FMM urges clarity, dialogue on port tariff hike

New Straits Times

17-06-2025

KUALA LUMPUR: The Federation of Malaysian Manufacturing (FMM) remains concerned that the scale and timing of the recent port tariff hikes without detailed cost disclosures or comprehensive stakeholder consultation may place an undue burden on industry.
In response to the explanations provided by the Port Klang Authority (PKA) in its press statement dated June 16, 2025, FMM said given the wide-ranging implications for trade, investment and the cost of doing business, it believes the rationale for the revision warrants further scrutiny.
"FMM fully respects the right of all stakeholders, including PKA, to present and defend their positions. Constructive dialogue is essential to national development.
"However, given the wide-ranging implications of this tariff hike, especially amid broader cost escalations and global uncertainties, we believe it is time to move beyond justification and toward pragmatic resolution," said FMM president Tan Seri Datuk Soh Thian Lai.
Soh said the federation disagrees on PKA points that Port Klang's tariff rates will remain among the most competitive in the region.
While Port Klang's official handling tariff of RM390 (approximately US$92 per TEU) may appear lower on paper, he said this figure does not reflect the actual cost borne by Malaysian shippers.
"Terminal Handling Charges (THC) are not billed directly by port operators to shippers; instead, they are imposed by shipping lines, often with significant mark-ups.
"Current publicly available rates by shipping lines show that Malaysian shippers are already paying an average of RM480 per 20-foot container, well above the existing RM300 port handling charge.
"Increasing the tariff to RM390 without structural reform will effectively give shipping lines the latitude to raise THC further, potentially reaching the real-world cost range of US$120 to 130 per TEU," he said.
Meanwhile, Soh pointed out that port operators face cost pressures like other industries, but it questions whether the proposed tariff hike is truly warranted given current financial and regulatory contexts.
Under existing concession agreements, the costs associated with port development and infrastructure are contractually required to be fully borne by port operators, he said.
As for the PKA's claims that relative to other increases, port charges are a small fraction of the total cost that consumers will ultimately bear indirectly, FMM disagrees with the narrow framing of cost impact based solely on per-kilogram increments.
While PKA's micro-level calculation may appear negligible, he said it overlooks the broader and more significant issue, such as the cumulative cost burden placed on Malaysian exporters, importers and manufacturers.
"PKA's analysis fails to acknowledge that logistics costs are already among the highest contributors to the cost of doing business in Malaysia.
"The impact of a 30 per percent increase in container handling charges and a 200–243 per cent hike in storage charges cannot be minimised by simplistic per-unit cost metrics.
"FMM reiterates that the evaluation of port tariff adjustments must be done holistically, accounting for their multiplier effect across the supply chain and national economy," he said.
In addition, Soh said FMM reiterates that claims of "modest" increases are not supported by the quantum of the adjustments, which are among the steepest seen in recent memory.
Without detailed, he said, transparent cost justifications, these increases will be viewed as revenue maximisation at the expense of trade facilitation.
"Maintaining investor confidence and trade momentum requires a holistic approach where competitiveness is grounded in predictable pricing, stakeholder consultation and a transparent cost-recovery framework.
"FMM urges the authorities to defer the hike and engage the industry in reassessing a sustainable, accountable tariff structure aligned with national economic goals," he added.