Abolishment of cabotage policy cause of sky-high freight charges

Dr Renco Yong

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SIBU, Jan 26: Sarawak Association of Marine Industries (Samin) holds the view that the abolishment of the cabotage policy for Sarawak and Sabah not only fails to yield any benefits for local shipping companies, but has instead caused local industries to suffer from sky-high freight charges.

On the liberalisation of the cabotage policy for Sabah and Sarawak which has been in place since 2017, Samin president Dr Renco Yong lamented that it has not brought much impact in reducing the freight rates of shipping services linking ports in the two Borneo States with foreign ports and those in Peninsular Malaysia.  

“As a matter of fact, the freight rates have been increasing in the past five years as we continue to depend on foreign vessels to provide shipping services to our ports,” he said in a press statement today.

Yong said many local shipowners of cargo ships have sold their vessels due to fierce competition from foreign shipping companies which have a bigger, greater economic of scale and more connectivity with ports.  

This was further compounded by the nation’s dependence on foreign shipping services and put local consumers, manufacturers, commodities producers, industries and businesses at the mercy of the high freight rates imposed by foreign shipping lines now. 

“The existing policies have undermined the competitiveness of our exports, increased the price we pay for goods and services and caused the outflow of foreign exchange to Malaysia,” said Yong.

To minimise the impact of high freight rates on local industries, it was his hope that all parties concerned would quickly clear the backlogs along supply chains and ease the bottlenecks to bring container freight rates back to reasonable levels. 

“Governments, port operators, container shipping companies, container owners, trucks and warehouses operators and along the maritime supply chain must work together to clear the backlogs at ports and along the supply chains as quickly as possible.  

“This is important to ensure trade flows smoothly, economies can grow and players in the marine industry can be relieved from the adverse effects of the freight rates”, Yong stressed. — DayakDaily