MIDF Research highlighted the likelihood of heightened transshipment activity as companies try to ship goods to the world’s largest economy ahead of any new tariffs on US-bound goods.
PETALING JAYA: Following Donald Trump’s victory in the US presidential election, MIDF Research expects a rise in shipments at Malaysian ports as trade concerns mount.
The research house highlighted the likelihood of heightened transshipment activity as companies try to ship goods to the world’s largest economy ahead of any new tariffs on US-bound goods.
“Overall, the impact of a Trump presidency will depend on the measures implemented through his trade policies,” the research house said in a report.
During his campaign, the newly elected US president had proposed imposing blanket 10% or higher tariffs on all imports into the United States, with a much higher 60% on goods from China.
MIDF Research noted that a similar pattern occurred during Trump’s previous term from 2017 to 2021, when “Trade War 1.0” with China began in July 2018.
It said as tariffs were imposed on Chinese goods, businesses rushed to frontload shipments to the US to avoid increased costs and tariffs.
The research house said this led to a surge in container traffic at ports around the world, including those in Malaysia.
It pointed out that transshipment hubs such as Port Klang and the Port of Tanjung Pelepas in Johor experienced an 11% year-on-year rise in containerised transshipment volume in the second half of 2018.
Apart from that, MIDF Research said the “China Plus One” strategy of seeking alternative manufacturing sites beyond just China has driven growth in Malaysian port volumes.
“After Trade War 1.0, there was a growing adoption of the China Plus One strategy, with companies diversifying their supply chains by expanding manufacturing to countries beyond China, with Malaysia emerging as one of the key beneficiaries,” it noted.
Looking ahead, MIDF Research anticipates that “Trade War 2.0” could again lead companies to frontload shipments to the US, creating a temporary surge in port throughput and likely driving up ocean freight costs on US-bound routes, although the magnitude may vary.
Separately, MIDF Research also highlighted the ongoing challenges posed by efforts to address perceived unfair trade practices.
Recently, the US Department of Commerce issued a preliminary affirmative determination in its countervailing duty (CVD) investigation on solar cell imports from several Asean countries, including Malaysia.
The investigation stemmed from subsidies granted by originating or exporting countries.
MIDF Research noted that the CVD issue has impacted logistics players such as Tasco Bhd
.
It pointed out that Tasco’s recent quarterly results showed weaker domestic performance due to reduced shipments from a client affected by the CVD, impacting business areas such as warehousing, customs clearance, container haulage, and trucking.
Despite these challenges, MIDF Research maintained a neutral stance on the port and logistics sector, with Tasco as the top pick due to its “appealing” valuation.
“Tasco indicated that the loss of volume from its major photovoltaic customer will be gradually offset by contributions from a pipeline of new customers, including a high-end automotive customer that it is currently providing with customs clearance, container haulage, and cross-border trucking services,” the research house said.
