For decades, Singapore has been the main transshipment point for traders trying to get commodities from Africa to Asia, but now that banks are attempting to reduce their risks in response to the global financial crisis, traders have had a harder time getting financing for the long journeys.
This, along with increasing land costs in Singapore and the surge in demand from commodity-hungry China, has left traders with pressing and expensive issues to address to get their goods to Asia at the right price.
Enter Maersk with a solution: cheaper storage in Malaysia.
Since 2001 the company has steadily increased its use of the Tanjung Pelepas port in the state of Johor, where land prices are a fraction of Singapore's. Six months ago Maersk began offering the port as a storage point for customers, and is now the only shipping company for which Pelepas is a bigger transshipment port than Singapore.
According to a report in the Financial Times, this would allow commodity traders to react more quickly to customer orders as it takes only seven days to go from Malaysia to China vs. the 35 days it takes to be sent directly from Africa.
As the fiscal squeeze leaves many traders without trade-finance terms from banks, this new route could make it easier to get financing because of the shortened time between order and receipt of goods.
“Commodities is an exciting segment for us, driven by increasing exports out of emerging countries such as Africa, and increasing demand from Asia due to manufacturing and rising domestic consumption,” said Bjarne Foldager, Maersk Line’s “cluster manager” for Malaysia, Singapore and Brunei.