Northport cutting costs to ride out slowdown

Terminal operator Northport (Malaysia) Bhd has embarked on a cost-cutting exercise that will see all recruitment frozen and advertising spending slashed, in anticipation of worsening economic conditions.

“Many people are predicting that things are going to get worse next year, and so we are preparing ourselves to ride through this crisis. An obvious way is to cut costs,” said its managing director and chief executive officer Datuk Basheer Hassan Abdul Kader.

He was speaking to reporters after delivering a talk titled “Expanding the Operating Capacity of Northport through Implementing Strategic Initiatives” at the Selangor Freight Forwarders and Logistics Association in Port Klang last week.

Basheer said the port has put a freeze on staff recruitment and postponed or cut spending in areas such as advertising.

“However, we have no plans to retrench staff. In fact, it did not cross our mind,” he said, adding that the port had recruited about 30 people in the last three months.

pix_middleBasheer believes that Northport’s restructuring and merger exercise between Klang Container Terminal Bhd and Kelang Port Management Bhd in 2000 will put the port in good stead to withstand the current downturn.

This includes its strategy over the past few years of focusing on revenue and profit growth instead of volume growth; the optimal utilisation of its assets such as land, labour and capital; and moving to higher-margin businesses comprising container, conventional cargo, logistics and automotive.

“Because of our prudent policy where we have kept our gearing to almost zero, we are well positioned to withstand the current crisis,” he said.

Northport is also keeping its RM500 million expansion plans on track, which include the development of a 350m container berth, bringing the container quayline at the port to a total of 3.4km.

Basheer also said the port remained on track to meet its forecast of three million TEUs (20-foot equivalent units) in container throughput this year.

However, he warned that the port has started seeing a drop in cargo volume in the fourth quarter of this year.

“Northport’s focus is import and export trade, particularly intra-Asian trade. As such, this recession is a concern to us because if Malaysian trade is affected, Northport will also be affected.

“We are starting to feel the effects of the global slowdown in the current quarter. But the drop (in cargo volume) is nothing to be seriously alarmed about yet,” said Basheer.

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