FMM strongly objects to Port Klang's tariff hike, warns of hit to export competitiveness

PETALING JAYA: The Federation of Malaysian Manufacturing (FMM) has expressed its strong objection to the impending tariff increase at Port Klang, which was approved by the Ministry of Transport (MoT) and officially gazetted on Friday.
The association said these cost increases come at a time when industries are already under immense pressure from global trade disruptions and significant domestic policy shifts.
It noted that the new tariff increase place a severe burden on Malaysian manufacturers and further weaken the nation's export competitiveness while eroding Malaysia's position as a preferred regional trade and logistics hub.
To note, the overall tariff revision at Port Klang, amounting to a 30% increase, will be implemented in three phases, with the first phase taking effect on July 1.
Among the key changes that will heavily impact importers and exporters are a 30% hike in container handling charges and a steep escalation in container storage charges, which are set to rise by between 197% and 243%.
FMM president Tan Sri Soh Thian Lai said while the association notes MoT's decision to stagger the port tariff increase over three phases following engagement with FMM and the Malaysian National Shippers' Council, FMM maintains that the timing remains deeply concerning.
'The sharp initial escalation beginning July 1, 2025 poses immediate and damaging consequences to the cost structures of exporters and importers alike.
'This comes at a time when industries are already contending with unresolved external shocks, including the ongoing US tariff threats on Malaysian exports, the expansion of the Sales and Service Tax (SST), and a scheduled restructuring of electricity tariffs.
'The convergence of these cost pressures will deliver a heavy blow to manufacturers and exporters at a critical juncture in Malaysia's economic recovery, further eroding the country's export competitiveness,' Soh said in a statement.
Under the newly gazetted tariff structure by the Port Klang Authority, container handling charges for a 20-foot container will increase by 30% in total, implemented over three phases. The current rate of RM300 will eventually rise to RM390, with an estimated RM90 added per container upon full implementation.
Given that Port Klang handles about 12.5 million TEUs annually, the full increase could translate to an additional RM1.125 billion in annual costs to industry once all phases are in effect.
Soh noted that Malaysian ports have traditionally enjoyed a competitive edge due to reasonable cost structures.
'However, with the new rates, container handling fees will approach US$120–130 (RM509-552) per TEU, similar to rates in Singapore and Hong Kong, but well above Asean neighbours such as Vietnam, Indonesia, and Thailand.
'This will erode Malaysia's value proposition and increase the risk of cargo diversion to competing regional ports.
'Furthermore, Malaysia's drop to 34th in the IMD World Competitiveness Ranking and its current standing at 26th in the World Bank's Logistics Performance Index highlight the urgency of containing cost escalations.
'This tariff hike sends the wrong signal to investors and could significantly disrupt trade flow and business planning at a time when manufacturers are already struggling with margin pressures, high logistics costs, and global uncertainty,' Soh said.
FMM said the government must take a holistic view of the cascading cost impacts on Malaysian businesses and consumers.
'Port tariffs, SST expansion, electricity hikes and international trade headwinds must be evaluated together. No single ministry or agency can make isolated decisions without assessing the full burden being placed on industry,' Soh said.
FMM called for an immediate pause in the implementation of the port tariff increase, electricity base tariff revision and expanded SST scope.
'We urge the government to reconvene with industry stakeholders to reassess the economic and operational consequences and align all measures under a coordinated national cost impact strategy. If these measures proceed as scheduled, July 1, 2025 will mark a critical inflection point for Malaysian industry.
'A combination of port tariff hikes, new SST taxes, electricity cost increases, and global tariff threats will crash down on businesses, overwhelming their ability to remain competitive and sustainable. These cost increases will eventually
translate into higher prices for consumers and a slowdown in manufacturing investment and job creation,' Soh said.
FMM stands ready to work with the government to realign policy implementation timelines, ensure transparency in cost justifications, and develop a coordinated national strategy to support industry growth and protect the welfare of consumers.

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