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WITH a warehousing capacity of six million square feet, Tiong Nam Logistics Holdings Bhd stands to benefit from the continued strain in global supply chain.
The stress in the global supply chain is due to the Covid-19 pandemic that continues to rage on as new variants of the disease are detected.
A significant amount of factory operations globally remain interrupted. Earlier this week saw the partial shutdown of the world’s third-busiest container port, the Ningbo-Zhoushan port in China.
These developments are likely to spur demand for warehousing space as companies take more cognisance of their future raw material requirements. Logistics service provider Tiong Nam is hoping to ride on this demand.
The company’s managing director Ong Yoong Nyock tells StarBizWeek that it is investing to increase its warehousing capacity by 22% by the first quarter of 2024.
“We have a new 225,000-sq-ft warehouse coming on stream this year in Seelong, Senai, and have recently announced the construction of a new 1.1 million-sq-ft warehouse at Senai Airport City. These expansions will expand our total warehousing capacity to 7.3 million sq ft in the financial year ending Mar 31, 2024 (FY24), while other potential expansions are also being planned,” Ong says.
“The warehouse capacity expansions allow us to pursue new customers. We have secured a renowned multinational (MNC) client that will lease the upcoming 1.1 million-sq-ft facility in Senai Airport City on an exclusive basis, hence our utilisation rate will hover around the 75%-80% range,” he adds.
Tiong Nam’s warehouse utilisation stood at 80% as at end-March 2021, and this is an increase from 75% a year ago.
“With the gradual easing of social restrictions expected to spur the economy, we believe there will be higher demand from various industries for warehousing,” Ong says.
He points out that Tiong Nam services companies in industries such as food and beverage, information technology, electrical and electronics as well as oil and gas.
“Our wide sector coverage means we are not subject to the vagaries of any one sector. We are beneficiaries of the trend where companies are accelerating outsourcing to total logistics providers like ourselves,” Ong says.
“Furthermore, the unresolved US-China trade war has led to a quicker pace of supply chain diversification among global companies into South-East Asia. This will spur more demand for logistics and warehousing providers with extensive regional infrastructure like ourselves,” he adds.
Ong anticipates that demand would grow from MNCs in the near future. This segment’s revenue contribution has exceeded 30% in FY21 from only 10% in FY16, says Ong.
“We are targeting higher contribution from MNCs in the coming years,” he adds.