Malaysia's biggest port operator, Westports Holdings Bhd, remains unfazed by Thailand's land bridge project, according to its executive chairman.
The firm is considering external strategic investors to fund a 39.6 billion ringgit (US$8.3 billion) expansion, aiming to nearly double its capacity in the coming decades.
With traffic volumes forecast to exceed the Malacca Strait's capacity by 2030, Thailand has proposed a 1-trillion-baht, 90-kilometre land bridge project to bypass the shipping lane. The plan aims to connect seaports in Chumphon province in the Gulf of Thailand and Ranong province on the Andaman coast, reducing travel time by four days.
In an interview with Bloomberg, Westports executive chairman Ruben Emir Gnanalingamsaid said that he is not worried by the idea at this time because his customers are yet to seriously consider the project as an alternative.
Regarding the expansion, Ruben mentioned the company's openness to external strategic investors who can add value. He also said considerations of a dividend reinvestment plan and borrowing to support the expansion of the Klang facility. Westports, the second-largest port in Southeast Asia, plans to increase capacity to 27 million twenty-foot equivalent units from the current 14 million by 2082.
The expansion, starting with the operation of the first of eight new container terminals in 2027, mirrors ambitious plans in neighbouring Singapore, where Tuas Port is set to become the world's largest automated terminal by 2040 at an expected cost of S$20 billion ($15 billion).
Buying assets
The company’s shares have surged more than 20% since their recent low in October, beating the roughly 5% gain in the Kuala Lumpur benchmark. Two-thirds of analysts who cover the firm have a 'buy' recommendation.
Westports is looking at opportunities to buy other ports in Southeast Asia, but won’t overpay for an asset, according to Ruben, who succeeded his late father Gnanalingam Gunanath Lingam as chairman last year.
"There have been ports we have bid for, but we have a limit of how high you can go," he said. "Our goal is to make decent returns on investment. Our goal is not to plant flags and lose money."
Sustainability is another major focus. The global maritime industry is under growing scrutiny as its greenhouse gas emissions have increased 20% in the past decade and it now accounts for about 3% of the world’s total. Shipping firms are accelerating efforts to go green, overhauling fleets to meet an industry target for net zero emissions by 2050.
Westports' efforts to reduce its carbon footprint have seen mixed results, and the firm is now rethinking its use of electric vehicles (EVs) — a mainstay of many companies’ efforts to reduce their emissions.
"The crazy thing is, the EV trucks we tried produced more emissions than diesel under certain conditions, because our grid is so dirty due to coal,” he said. "So we have decided to slow down on EV use."