VZCZCXRO7088
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0308/01 0920146
ZNR UUUUU ZZH
R 020146Z APR 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 6561
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 2272
RUEHHK/AMCONSUL HONG KONG 6470
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC

UNCLAS SECTION 01 OF 02 SINGAPORE 000308 
 
SENSITIVE 
SIPDIS 
 
EAP/MTS - MCOPPOLA 
NEW DELHI FOR JEHRENDREICH 
 
E.O. 12958: N/A 
TAGS: EWWT SENV EPET ETRD EINV ECON SN
 
SUBJECT:  OUTLOOOK FOR PORT OF SINGAPORE FROM MARITIME AND PORT 
AUTHORITY 
 
REF:  A.) 08 SINGAPORE 1325 
B.) SINGAPORE 88 
C.) 08 SINGAPORE 1248 
D.) 08 SINGAPORE 1228 
 
¶1. (SBU) SUMMARY:  The economic downturn has caused container 
volumes to decline substantially in Singapore, but it has not had a 
comparable effect on vessel traffic and daily operations at the 
port, Maritime and Port Authority (MPA) officials told Emboffs March 
¶31.  There are no ships laid up in the port and vessel traffic is 
moving.  Land reclamation plans to expand the port are on track, as 
are plans to build a new terminal to accommodate the largest 
passenger cruise liners by 2011.  A safety and security study is 
underway for Singapore's liquefied natural gas (LNG) terminal, due 
to come online in 2012.  MPA believes that the Straits of Singapore 
and Malacca can handle the additional volume and larger vessels that 
such projects will bring.  Concerns about possible caps on vessel 
traffic in the Strait of Malacca and compulsory pilotage schemes 
have subsided.  MPA remains focused on meeting and enforcing 
environmental standards even as the ambitious plans for Singapore's 
port unfold.  End Summary. 
 
Cargo Volumes Down but Vessel Traffic Steady 
------------------------------------------- 
 
¶2.  (SBU) Singapore exports and the volume of transshipped cargo 
through Singapore's massive port have dropped substantially in 
recent months (Ref A).  However, overall vessel traffic and 
day-to-day operations at the port remain largely unaffected, Capt. 
LEE Cheng Wee, Deputy Director and Port Master at MPA, told Emboffs 
March 31.  Contrary to some public reports, there are no ships laid 
up in the port, he said.  (NOTE:  Industry reports indicate that 
shipping companies have idled approximately ten percent of the 
global fleet of container ships.  Contacts at local shipper Neptune 
Orient Lines (NOL) said several of their ships are laid up in 
Singapore, but the ships are at anchor in waters around Singapore 
and not technically "in the port."  End note.)  The tariff structure 
discourages ships from idling in the port over long periods, and 
most vessels remain in Singapore for no more than five to ten days, 
Lee added.  The number of vessels calling on the port has not 
changed much because many are sailing with only 50 to 60 percent of 
their cargo capacity.  MPA has instituted concessions on port dues 
and other fees to help shipping companies deal with the slow 
economy.  Lee indicated that PSA, Singapore's largest port terminal 
operator, is also in discussions with shipping firms regarding its 
terminal fees. 
 
Port Profits Halved but Future Port Expansion on Track 
--------------------------------------------- --------- 
 
¶3.  (SBU) PSA, which operates ports worldwide, just announced that 
total container volume at its terminals in Singapore rose seven 
percent in 2008 to 29 million TEUs (twenty foot equivalent 
containers).  However, PSA also announced that its profits fell 46 
percent from S$1.27 billion (US$850 million) in 2007 to S$686 
million (US$457 million) in 2008.  In meetings with Econoffs last 
year, PSA outlined ambitious expansion plans for Singapore, which 
included two new phases of berth construction at the Pasir Panjang 
Terminal, and a near doubling of container volumes.  Such plans are 
now on hold as a result of the financial crisis (Ref B), but 
Singapore is looking toward future economic recovery and does not 
want to fall behind other ports, such as Hong Kong, Lee said. 
Therefore, as PSA rides out the economic storm, MPA is continuing 
land reclamation projects at the port, which will be the foundation 
for PSA's future expansion at Pasir Panjang. 
 
Adding Berths for Largest Passenger Cruise Liners 
--------------------------------------------- ---- 
 
¶4.  (SBU) Lee said that plans for a new International Cruise 
Terminal, designed to accommodate the largest passenger cruise 
liners, will also go forward, though its opening has been pushed 
back one year to 2011.  MPA officials said that even after the new 
terminal opens, Singapore will continue to operate its existing 
Singapore Cruise Center, which reportedly handled more than 900 
ships in 2008.  The Singapore Tourism Board, which has the lead on 
the project, is building the terminal to provide a more welcoming 
docking location to larger cruise liners that currently have to 
berth at PSA's facilities, added Capt. Jolyn TAY, MPA Assistant 
Director for Marine Licensing and Prosecution.  Neither Lee nor Tay 
anticipated that total numbers of cruise liners in Singapore and the 
Straits would increase dramatically once the new terminal is built 
as the new terminal will provide only two additional berths. 
 
SINGAPORE 00000308  002 OF 002 
 
 
 
LNG Terminal Still Set to Come Online in 2012 
--------------------------------------------- 
 
¶5.  (SBU) MPA and other GOS agencies are working to address safety 
and security concerns associated with the opening of Singapore's 
liquefied natural gas (LNG) terminal in 2012.  PowerGas Ltd., a 
subsidiary of sovereign wealth fund Temasek, will own and operate 
the terminal, which is expected to handle 3 million tons of gas per 
year (Ref C).  LNG vessels already call in Singapore waters for 
bunkering services, though they do not berth at the port. 
Therefore, Lee did not predict a sharp increase in LNG vessels 
transiting the Straits and noted that Singapore will cap aggregate 
LNG volume in the port to three vessels every three days.  The GOS 
safety and security study underway is looking at a range of 
potential risks such as fire, environmental damage, and terrorist 
threats, Lee said.  MPA and other agencies will conduct trials and 
exercises to prepare for such threats, and Lee welcomed input from 
U.S. Coast Guard regarding U.S. studies on how to manage risks posed 
by LNG terminals. 
 
Straits Have Capacity for Singapore's Port Projects 
--------------------------------------------- ------ 
 
¶6.  (SBU) Lee was sanguine about the effect Singapore's plans for 
the port might have on overall traffic through the Straits, even if 
economic recovery increases traffic at other nearby ports.  In his 
view, the Straits can handle the LNG vessels, larger cruise liners, 
and additional volume that might follow aggressive port expansion. 
MPA confirmed that Malaysian officials have not pursued capping 
vessel traffic through the Strait of Malacca, since Malaysia's then 
Deputy Prime Minister Najib (now the Prime Minister) mentioned the 
possibility in October 2008 (Ref D).  Singapore, Malaysia and 
Indonesia are working together through the Tripartite Technical 
Experts Group (TTEG) to set guidelines for vessel pilots who are 
part of pilotage schemes in the littoral states.  Singapore's 
earlier concerns regarding Indonesia's plans to impose a pilotage 
program (Ref D) in the Straits seem to have subsided, though 
Singapore maintains its position that all pilotage programs must be 
voluntary.  Lee said there are private companies in Singapore that 
offer pilotage services, so MPA would ensure that such enterprises 
adhere to any pilot guidelines established by the TTEG. 
 
Environmental Concerns Still a Priority 
--------------------------------------- 
 
¶7.  (SBU) Environmental issues and enforcement of MARPOL 
requirements remain a priority for MPA.  Lee stated that MPA's 
efforts are focused on precautionary measures to prevent 
environmental incidents, so MPA tracks vessel movements, monitors 
oil pollution, and works with private contractors that prepare 
environmental impact assessments before any major initiative can be 
undertaken at the port (e.g., land reclamation).  MPA focuses on 
post-incident training as well, and will conduct a chemical spill 
exercise in April.  Singapore, Malaysia and Indonesia are working to 
formalize protocols under the Cooperative Mechanism to develop an 
agreed contingency plan for chemical spills, Lee said.  Protocols 
are already in place for managing oil spills. 
 
SHIELDS