Gulf of Thailand
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The project to create a Gulf of Thailand which will enable ships to bypass Straits of Malacca has resurfaced again. This is going to affect Singapore as a regional hub. So what is Singapore going to do about it and how are we going to compete effectively.
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must be the malaysian suggested this???
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Don't worry. There have been much talking for the past 20 years and no one has actually managed to pull enough resourses together to make it come true.
Thailand has been having a lot of trouble in the south lately. The last thing they want is having their southern tip cut into two.
If somehow they managed to do it. SG will not be the only country in deep shit, MY will not be any better off either. -
check the map before u make blind assumptionsOriginally posted by sugardaddy:must be the malaysian suggested this???
the entire malay peninsula, not to mention much of the malay archipelago would be hit very badly hit if the thais built their canal.
it would basically render every single port south of the proposed kra-isthmuth canal irrelevant and the thailand would run the most prosperous shipping route in SE Asia
it would basically be another suez canal.
geographically, its possible. but politically, its a terrible no-no and enviornmentally, its a potential disaster. not to mention that economically, there's no one to pay for it
so no... thats not the most compelling threat we face. -
why not...the malaysian can build another port there together with the thai mah.... please lah...anything is possible....malaysian authority are just out to get Singapore...Originally posted by CX:check the map before u make blind assumptions
the entire malay peninsula, not to mention much of the malay archipelago would be hit very badly hit if the thais built their canal.
it would basically render every single port south of the proposed kra-isthmuth canal irrelevant and the thailand would run the most prosperous shipping route in SE Asia
it would basically be another suez canal.
geographically, its possible. but politically, its a terrible no-no and enviornmentally, its a potential disaster. not to mention that economically, there's no one to pay for it
so no... thats not the most compelling threat we face. -
DuH... who has the best experience in operating a successful port? Sg of matland?Originally posted by sugardaddy:why not...the malaysian can build another port there together with the thai mah.... please lah...anything is possible....malaysian authority are just out to get Singapore...
who is on better terms with the Thais? Sg or Matland?
even if the Thais are looking for partners to build the canal (which they are not and they are not building the canal), they wouldn't logically ask matland.
sure... matland would love to get us in any way possible but THIS is not one of them. who would destroy their own economy just tekan their neighbour's economy???
at least Sg and matland are agreed on this point: the Thais are not building their canal because it will kill them both. -
IIRC the original proposal to cut through the Isthmus of Kra would benefit Malaysia and Thailand, with Penang and Songkhla be main entry points. A situation which sees Malaysia and Thailand benefiting and SG losing out.
Only problem was, a survey found the site found the site unsuitable for such a project, to which the Thais started hunting for a new location further north, effectively kicking Malaysia, together with SG out of the loop, which of course, left our northern neighbours sweating over the problem of irrelavance facing Port Klang, Penang and SG.
Which reminds me of the proverb, "ren suan bu ru tian suan". They wanted to marginalise us with the pea-brained scheme, only to find their ports facing marginalisation as well, which is why you never hear any more enthusiasm for the Kra projet. -
But the last time I heard, PSA actually approved of the cannal.They signed a pact with Thailand which stated that some of the shares would be owned by Singapore.In addition, Singapore is allowed to Tax ships going into the cannal.That is, if it is ever going to be built.In fact one Thai MP proposed to give all Singaporeans Thai citizenship as an incentive.Read this in the papers some years ago.
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But the last time I heard, PSA actually approved of the cannal.They signed a pact with Thailand which stated that some of the shares would be owned by Singapore.In addition, Singapore is allowed to Tax ships going into the cannal.That is, if it is ever going to be built.In fact one Thai MP proposed to give all Singaporeans Thai citizenship as an incentive.Read this in the papers some years ago.
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I think if they really does tt, it will hurt Malaysian damn hard
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Personally, I feel that the canal will be built as the technology advancement will reduce the cost drastically and thus making the project feasible.
I think the Sg govenment should play an active role if the project does take off like managing the port in the canal or investing in the project in order to have a voice in the outcome. Our port can play a secondary role like have high value added services while the port in the canal will just have basic facilities -
Centurion and Silkmagic,
yes we can offer them all sorts of expertise in return for fringe benefits. But in the end, thats what it all is: Fringe benefits. It would be little more than a damage-limitation exercise.
I would dare say if the project is to go ahead, the effect on Singapore will be extremely heavy, no matter how we align ourselves to take advantage of the Kra project.
Sure, we'll still have ships passing through our ports, but think about the numbers as opposed to minus the Kra canal. If th canal were to be built who will pass through Singapore, traffic from Australasia, S Pacific and Indonesia thats who. I'm no shipping magnate, but I would say the numbers will be a pittance compared to that traffic to and from HK, Japan, Taiwan, S Korea and China, who will almost cretainly use the Kra Canal if it is built
To those who arrogantly harp on the fact that SG is still the number one port, I say this: This is the very attitude that cost us MSC and Evergreen to PTP. Unfortunately PSA adopted this same stuck-up, arrogant and take it or leave it attitude with the shipping lines. Small wonder they took their business elsewhere. Hell, I know I would
When will these bloody idiots learn that the world is not as meek and docile as your average Singaporean, and will never buy their stupid take-it-or-leave-it arogance. -
well... they did wise up to that fact after they lost some businessOriginally posted by Viper52:Centurion and Silkmagic,
When will these bloody idiots learn that the world is not as meek and docile as your average Singaporean, and will never buy their stupid take-it-or-leave-it arogance.
true... the isthmuth canal woud really spell the end of Sg as the no. one port in the world and no amount of participation on our part would cushion the impact.
and it is a very real possibility in the future... just think: the Suez and the Panama canal both underwent their periods of up and down before someone took the initiative and pushed the mammoth projects along.
someone might suddenly think that the kra-isthmus canal is a great idea and throw in the money and the leadership to being this project about.
problem is, who??? everybody residing south of the location of the proposed canal (i.e. all of island SE Asia see it more as a threat than an opportunity). the thais are not promoting it very energetically.
and to be honest, if it was so easy to accomplish and so desirable to have, i think it would've been achieved 100-200 years ago already.
it might happen in future, but i seriously would not lose sleep over it cos i frankly don't see it happenning in my lifetime. -
Originally posted by CX:
Too bad it had to take a swift kick in the face each from Evergreen, MSC and PTP to wake up ther effing idea.
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well... they did wise up to that fact after they lost some business
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They should have seen this coming long ago, the signs were all there, yet they were blatantly ignored. -
The digging of the Kra canal would not be a problem for us at all.
The reason is simple -- the traffic through the Malacca Straits is much higher than the Kra canal can possibly handle. The canal would only take a small amount of business from us. The Suez and Panama canals are mostly economic failures because the capacity of a canal is not very high, unless you spend terabucks to dig a really wide one. Add to this the enormous cost of running a canal and it is not even clear that Thailand would even benefit from it.
This is the real reason why no one has actually dug this canal -- there is a significant danger that it will be a money loser. The only reason why they are making noises about it now is that the digging of the canal would instantly create a few hundred thousand jobs, which would be a real boost for the ruling coalition now that unemployment in Thailand is so high. They are also trying to justify the immediate and continuing expense of the canal by saying that they will set up an export processing free trade zone around the canal, which will hopefully turn into an industrial powerhouse. This is nice in theory, but Thailand is lacking in the other factors that would cause such a zone to grow (skilled cheap labor, political stability, infrastructure, etc)
As it is, Singapore does not handle ALL of the traffic through the Malacca Straits and we never did. For example, we are unable to handle the largest class of oil tankers, so they just all sail right past us and dock at ports that can (such as Klang if I am not wrong). This traffic is a big pie and there is more than enough for everyone to get a piece. As long as we are competitive, we will still attract business.
About the moves of a few companies to PTP -- it's bad but not as bad as most people think. As it is, we are pushed to beyond maximum capacity, so even after they left, we did not lose that much money. Truth be told, PSA is so popular that we can afford to turn some people away. And Evergreen is already shifting some of its traffic back because it is beginning to realize PTP is cheap -- in every sense of the word
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We cant totally put all the blame on PSA or the government.Malaysia government has perhaps earn a reputation of speaking utterly plainly words rather then action.Who knows when they will be serious about their speechs and plansOriginally posted by Viper52:Too bad it had to take a swift kick in the face each from Evergreen, MSC and PTP to wake up ther effing idea.
They should have seen this coming long ago, the signs were all there, yet they were blatantly ignored. -
totally agreeOriginally posted by dkhoo:As it is, Singapore does not handle ALL of the traffic through the Malacca Straits and we never did. For example, we are unable to handle the largest class of oil tankers, so they just all sail right past us and dock at ports that can (such as Klang if I am not wrong). This traffic is a big pie and there is more than enough for everyone to get a piece. As long as we are competitive, we will still attract business.
there's enough business for everybody so we shouldn't let the rivalry get out of hand and get too emotional about all this.
true... klang and ptp are competitors. but does Sg seriously expect people its neighbours to stay undeveloped forever? one must be realistic...
and if the kra-isthmus canal is indeed a big cause for concern for Sg then Sg must diversify and reduce reliance on the ports as a source of revenue. -
So you are saying PTP is still inefficient? Maybe evergreen's too big for PTP to handle that's why some of them return....Originally posted by dkhoo:About the moves of a few companies to PTP -- it's bad but not as bad as most people think. As it is, we are pushed to beyond maximum capacity, so even after they left, we did not lose that much money. Truth be told, PSA is so popular that we can afford to turn some people away. And Evergreen is already shifting some of its traffic back because it is beginning to realize PTP is cheap -- in every sense of the word -
Evergreen is keeping something like 10% of its original business in Singapore, the other 90 goes to PTP. That has got nothing to do with the fact that PTP cannot handle that 10%, as it is PTP is still operating way below capacity. The retention of its Singapore services by Evergreen is called hedging its bets both ways, and its nothing any smart business people won't do.Originally posted by Silenthunter:So you are saying PTP is still inefficient? Maybe evergreen's too big for PTP to handle that's why some of them return....
As for the idea that "we can afford to let Evergreen and MSC f--- off because we have enough business anyway"...when will some ever learn? Thank goodness PSA woke up before these individuals did.
dkhoo, for your assertion that Suez and Panama Canals are failure, I really would like to see figures to backup that claim. As far as I know these projects were monumental successes, and provide the lifeblood of the shipping companies successes as they provide the only viable means of crossing from Asia to and from Europe(Suez) and to and from the PAcific and Atlantic(Panama)
For example, please provide figures to show shipping traffic through Suez vis-a-vis that for traffic round the Cape of Good Hope, which are the only shipping routes from Asia through the Indian Ocean and through to the Atlantic/Europe, with the Cape being the much much longer route.
As for the Panama Canal, how pray tell do ships cross from the Atlantic to Pacific, make their way round the antarctic from the south of Argentina? -
OK, it is probably unfair to say that the Suez and Panama Canals are failures (the Suez was a success and the Panama Canal eventually became a borderline success, though it bankrupted the original builders). However, a Kra canal is not comparable to these because the distance saved is so small. Most small canals are failures. Search Google for "canal economic failure" and read about the huge number of canal failures over the decades.
The key to understanding why many canals are economic failures is that it is often more efficient to simply build a port at each end of your planned canal and ship the goods across BY RAIL. There is usually no need for the ship itself to move between the two points, unless it is a naval vessel or specialized ship like an oil tanker. This has become less true with larger and larger merchant vessels though.
Even for the Suez and Panama Canals, the volume of shipping to ports at the two ends of each canal is much higher than the shipping through the canal itself. In particular, the US itself is an important destination for goods, which was less true when the Panama Canal was built. It is unknown how much of the goods traffic between the bodies of water the canals link these canals actually handle.
About PTP, yes it is a problem that Maersk and Evergreen left. Of course we need to fight to get them back. No, we should not panic. In the end, PSA is charging what she can afford to charge. Singapore's high price is not just for fun -- it is because we give faster service and better connectivity. While it is true that the premium product usually suffers most in a recession, that does not mean that our strategy is invalid. If anything, we should try for both ends of the market. For example, PSA should buy into PTP if given the chance (as it has done with ports all over the world). In addition, PSA should allow shipping lines a little more autonomy in SIngapore -- which was one of the reasons Evergreen left. -
dkhoo, you are right when you say that any Kra Canal project's success is very much in the air as the distance saved is short as opposed to sailing down to Singapore and up again. But the distance saved is Only part of the equation. Most of this small extra distance is through the Straits of Singapore and Straits of Malacca, narrow congested waterways clogged with small islands and heavy traffic. Ships cannot do anywhere near a their maximum speed as they traverse these waterways. Add this to the fact that ships often have to wait to enter the Straits of Singapore, and then wait to enter the Straits of Malacca(or vice versa, depending on where they come from/go to) and you begin to see the likely feasibility for this project. The real time savings for using any proposed Kra Canal may be small, 1 to 2 days, but then one has to remember the saying, "Time is money". Now lets say the Kra Canal doesnt take all of SG port business away, lets say its only a "paltry" 20-30% of business. But whats the knock-on effect on Singapore as a whole? PTP eats away 10%, the Kra Canal eats another 20%. What are we left with?Originally posted by dkhoo:OK, it is probably unfair to say that the Suez and Panama Canals are failures (the Suez was a success and the Panama Canal eventually became a borderline success, though it bankrupted the original builders). However, a Kra canal is not comparable to these because the distance saved is so small. Most small canals are failures. Search Google for "canal economic failure" and read about the huge number of canal failures over the decades.
The key to understanding why many canals are economic failures is that it is often more efficient to simply build a port at each end of your planned canal and ship the goods across BY RAIL. There is usually no need for the ship itself to move between the two points, unless it is a naval vessel or specialized ship like an oil tanker. This has become less true with larger and larger merchant vessels though.
Even for the Suez and Panama Canals, the volume of shipping to ports at the two ends of each canal is much higher than the shipping through the canal itself. In particular, the US itself is an important destination for goods, which was less true when the Panama Canal was built. It is unknown how much of the goods traffic between the bodies of water the canals link these canals actually handle.
About PTP, yes it is a problem that Maersk and Evergreen left. Of course we need to fight to get them back. No, we should not panic. In the end, PSA is charging what she can afford to charge. Singapore's high price is not just for fun -- it is because we give faster service and better connectivity. While it is true that the premium product usually suffers most in a recession, that does not mean that our strategy is invalid. If anything, we should try for both ends of the market. For example, PSA should buy into PTP if given the chance (as it has done with ports all over the world). In addition, PSA should allow shipping lines a little more autonomy in SIngapore -- which was one of the reasons Evergreen left.
MSC Evergreen left SG for 2 main reasons: High shipping charges and the fact PTP allows co-ownership. Your claim of "Singapore's high price is not just for fun -- it is because we give faster service and better connectivity" sounds like the crap excuse PSA gave at that time, and is reflected in the following 2 articles after MSC and Evergreen left
:Singapore port says won't get into price war
but then in 6/02
Asian rivalry turns into a ship fight
Of interest in the second article is the passage: "Last week, it announced big discounts on port charges, and invited foreign shippers to invest in what was once a jealously guarded ``Singaporeans only'' strategic asset."
Compare this with their claims in the first article dated 4/02, which among other things, stated: "PSA would not respond to competition by slashing rates, as this could result in an escalating price war,"
Which
1) Makes the 2nd statement ring *REALLY* hollow, and
2) Makes them look like fools, or worse, liars.
Which then raises the questions:
1) Is the price the shippers originally paid really the lowest premium price for premium quality, but more importantly
2) Why did it need such a hard kick in the teeth for them to wake up?
The bosses of Evergreen and MSC did not wake up one morning and said 'I know, we'll move our Singapore operations to PTP!'. It was a long considered move, and the result of unsuccessful attempts to get the docking charges in SG reduced and to have a stake in the port. Which was, as expected, rebuffed with "You're paying the lowest price possible for SG's port quality"(which as it turned out, wasn't the case). And before anyone wonders why not let bygones be bygones, this issue contains lessons for all sectors of our economy and for all Singaporeans who assert that they're Numero Uno and will always be.
Someone has pointed out in another forum sometime back, all PSA lost from this fiasco is some money, it will survive. But remember, every container that we lose does not affect only PSA. It also affects a whole host of other Singaporeans, from the driver who drives the prime-mover carrying the container to those whos job is linked to the contents of the container. And maybe, just maybe, more than money will be lost by these people. Chew on that -
Sure or not.Originally posted by CenturionMBT:In fact one Thai MP proposed to give all Singaporeans Thai citizenship as an incentive. -
Sure sure sureOriginally posted by want to know:Sure or not. -
Hmmm, those articles are interesting -- good find. I do admit that PSA can be rather arrogant at times. The humility of the old guard is slowly getting lost with the fresh blood entering the company. It is true that PSA needs an attitude adjustment and I am sure that this minor insult will work out in the long run.
About the Malacca Straits -- your point about the straits being overcrowded is exactly the reason why the canal will not be a problem. The straits are already over-capacity -- which implies that there is more traffic that wants to use it but can't. Even if the canal were dug, all it would mean is that more goods would decide to sail via the straits / canal rather than take some other route or not sail at all. The pie would get bigger and again everyone would get a piece. I am a strong disbeliever in zero sum games.
While I agree that PSA's typical GLC uncompetitiveness is a real problem, particularly in this depressed world economy, I cannot agree that the Kra canal would be a big problem even if it were built. Again, the canal has the smell of a political move rather than a strategic decision. I will believe it when I see it. -
dkhoo,
glad you enjoyed the article, amazing what the Straits Times misses out isn't it?
Agree with your analogy that the Straits of Malacca is overcrowded and the Kra Canal will ease the overcrowding, but my point remains, lets take a very basic example:
Randomly select a hundred ships that pass by Straits of Malacca today. Say, 70 call into Singapore, 30 sail on by.
Then factor in the Kra Canal, assume it relieves Straits of Malacca of 50% of traffic, or 50 ships. Best case scenario, the 30 that sail on by Singapore use the Kra, along with 20 ships that would have otherwise come to Singapore, use the Kra. That leaves PSA with 50 ships. Worse case(unlikely), it'll see only 20 of the 70 calling into Singapore.
Now
50/70 = 71% or 29% reduction
20/70 = 28% or 72% reduction
The real case will likely be somewhere near the best case, but even so, if you look at www.psa.com.sg, Singapore handled 15.52 million TEU last year. A 29% drop in traffic would roughly represent an almost 5 million TEU loss yearly. Can we afford that kind of haemohrrage? To answer that, remember that MSC had a 2 million TEU capacity in SG while Evergreen had only 1 million TEUs. As a country with no resources but a deepwater port that makes transshipment as one of its main source of revenue, I'd say we can't. Not during the best of times, and especially not in times like this. Remember the fact that each lost container doesn't just cause PSA losses?
Like I've said before, the above example is vastly simplified and makes lots of assumptions, but I think it will suffice in here.
Of course, its all hypothetical, for the Kra Canal hasn't been, or looks likely to be, built. But it gives the "We'll survive despite the Kra Canal because Singapore is always Numbah One!" camp something to think about. I hope.