Malaysia says 'can handle' losses from Israeli cargo ban, as 4,000 containers wait at Port Klang

Malaysia will have to swallow the loss of trade after banning Israeli shipping giant Zim from operating in the country over the nation's war on Gaza, Prime Minister Anwar Ibrahim has said, following his administration's order for the firm to swiftly remove 4,000 containers stranded in Malaysian ports.

The Malaysian prime minister has been among the world's most outspoken leaders to condemn Israel's bombardment of Gaza, which has killed 20,000 Palestinians so far, earning applause at home in a country with a long, vocal history of support for the Palestinian cause - as well as Hamas.

On Wednesday, Anwar said vessels operated by Zim and any ships bearing the Israeli flag would not be allowed to dock or unload cargo at any Malaysian port. Ships headed for Israel will also be barred from loading any cargo in Malaysia.

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Anwar later said the government was aware of the risks of losing out on trade from the ban, but added the country "can handle" any shortfall.

"True, we may lose a bit with ships not coming, but this is our principle of humanity," he said on Thursday at a dialogue with students at a university in Perak state.

Anwar's gambit is expected to bolster domestic support for his administration given Malaysia's historical backing of the Palestinian cause, according to experts.

"Even if there is any commercial impact to Malaysia, it's a small price to pay for the potential return in political capital domestically," Adib Zalkapli, a Malaysia director at political risk consultancy BowerGroupAsia, told This Week in Asia.

Transport Minister Anthony Loke said Zim would need to make its own arrangements with other shipping lines to move 4,000 containers which are mostly stranded in Port Klang, the country's largest port.

Zim would be given "some time" to sort out arrangements to move the containers as the cargo was bound for different destinations, Loke was quoted as saying in a report by national newswire Bernama late on Thursday.

Loke did not say where Zim's cargo was headed or what was being transported in the 4,000 containers. It is unclear how much time Zim will be given to relocate its containers and what will happen if it fails to do so.

Loke's office told This Week in Asia that the matter was being handled by the Port Klang Authority , which oversees operations at the port and is responsible for communicating policy matters with shipping lines.

PKA Chairman Ean Yong Hian Wah said he had "no comment at the moment".

Port Klang is a major transshipment hub for ships plying the busy South China Sea route, through which at least US$3 trillion in goods passes annually.

Port Klang was ranked the 12th busiest port in the world in 2021, handling a total cargo volume of 12.33 million twenty foot equivalent units (TEU) that year. One 20-foot container is equivalent to one TEU.

Zim did not immediately respond to a request for comment.

Zim is one of the world's largest container shipping lines, running dozens of routes spanning the globe transporting "all types of cargo", according to the company's website.

In a December 14 advisory, the company said it had imposed higher surcharges on its ships to maintain its level of services and safety of crews, vessels and cargo due to "an increase in the level of the threat" from Yemen's Houthi militants in the Red Sea.

Shipping lines in and out of Israel have suffered significant disruptions since mid-November, as Houthi militants attempted to hijack, bomb or divert vessels they deem to be linked to Israel.

The attacks have led oil major BP and shipping company Maersk to suspend Red Sea operations, sending energy and freight prices up and triggering pressure on new cargo routes.

Israel's months-long assault on Gaza was a kickback to the October 7 attack by mainly Hamas militants on Israel, which killed well over 1,000 people, the majority civilians.

This article originally appeared on the South China Morning Post (SCMP).

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