Why did TALKE decide to invest in Malaysia?

TALKE, a German company with over 70 years of history in Europe, expanded internationally in recent decades, particularly in the Middle East. During discussions with Middle Eastern customers who were distributing their products through Westport, Port Klang, into Southeast Asia, TALKE started exploring opportunities in both Singapore and Malaysia. While Singapore had superior shipping connectivity, TALKE Logistics eventually recognized that Malaysia offered more advantages, especially in terms of land logistics. Securing land within a port is challenging due to most areas being designated for port-related facilities. However, in 2019, TALKE Logistics was allocated approximately 15 acres of land within Westport. Malaysian ports benefit from available land, free zones, and efficient, paperless processes for operating these zones. Additionally, Malaysia offers significant cost advantages, from upfront building costs to operational expenses, and has a growing pool of talented professionals choosing logistics as a lifelong career.

TALKE will soon open a new warehouse facility at Port Klang. Could you provide more information about its capabilities and role in storing general and dangerous goods?

Initially, TALKE considered investing in a general warehouse facility since many clients in the Middle East are petrochemical companies that bring polymer resins through Westport for regional distribution. However, TALKE identified a gap in the market for world-class facilities to handle palletized chemicals in containers, as well as dangerous goods (DGs). As a result, the decision was made to construct a DG facility as the first phase, followed by a general warehouse catering to petrochemical products in the second phase. The construction is currently underway for an 18,000 m2 facility with seven chambers, four of which are temperature-controlled, providing a total capacity of 26,000 pallets.

Can you explain the model of regional distribution business from Malaysia to Southeast Asia?

The most strategically positioned ports for regional distribution in Southeast Asia are Singapore, Port Klang, and Tanjung Pelepas. These ports serve as transshipment hubs for major shipping lines. Singapore, for example, exceeded a container throughput of 37 million TEUs this year, while Port Klang handles around 13 million TEUs, and Port Tanjung handles 11 million TEUs. Due to limited land availability, Singapore cannot easily accommodate large volumes of dangerous goods, creating an opportunity for Malaysia. Port Klang has a masterplan to double its container throughput capacity over the next 20-25 years. To achieve this, it is essential to create cargo stickiness, meaning not only handling cargo for Malaysia but also for other countries. This requires establishing high levels of connectivity to source cargo from the Middle East or the US and ship it across the Asia-Pacific region at competitive prices and within competitive lead times. The goal is to connect long-haul shipping with shorter-haul shipping. To incentivize shipping lines to call at Malaysian ports, volume is crucial, along with the development of a mature ecosystem to facilitate efficient interchange.

What are the main challenges for Malaysia to become a transshipment hub?

The shipping industry has undergone significant consolidation in the past decade, with a small number of shipping lines controlling around 80% of the global business. However, shipping lines still require diversification to mitigate potential disruptions. Malaysia serves as a vibrant alternative to Singapore, but it must continue investing in top-class infrastructure, including both physical infrastructure like multi-lane roads and digitalization, which may involve cost considerations. Additionally, there is a need to update certain by-laws and regulations to better align with current business requirements in the free zones.

How will TALKE Logistics differentiate itself as a new entrant in the market?

TALKE aims to introduce a high level of sophistication and effort to clients in Malaysia through its state-of-the-art facilities, ensuring the safe handling and storage of products. TALKE will be the first to build such a facility inside a port, setting a new standard for safety and compliance. The company intends to actively collaborate with the entire value chain to raise awareness, provide education, and, hopefully, collectively elevate compliance standards among industry peers.