092 MMC Corporation Berhad Ports and Logistics Serving as the Nation’s Global Gateway MMC’s ports are the strategic gateways for national trade and commerce, vital to spurring economic growth. Within Malaysia’s export-driven open economy, our ports generate tremendous value across a large number of industries, sectors and supply chains. Annual Report 2020 093 Corporate Overview Leadership Corporate Highlights Key Messages MD&A OPERATIONS REVIEW PELABUHAN TANJUNG PELEPAS SDN BHD digital transformation of equipment and systems has enabled PTP to achieve increased efficiencies and productivities. OPERATING ENVIRONMENT The first quarter of FY2020 was promising with Pelabuhan Tanjung Local manufacturer Konica Minolta, based in Melaka, diverted Pelepas Sdn Bhd (“PTP”) registering strong growth on both the its shipments from Port Klang to PTP port as an alternative business and operational fronts. gateway. However, Evergreen Marine Corp’s (“Evergreen”) trading volumes declined year-on-year due to its services and capacity However, Coronavirus Disease 2019 (“COVID-19”) began to disrupt being reduced by the influence of the Ocean Alliance network the good momentum built at the start of the financial year. The concentration in PSA. pandemic impacted global and regional maritime trade and with the imposition of the Movement Control Order (“MCO”) in March PTP ended the financial year having surpassed its cargo volumes 2020 in Malaysia, PTP’s second quarter performance saw negative and profit targets for FY2020. The deployed COVID-19 business growth. Although the port’s operations were deemed as essential continuity plan enabled port operations to maintain a high degree services and hence allowed to operate, local cargo and Free Zone of productivity while ensuring adherence to all Standard Operating volumes were still affected during the lockdown period. Procedures (“SOPs”) to keep employees and stakeholders safe. Though the onset of COVID-19 had brought on a new set of PTP also continued its efforts under ‘PTP Way of Working’ initiative business challenges and complications, the pandemic had also framework to counter global uncertainties and to make PTP fit contributed to a movement of trade and goods in PTP’s favour for growth amidst a still turbulent and uncertain future business in the second half of FY2020. With the resumption of economic environment. This initiative includes ‘Lean For All’ problem-solving activity from May 2020 onwards, PTP’s performance improved tools and PTP values as part of the changing dynamic of how the considerably, supported by a surge in transhipment volumes arising company approaches its business and working culture. from backlog demand. Additionally, PTP’s cargo volumes also benefited from the congestion issues faced by the neighbouring BUSINESS AND OPERATIONAL PERFORMANCE Singapore port. In FY2020, PTP posted a revenue of RM1.5 billion, an increase of 12% year-on-year (FY2019: RM1.3 billion) with Profit Before Tax Pent up post-COVID-19 demand for consumer goods and a (“PBT”) and Profit After Tax (“PAT”) also improving by 48% and 69% significant container trade imbalance experienced by the 2M respectively year-on-year. (PBT FY2019: RM207 million and PAT partners contributed to the increase in cargo volumes and ultimately FY2019: RM135 million). increased handling revenue for PTP. In particular, local cargo volumes improved as manufacturers ramped up production and Container cargo volumes as of 31 December 2020, stood at 9.85 export activities to clear COVID-19 backlogs. million TEUs, marking an 8.5% year-on-year growth (FY2019: 9.07 million TEUs). Additional volume was mainly attributed to the sharp The performance of shipping alliances rebounded in the second increase in ad hoc calls. half of FY2020 in tandem with improved trade between China, Europe and the transpacific region. Along with continued cost-saving initiatives, PTP also undertook proactive cash preservation measures by replanning its major T.S. Lines, Taiwan’s fourth-largest shipping company, joined a six- capital expenditure (“CAPEX”) schedule. sailing PTP call frequency per week through a slot swap agreement with Sealand - Maersk on the IA1, IA3 and IA8 services. Not only Performance Milestones has this strengthened PTP’s intra-Asia service network, it has also PTP broke records and achieved various milestones in FY2020. One demonstrated the port’s entrepreneurial spirit of flexibility, mobility of its highlights was the Operations team logging the highest all-time and innovation. move record in a month, with a total of 967,783 twenty-foot equivalent unit (“TEUs”) in December 2020. This surpasses the previous record The strings of intra-Asia services offer customers flexibility in terms of 922,800 TEUs set in November 2020. of the number of frequencies available at PTP as well as choice of carriers and competitive freight. The direct calls from PTP PTP also successfully logged the highest TEUs and tonnage provides mobility to customers in having their shipments arrive record in the Maersk fleet Triple E class (2nd Generation) category, at destinations within a shorter length of time. This, coupled with with the highest vessel utilisation of 19,388 TEUs/186,408 tonnes 094 MMC Corporation Berhad Governance Sustainability Report Financial Statements Additional Information AGM Information OPERATIONS REVIEW (Munich Maersk). This surpassed the previous records of 19,344 On a separate note, a pilot project has been launched for the TEUs (Murcia Maersk) and 185,723 tonnes (Manchester Maersk) in upgrade of the wharf road with the aim of resolving damages to November 2020. the wharf road behind Berth 7 to Berth 12 (Block 10 to Block 18). The upgraded section will be evaluated for six months before The Operations team also secured the highest Port Moves Per Hour proceeding with restoring the remainder of the road. (“PMPH”) for the South Africa Service Bound (Maersk Amazon) with a record of 184.6 PMPH, yet another record surpassed the 164.38 The port’s Sewage Treatment Plant (“STP”) is designed with a PMPH set in January 2017. capacity of 35,000 Population Equivalent (“PE”), with 2 modules. The existing STP Module 1 exceeded its design capacity of 17,500 The key to these record-breaking accomplishments was PTP’s PE and was unable to support the future expansion of the Free Zone continued efforts in working closely with shipping liners to attract areas, namely Tanjung Adang, Phase 3, 4 and 5. The construction empty containers and to induce volume by encouraging shippers of Module 2 commenced in FY2020 and is targeted for completion to consolidate their volumes at PTP as the port offers efficiency and by early FY2021. productivity. Despite COVID-19 restrictions, PTP received the necessary In addition, PTP deployed additional gangs to cope with the incoming permissions for its infrastructure works to proceed. As such, in May volume and to ensure optimal service quality to meet and exceed 2020, dredging works to deepen the navigation channel resumed customers’ requirements. in entirety. The project will ensure that the new generation of ULCVs can safely navigate in and out of PTP under all tidal conditions. A HIGHLIGHTS AND DEVELOPMENTS portion of the dredged material will be stored for future reclaimation Port Asset Upgrades and Infrastructure Works activities. In FY2019, PTP initiated several improvement projects as part of its “Ipsum Magna” programme (Latin for “great optimisation”) to On a related note, FY2020 saw the formation of an Asset Integrity increase the port productivity and its terminal footprint capacity. These team. The team is tasked to address equipment deficiencies by initiatives were designed to maximise the capacity of the existing identifying the root causes of issues, analysing data and developing terminal Phase 1 and 2 footprint. The programme is expected to be rectification plans. continuously refreshed with new projects and initiatives over the next five to 10 years. Manpower and Outsourcing A major roster system change was successfully implemented to In FY2020, strategic initiatives under the Ipsum Magna programme align rest periods for terminal workers without affecting service include replacement of existing Ship-to-Shore (“STS”) quay cranes delivery. The manpower localisation policy also continued into and Rubber Tyred Gantry (“RTG”) cranes as well as reviewing and FY2020, with foreign workers being phased out upon the expiry of making improvements to the electrical network. Asset digitisation was their contracts and replaced with local workers. also part of the Ipsum Magna agenda. In addition, PTP continued to train internal employees to take over FY2020, PTP received eight Ultra Large Container Vessel (“ULCV”) equipment maintenance from external contractors. Developing STS quay cranes. The cranes have a lifting capacity of 65 tonnes multi-skilled technicians internally is expected to lower costs by and can handle containers over 24 rows across ULCVs. This is part optimising trained existing workforce and improving equipment of PTP’s Asset Management Strategy to increase container handling availability. For example, general performance of our spreader capacity and service reliability, while maintaining high safety standards. equipment has increased to 94% as compared to 89% in overall post the upskilling of internal employees. At the same time, 10 fully Electric Twin Lift RTG cranes were also delivered. These battery-powered, energy-efficient E-RTGs ERP Implementation and Digitalisation produce zero greenhouse gas emissions.