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Orient Overseas Container Line (OOCL), Hong Kong's biggest container carrier, yesterday signed a new long-term contract with management at the port of Singapore.

The move will see OOCL continue to use Singapore as a trans-shipment centre for cargo linked to Southeast Asia, the Middle East, the Indian Sub-continent and Australia.

Most of the carrier's business, however, will continue to be generated in the SAR, a spokesman in Hong Kong said.

'We need a Southeast Asian hub,' general manager marketing Stanley Shen said.

'In addition to local cargo, Southeast Asia is a key trans-shipment area for us and the PSA Corp has always served us well,' Mr Shen said.

OOCL is believed to have negotiated lower handling rates for the contract extension as the PSA Corp, the Singapore port's management company, has been facing intense competition from an upstart facility at the Port of Tanjung Pelepas (PTP) in neighbouring Malaysia.

'PSA Corp has had to become a lot more flexible in terms of pricing,' a Singapore-based analyst for a leading European investment bank said.

'Otherwise there's not much from stopping the lines from going elsewhere.'

OOCL managing director Jolland Lau said OOCL 'appreciated the PSA's new and flexible approach' amid the difficult business environment.

State-owned PSA Corp, manager of the second-busiest container port in the world, has in the past 18 months lost its two biggest carriers to PTP.

The new contract would not mean OOCL would start shifting network emphasis away from Hong Kong, Mr Shen said.

'There is no comparison between the two ports,' he said.

'Hong Kong is a port where cargo resides and Singapore is a trans-shipment facility,' Mr Shen said.

'Hong Kong is where we load origin cargo, not trans-shipment.'

OOCL and its partners in the Grand Alliance - P&O Nedlloyd, Hapag-Lloyd, Japan's NYK and the Malaysia International Shipping Corp - average more than 2,800 calls a year in Hong Kong compared with about 600 to 700 a year in Singapore, roughly the same as the alliance's aggregate calls Shenzhen ports.

On Thursday, the PSA Corp said it had handled 1.42 million teu (20-foot equivalent units) last month, a year on year 5 per cent higher from what was a weak period for the operator last year.

Throughput at the port suffered last year because two leading international carriers, Maersk Sealand and Evergreen Marine, moved across the Johore Strait to use PTP.



OOCL seals new deal with port of Singapore