Malaysian manufacturers have been urged to source from Asean countries in order to reduce their reliance on outside suppliers.
The ongoing attacks by Houthi rebels in the Red Sea – of which 15 per cent of worldwide trade passes through it – are causing disruptions to important trade routes including those involving Malaysia and Asean countries, industry observers said.
They, however, said the redirection of container ships to avoid the threat of attacks in the Red Sea can cause a surge in prices of Asian-manufactured goods products due to longer shipping times and causing congestion at unprepared ports.
The Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai (pic) said supply-chain security is also a concern because of the geopolitical unpredictability surrounding the conflict between Israel and Hamas.
According to him, the different economic development stages among Asean members as well as the industry specialisation of each nation allow for greater labour force and natural resource complementarity amongst them.
“As Asean supply chains are also deeply integrated with Northeastern Asian neighbours, Malaysian manufacturing companies can build resilience by working closely with our Asean counterparts, not only as a source for inputs and a market for Malaysian manufactured exports but also to integrate deeper for trade and investment regionally,” he said.
According to Soh, Malaysian manufacturers stand to gain from both the comprehensive and progressive Trans-Pacific Partnership, of which four Asean countries are members, and the Regional Comprehensive Partnership Agreement, of which Asean is a core component.
He said manufacturers should think about combining various forms of transportation such as air, sea, rail and road, to optimise shipping routes in order to cut costs and delays.
Air freight can still offer greater flexibility and drastically shorten transit times for urgent shipments of valuable cargo, even though it may not be able to handle large volumes of cargo, he said.
Maybank Investment Bank Bhd analyst Loh Yan Jin said as of now, Malaysian ports, particularly Westports, have not reported any disruptions.
However, freight forwarders indicate that certain ports in Asia, especially in China, have started to encounter container shortages, she added.
This situation arises from shipping liners diverting traffic away from the Suez Canal, leading to longer shipping times and is expected to cause congestion at unprepared ports (due to delayed arrivals, this has caused more port calls from the liners simultaneously than anticipated).
“This congestion is anticipated to result in an imbalance in vessel space and equipment placement, including stranded empty containers in the wrong locations,” she said.
Loh further explained that anticipating a situation like what happened with moving shipping containers around during the pandemic supply chain issues, could be good for Westports.
“It might increase the need for managing empty containers at the port, but it is worth mentioning that the fees for handling empty containers at Westports are pretty much the same as for containers that are full,” she said.
