KUALA LUMPUR, Feb 15 — The impact of the Red Sea crisis on Malaysia’s shipping and ports is minimal compared to European countries, which depend heavily on Asian exports, thus they need to bear the brunt of higher shipping costs, said Maybank Investment Bank (Maybank IB).
The research house said Malaysian exporters generally face minimal disruption, with moderate freight cost increases.
“Despite challenges in the supply chain and increased freight costs, Malaysia’s trade outlook remains positive and stable and Malaysian ports have experienced minimal disruptions, with limited impact on trade routes to Europe and the United States,” it said in a note today.
However, some importers in the chemicals, machinery and automotive industries face supply chain delays, affecting their production timelines, it added.
Nevertheless, the investment bank said there is no expectation of significant increases in freight rates for these routes due to their backhaul nature, except for luxury items like wine and gourmet food, which may be subject to higher container freight rates.
“Overall, the disruptions are generally positive for the shipping sector. Global container rates, notably from East Asia to Europe, are anticipated to remain elevated, stabilising at the current level which is two to four times higher than the low in November 2023,” it added.
Maybank IB noted that the increase in rates is primarily attributed to voyage time and operating costs rather than capacity constraints, suggesting a fair balance in current rates.
“Intra-Asia rates are expected to be stable, hovering slightly above pre-pandemic levels, while domestic rates should face minimal disruption,” it said.
As such, the research house has maintained its “buy” calls for MISC Group and Westports Holdings, with minimal impact seen for MISC due to its focus on long-term charters.
As for Bumi Armada, Maybank IB projected a record-high core net profit of RM844 million for the company in the financial year 2024, with its buy call retained but with the target price lowered to 65 sen.
“This is given that the Kraken floating production storage and offloading’s (FPSO) unexpected mishap is now behind Bumi Armada, coupled with the start of bareboat charter lease recognition for 30 per cent joint venture Sterling V FPSO beginning April 2024 and a further decline in finance costs,” it added.
— Bernama
