very feasible decision for most shipping companies and operators due to the many benefits and advantages that they will enjoy in its use compared to the current maritime route located at the Strait of Malacca. Therefore, the possible implications of the Kra Canal decision on changing the maritime business patterns in Malaysia will be examined by focussing on geogra phical aspects and logistics distribution with a descriptive analysis. Moreover, to strengthen the study, the PESTLES theory will be used to examine the possible implications through seven different aspects.
Step 2: Data collection process
The current maritime business patterns in Malaysia focus on the main gate by the sea which is located at Port Klang. The Strait of Malacca is considered as an international passage route for travelling between Europe and the Far East by sea and vice versa. Table 3 summarises the types of vessels and total vessel movement reported to the Klang Vessel Traffic System (VTS) from 2010 to 2014. The VTS is controlled by the Marine Department of Malaysia, Port Klang. The main types of vessels that cross the Malacca Strait are container, tanker and bulk carrier vessels. The total vessel crossing the Malacca Strait is 380,455 vessels for the five years. This shows that the number has increased every year except for a slight decrease in 2011.
From the total vessel movement shown in Table 3, only 131,689 (34.61 %) vessels were foreign going and called at the Malaysian main ports from 2010–2014. It seems that the other 65.39 % just crossed the strait without giving any benefit or profit to the Malaysian ports. Even worse, any vessel collision/accident, piracy issue and marine pollution incidents have to be handled by Malaysia together with its two other neighbouring countries, Indonesia and Singapore. These issues are strongly supported by data from the total foreign going ships that called at the Malaysian main port from 2010–2014 (Table 4). The data include several types of foreign going ships, such as containerships, general cargo ships, liquid tankers, dry bulk ships, and other ships. It has been proven from statistics that foreign going ships that call at Port Klang were reduced from 15,914 vessels in 2011 to 15,306 vessels in 2012, 14,139 vessels in 2013 to 13,377 vessels in 2014. A similar business pattern is found in the three other main ports of Penang Port, Johor Port and Port of Tanjung Pelepas. The statistics on ship calling in 2015 is expected to be reduced respectively due to an unstable global economy, market demand and political aspects in Malaysia.
Figure 4 is a plot of foreign going ship calls in Malaysia. Obviously, the plot shows the instability and reduction of foreign ships that call at Malaysia. Ultimately, this situation has affected the port profit. It seems that there are no main line container vessels calling at the Klang and Penang Ports. Only one feeder container vessel reported calling at the Penang Port for both 2013 and 2014. For the Johor port, there was no feeder container vessel and other vessels calling from 2010 to 2014. However, obviously all of the ships calling at the Port of Tanjung Pelepas are containers (main line and feeder).
Step 3: Possible implications
The possible implications on the geographical aspects and logistics distribution will be discussed in this step. All information is obtained through interview sessions with six industry experts.
a) Geographical aspects
The changes in the geographical target will be evident. There are a minimum of six (6) possibilities of new maritime routes that can be developed after implementing the Kra Canal (Fig. 5). They are for instance:
Europe/Middle East - Penang - Far East (and vice versa)
Europe/Middle East - Penang - Bangkok - Far East (and vice versa)
Europe/Middle East - Satun - Far East (and vice versa)
Europe/Middle East - Satun - Bangkok - Far East (and vice versa)
Europe/Middle East - Bangkok - Far East (and vice versa)
Europe/Middle East - Far East (and vice versa)
Obviously, the Bangkok and Penang Ports will experience significant benefits due to this mega project. In terms of the perspective of Malaysia, the Penang Port is still quite near to the canal and, perhaps, the effect may only be marginal. Also, Malaysia is still one of the target destinations to be called at by foreign going vessels. Although the port destination is expected to change due to the shifting of the route service but, Malaysia is still able to obtain economic benefits through the Penang Port. In current practice, most vessels prefer to call at Port Klang, Johor Port and Port of Tanjung Pelepas as hubs for the handling of import and export cargo as well as transhipment cargo compared to the Penang Port. However, after developing the Kra Canal, the geographical aspect of the Penang Port will be that it acts as the main gateway when entering Malaysia by sea. This situation will benefit the Penang Port from many perspectives, for instances, increases in 1) foreign going vessel ship calls, and 2) logistics and supply chain activities.
b) Logistics distribution
In practice, Port Klang, the Port of Tanjung Pelepas and Johor Port will be among the selected ports for port of call and transhipments. However, if the Kra Canal is available, it is predicted that the Penang Port will be a new shipping hub that replaces Port Klang as well as the Port of Singapore (Fig. 6). All of the feeder vessels will be operating from the Penang Port to other main ports such as Port Klang, Port of Singapore, Kuantan Port and Tok Bali Port. For the latter, feeder vessels will cross through the Kra Canal, but for the Kuantan Port, they might have two route options: either through the Kra Canal or the traditional shipping route.
Currently, the Penang Port is the main gateway for the northern Malaysian hinterland and also serves cargo transportation to and from South Thailand. It is also connected to the North-south and the East-west highways as well as to the rail network. The port is connected by road and rail to an inland terminal located at Padang Besar near the border of Malaysia-Thailand. Padang Besar inland terminal is also connected by road and rail to South Thailand which is the location of the proposed Kra Canal. Nevertheless, if the Penang Port becomes the new shipping hub, then it is possible that the hinterland radius will also be increased.
As a new shipping hub, the free trade zone in the Penang Port means that the port will be larger and more active. Many production companies will establish their factories or warehouses in this free trade zone due to fast and efficient shipping and logistics. These will provide significant opportunities to business companies as well as expand the local economy.