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GEORGE TOWN: Due to the demand slowdown in the electrical and electronic (E&E) sector this year, the volume of outbound and inbound cargo handled by the Penang Freight Forwarders Association (PFFA) is expected to stay flat or decline in 2023 compared to a year ago.

Honorary secretary-general Ali Ahmad told StarBiz that since January 2023, the cargo volume at the Penang International Airport had slowed significantly compared to the corresponding period last year.

“The drop in electronic components exported is at least a double-digit percentage figure.

“Before the slowdown, a multi-national corporation would ship out about 2,000 to 3,000 kgs of electronic components daily in multiple shipments. Since January 2023, the daily shipment hovers around 30 to 100 kgs.

“There was also a corresponding decline in perishable and non-perishable goods shipped out,” Ali said.

He added in 2022, the volume of imported and exported cargo handled by PFFA members was 138,595 tonnes, about 5% less than the figure forecast.

“In 2023, we expect the figure to stay flat or contract from last year’s achievement.

“The rise in interest rates worldwide impacted business expansion plans and demand for consumer electronic products,” Ali said.

Ali said E&E components comprise over 70% of the cargo exported and imported and would continue playing an essential role in driving up the volume of freight handled in Penang.

Depending on the destinations, the current air freight rates from Malaysia to Asian, the United States, and Europe has normalised.

Depending on the destinations, the range per kg to Asian countries is between RM3 to RM4 per kg compared to RM8.50 to RM12.75 per kg a year ago, while to the United States, the charges are now RM15 and RM16 per kg compared to RM53 per kg a year ago.

The rate to Europe from Malaysia currently hovers between RM14 and RM15 per kg compared to RM21 per kg a year ago.

“There’s now sufficient air cargo space, so the price has dropped,” he said.

According to the international research house Gartner, the global semiconductor revenue is projected to decline 11.2% in 2023.

In 2022, the market totalled US$599.6bil (RM2.67 trillion), a marginal growth of 0.2% from 2021.

The short-term outlook for the semiconductor market has deteriorated further. Global semiconductor revenue is forecast to total US$532bil (RM2.36 trillion) in 2023.

“As economic headwinds persist, weak end-market electronics demand spreads from consumers to businesses, creating an uncertain investment environment.

“In addition, an oversupply of chips which is elevating inventories and reducing chip prices, is accelerating the decline of the semiconductor market this year,” said Practice vice-president at Gartner Richard Gordon.

Nomura Global Markets Research, in a recent report , noted high frequency data show that Asia’s exports are in the process of bottoming out.

The second quarter will likely be worse than the first quarter on average, but it should mark the cycle bottom.