KUALA LUMPUR, April 27 (Xinhua) -- Malaysian industry players are activating contingency plans to manage disruptions along key global shipping routes, local media reported Sunday.
Firms, particularly in manufacturing and electrical and electronics (E&E), are already implementing mitigation measures, Malaysia Semiconductor Industry Association (MSIA) president Wong Siew Hai told local daily New Straits Times.
Wong said companies are increasing buffer stocks to offset potential delays of 10 to 14 days as shipments are rerouted via the Cape of Good Hope. Exporters are also adjusting delivery timelines, while some firms reliant on Europe or the United States are diversifying sourcing towards ASEAN and East Asia.
An MSIA survey found that 86 percent of respondents have adopted at least partial mitigation strategies, with the rest having contingency plans in place.
Wong noted that freight and shipping costs have risen the most, with businesses currently absorbing part of the increase to stay competitive. However, sustained cost pressures are expected to squeeze margins and eventually be passed on to consumers.
Meanwhile, small and medium enterprises (SMEs) are shifting towards a just-in-case inventory approach, placing orders earlier and holding higher stock levels.
SME Association of Malaysia president Chin Chee Seong said this poses cash flow challenges, especially for high-value components and machinery. He added that longer shipping routes have increased fuel and insurance costs, while volatile freight charges make pricing difficult and weaken competitiveness.
For his part, Small and Medium Enterprises Association Malaysia president William Ng urged SMEs to diversify into intra-ASEAN and Regional Comprehensive Economic Partnership (RCEP) markets and explore multimodal transport options. He warned that a lagged inflationary impact could emerge by mid-year, with prices of some goods rising by 5 percent to 8 percent. ■
