Whether or not Malaysia’s ports succeed in this decade will also have a significant impact on the nation’s industrial and commercial residential real estate markets.
Juwai IQI Juwai IQI Group Co-Founder and CEO Kashif Ansari and Chartered Valuation Surveyor Irhamy Ahmad of Irhamy Valuers International released statements today on this vital topic.
Malaysian ports face crucial transformation
Chartered Valuation Surveyor Irhamy Ahmad of Irhamy Valuers International said:
“The year 2022 will be an important one for Malaysia’s ports. They will have to overcome current supply chain difficulties while also investing in automation that will allow them to compete in the future.
“The 5G technology that now part of new iPhones is also crucial to the future success Malaysia’s economy. That’s because 5G is the keystone technology for the next phase of growth and modernization in the country’s ports. 5G isn’t just for streaming movies. It is vital to nearly every sector of the economy.
“Malaysia’s ports are well-positioned to succeed in the new world of automation. The country is already might be one of the most important shipping nations in the world. The United Nations has a measurement it calls the Liner Shipping Connectivity Index, which estimates how integrated countries’ ports are into global shipping routes.
“As you would expect, China is the top-ranked country on this index. Korea, Singapore, and the United States of America are also highly ranked.
“Malaysia is ranked fifth, which is exceptionally good compared to nearly every other country in the world. Malaysia ranks ahead of its regional competitor, Vietnam, and also ahead of the traditional naval giant, the United Kingdom.
“Malaysia’s ports are also among the most efficient in the world. The country’s ports have continually invested in improvements that have real benefits for the manufacturing, agricultural, and resources industries in the country.
More cargo than would fit into Petronas Towers
“Malaysia boasts 30 major and medium-sized ports along its 4,800 miles of coastline. We have a strategic location on the Straits of Malacca and the South China Sea. These are two of the world’s most important waterways.
“Port Klang and Port of Tanjung Pelepas are two of the world’s 20 busiest ports and together handle about 30 % of Malaysia’s regional container transhipment business.
“Port Klang alone in normal times handles about 35,000 twenty-foot equivalent units, or ‘TEUs,’ per day.
“If you just measure the floor space of all those containers, it adds up to about 5.5 million ft². That means the combined floor space of all the shipping containers that go through just one of Malaysia’s ports every single day is about 25% greater than the 4.3 million ft.² floor area of the iconic Petronas Towers.
The need to automate
“The global supply chain disruptions of 2021 were a wake-up call to policymakers and port operators in trade-dependent nations like Malaysia. Even the world’s most successful ports are operating in a rapidly changing environment.
“The technology that used to be sufficient is no longer enough. It’s no longer enough to have the largest cranes, gantries, and tractors. The new default minimum for ports is fast becoming nearly complete automation. And for that, one needs 5G technology.
“5G can enable many improvements within Malaysia’s ports. On a 4G network, a terminal can monitor about 100,000 sensors and IoT, or internet of things, devices within a square kilometre. A 5G network raises the potential number of connections to 1 million.
“What does that change look like in real life?
“Links to satellites will enable ports to track ships as they make progress across the seas and to make accurate predictions regarding arrival times, thus reducing the disruptive impact of any potential delays.
“Smart drones can provide real-time monitoring of the port’s operations from the air.
“Loading and transshipping can be streamlined to a just-in-time stance. Optical character recognition cameras will facilitate this change. They can identify and process individual containers from among the thousands the ports handle every day.
“The brains of the port will be automated, and so will the brawn. The vessels and vehicles that move cargo to, within, and from ports are all on their way to being automated.
“Autonomous ships ply the seas. Self-driving cranes, trucks, and trains can move cargo through the port and out into the wider world. Self-driving tractors the size of military battle tanks can safely pull heavily loaded trailers around the port with an accuracy of up to five centimetres.
The high price of failure
“There are currently several ports in the world with vessels lined up for miles out to sea, waiting to unload cargo. When ports get backed up, economic growth can suffer and shortages can cause inflation.
“Looking forward 10 years, the most automated ports will be the most efficient in the world. And the most efficient will be the most successful. Those that fail to automate will see their cargo volumes decline and will be a negative drag on the economies they serve.
“Automated ports can also be more profitable. One case study of a 5G, IoT-enabled port by Ericsson found the optimization reduced costs by 20% per year.”
Port activity to drive real estate value creation through 2030
Juwai IQI Group Co-Founder and CEO Kashif Ansari said:
“What will the automation of the ports mean for Malaysia’s real estate sector? Smart ports could easily contribute to a 20% to 25% increase in the value of nearby commercial, industrial, and logistics property.
If Malaysian ports such as Port Klang and Port of Tanjung Pelepas successfully manage to stay ahead of the automation trend, it should attract an increasing share of foreign direct investment in manufacturing. The investment will drive demand for industrial and logistics space. The most attractive property will be near ports and population centres and be well served by rail and road infrastructure.
Smart ports will enable greater integration with nearby logistics and manufacturing facilities. Integration promises to reduce the delays that currently exist in the movement of export goods from their point of manufacture to the ships that will carry them overseas."
“Just as ports track and manage the arrival of ships, they are also increasingly able to track the accumulation of export goods in nearby manufacturing and distribution facilities. Delivery and shipment of these goods can be arranged with a minimum of delay and a maximum of coordination.
“All of these changes will greatly increase the value of the property that can be integrated in this way while decreasing the relative value of land that is otherwise similar but not integrated.”