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The new chairman of Singapore's PSA Corp says he wants to expand the group's business into the United States as pressure grows on its core transshipment activities at home.

Stephen Lee, who took up his post at the start of this month, said buying facilities in the world's largest economy would help complete the group's 'global jigsaw puzzle' of holdings, according to the latest edition of PSA's in-house magazine. The PSA Corp has been battling a swift rise of competition from neighbouring Malaysia, in particular the fledgling port of Tanjung Pelepas (PTP).

PTP has lured away PSA's two largest customers in the past year, Taiwan's Evergreen Marine and Denmark's Maersk Sealand.

The defections raised the pressure on state-owned PSA's senior management and preceded the resignation of Mr Lee's predecessor, Yeo Ning Hong.

Prime Minister Goh Chok Tong said in July the new PSA chairman would bring 'a fresh perspective'.

One possible US target is the Stevedoring Services of America (SSA), which owns terminals in Seattle, Oakland and Los Angeles, and has been reported to have put a US$1-billion price tag on its global port network.

SSA also runs terminals in Australasia, Egypt, Chile, Bangladesh, India, Mexico, Panama and South Africa.

The PSA Corp, Hutchison Port Holdings (HPH) and P&O Ports have reportedly been approached about buying the Seattle-based firm. HPH has consistently refused to comment on the reports.

The PSA has said it wants to see throughput hit at least 10 million teu (20 ft equivalent units) outside Singapore by 2007, accounting for a third of group revenue.

Last year it handled 3.6 million teus outside the city-state, up from 2.73 million in 2000 and 1.6 million in 1999.

PSA Corp's overseas stable includes stakes in three Chinese ports - Dalian, in northern China, Fuzhou in the centre and Guangzhou in Guangdong. It also has holdings in India, Italy, Portugal, Belgium, South Korea, Yemen and Brunei.

In Port View, the PSA Corp's in-house magazine, Mr Lee made clear Singapore's transshipment business may come under increasing threat as smaller, rival ports expand handling capacity and boost direct calls through their facilities.

'They [rivals] can take the transshipment business away. We are a relay point - either a feeder or a main line will bring a box, unload it and put it on another main line. Where the main lines criss-cross is the exchange point,' he said.

'We are not the originator of that cargo. It is a switching service, which is more price sensitive . . . Like airplanes, passengers prefer to fly direct, nobody likes to switch unless it's necessary.'

Industry watchers and academics have long said facilities that are built specifically for transshipment cargo have short life spans; the infrastructure always eventually moves closer to the cargo to shorten the supply chain.

This case is being played out in Hong Kong, which has come under pressure from terminals in South China, where the sea freight originates.

For Singapore, the rising challenge from Malaysia prompted PSA Corp to hone its competitive edge. In June, it announced a 50 per cent cut in handling charges for empty boxes, together with a 10 per cent cut on bills from PSA facilities.

Last year, PSA Corp saw a 9 per cent fall in its Singapore business to 15.5 million teu. It was the first year-on-year decline in the company's 30-year history.



Pressure puts US expansion on PSA Corp's wish list