Red Sea crisis has minimal impact on Malaysia's shipping, ports

KUALA LUMPUR, Feb 15 (Bernama) -- 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 Thursday.

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.

-- BERNAMA