A Far Eastern Shipping Giant

In 1824, an Anglo-Dutch treaty confirmed British control of the Malay States of the Malay Peninsula and Singapore, while demarcating the influence of the Dutch over Java. A serious terrorist insurgency existed in Malaya from 1948 until July 1960 when three military operations finally cleared the jungles of terrorists. Operation Seladang in Pahang State, operation Bamboo in North Perak State, and operation Brooklyn in Kedah State were successful, but the total cost of the insurgency to the British government was over £700 million. British and Australian troops had killed or captured 9,581 terrorists at a loss among their own numbers of 1,851 troops killed and 2,526 wounded.

The population of peninsular Malaya was 49% Malay, 39% Chinese and 12% Indian, and the path forward to Malaysian independence would have to take into account both economic and political considerations. Rubber was the most important cash crop in peninsular Malaya, timber was the main export earner in Sabah in Borneo, while petroleum exports were increasing in Sarawak in Borneo. Oil palm and cocoa developments were planned, while new industries including electronics and electrical goods and textiles were planned in the new economic strategy, covering the next twenty years of the newly independent country of Malaysia.

Formation of MISC

Malaysia International Shipping Corporation (MISC) was incorporated on 6th November 1968 by the Malaysian government as a State owned shipping company that also featured some minority private investors as shareholders. The Europe to Malaysia liner trades were targeted first, and MISC received a quota from the Far East Freight Conference (FEFC) and entered into a pooling arrangement with conference members. Eight cargo-liners of between 12,300 dwt and 14,700 dwt were ordered from Japanese yards with five holds, four of which were forward of the bridge structure. The first to be completed was Bunga Raya of 14,700 dwt in November 1970 to begin the ‘Bunga’ nomenclature that continues to the present day. ‘Bunga’ means ‘flower’ in Malay and Bunga Raya is their name for the hibiscus flower. Bunga Raya was a shelterdecker with three decks on dimensions of length 531.6 feet and a moulded beam of 72.3 feet, and was powered by a seven cylinder two stroke Sulzer diesel engine of 14,000 bhp to give a service speed of 19 knots.

The shipping industry played a large part in furthering the newly won independence of Malaysia, this being established on 16th September 1963 through the union of the eleven States of Malaya together with Singapore and the former British colonies of Sarawak and Sabah on Borneo. The Sultan of Brunei refused to join the Malaysia Federation as his royal family would have lost some control over their massive oil resources. Singapore left this Federation in august 1965 and reduced the number of component Malaysia States to thirteen. Malaysia has vast natural resources of tin, rubber, palm oil, iron ore, bauxite, kaolin, coal, ilmenite, zirconium, crude oil and natural gas, sawn wood and plywood, and was gearing up her industrial strength through cement, brick, roof tile, rubber products, electronics, chemical and automotive industries. All of these products needed transportation to the markets of the Far East and Europe, and the first octet of MISC cargo liners were all in service by the start of 1973. Bunga Angsana, Bunga Melor, Bunga Melati, Bunga Orkid, Bunga Seroja, Bunga Tanjong and Bunga Teratai had followed the first vessel, Bunga Raya. They all had grey hulls, five holds with a combination of deck cranes of 12.5 tonne capacity and derricks from ten tonnes up to a heavy lift derrick of sixty tonnes for cargo handling.

MISC Coastal Services

The transportation of raw materials from Sabah and Sarawak in Borneo to the main Malaysian peninsula needed a coastal fleet of passenger and cargo ships. Bunga Butang of 3,265 dwt with accommodation for 750 deck passengers and a few berthed passengers was purchased first as Hoi Wong, and had been completed by the Helsingborgs Vary A/B in 1948. She was a shelterdecker with a dozen derricks of five or ten tonne capacity for her original trade on the Chinese coast and had a service speed of fourteen knots from a seven cylinder B & W oil engine. Bunga Kemuning of 3,000 dwt was purchased in 1971, completed ten years earlier as Otaru Maru, and had three holds and three hatches, eight derricks of up to twenty tonne capacity and a service speed of twelve knots from a six cylinder Hanshin oil engine.

Cargo-liners in the 6,000 to 7,000 dwt range were also needed, and the first to enter service in 1971 was the purchased Bulimba from British India Line and renamed Bunga Kenanga. She had been completed by the Harland & Wolff Ltd. yard at Govan on Clydeside in 1959 and was a handsome streamlined vessel and one of a class of five ‘B’ class of 7,599 dwt equipped with only deck cranes, no derricks, and were the first British built cargo liners to use A.C. current for all deck purposes.

The newly independent Malaysian State also needed to transport army personnel and their equipment to the States of Sarawak and Sabah and their bases in Kuching and Sandakan. Two coastal Chinese passenger ships were purchased from Swires of Hong Kong as the Clydeside built Shansi and Soochow of 3,161 grt dating from 1947. They were renamed Sang Suria and Sang Fajar respectively and acted as troopships carrying 370 troops as deck passengers with berthed accommodation for thirty officers. This coastal passenger and cargo fleet was completed during 1972 and 1974 by the newly Japanese built cargo ships Rimba Satu of 6,178 dwt and the sisters Gaya Dua and Gaya Satu of 7,430 dwt for the associated Gaya Shipping Sendirian Berhad, all with service speeds of fifteen knots. A quartet of newly built coastal cargo ships of 3,750 dwt was then completed in 1976/77 as Bunga Bindang, Bunga Gelang, Bunga Saga and Bunga Setawar.

Container Trades Entry

The big shipping companies of Western Europe and Japan had already completed the containerisation of the Europe to the Far East trade routes by 1977, with a few cargo-liners hanging on in the feeder trades until as late as 1981. In that year of 1977, the cargo-liners Bunga Angsana and her sister Bunga Teratai completed their conversions to cellular 600 TEU container ships in Japan. They had seven hatches to their five cellular holds, with one cellular hold aft of the superstructure, and served for nineteen years in the MISC container fleet until their sale to orient Express Lines and renaming as orient Strength and orient Stride. Larger new MISC twin funnelled container ships then came into service as Bunga Permai and Bunga Suria of 2,770 TEU capacity from the Sumitomo yard in Oppawa in 1979, as well as the feeder container ships Bunga Dahlia and Bunga Penaga of 200 TEU capacity from the Osaka Zosensho yard in the same year.

Ten years later, MISC had a big container ship fleet of a dozen fully cellular container ships. However, only the large Bunga Permai and Bunga Suria operated on the Far East to Europe container trade, the remainder of the fleet operating in the Far East, Australian, Indian, Pakistan and Persian Gulf trades. MISC was admitted to the ScanDutch pool in 1979, and space was also taken by slot charters on the twice weekly service of the big container ships of Ben Line and the ScanDutch consortium to increase the MISC container capacity on the Europe to Far East route. When the ScanDutch and Trio consortia ended their Far East services in 1991, Ben Line formed a weekly container service of nine container ships with East Asiatic Company (EAC) of Denmark.

MISC then joined a tonnage sharing agreement with Nedlloyd and CGM of France to operate seventeen container ships, including two from MISC, on the route. Calls were made at Felixstowe and Barcelona for the first time by the MISC pair of big container ships. At the end of 1997, MISC switched from the global alliance (MISC, APL, OOCL, Nedlloyd and Mitsui OSK) to the grand alliance (MISC, NYK, P&OCL, NOL and Hamburg Lloyd) on the Far East to Europe trade. Ports of call were Shanghai, Ningbo, Xiamen, Singapore, Barcelona, Southampton, Amsterdam and Hamburg.

The Malaysian government stake in MISC remained at 61% throughout the 1980s decade until MISC offered an IPO (initial Public offering) at the end of the decade on the Kuala Lumpur Stock Exchange. This allowed for the exit of a number of private shareholders and investors. The funds gained from the IPO offering enabled MISC to greatly expand its container ship fleet, and to diversify into its own shipbuilding, ship repair, engineering and haulage companies. Dry bulk carriers and LNG carriers began to increase in number in the MISC fleet.

The Malaysian government took control of its petroleum industry in 1974, founding Petroliam Nasional Berhad (PETRONAS) on 17th august 1974 as a wholly owned government subsidiary. In the same year, Sarawak signed an agreement with Petronas surrendering ownership and control of its extensive and lucrative Sarawak oil and natural gas assets, with Malaysia quickly becoming the third biggest LNG producer in the world in 1983. Petronas then acquired a 29.3% shareholding in MISC in 1997, and then expanded this to a majority 62.44% shareholding a year later by the acquisition and transfer of Petronas Tankers, Konsortium Perkapalan Berhad, Asia LNG Transport and PNSL Holdings Berhad to MISC.

Larger container ships of 4,470 TEU capacity had been completed by the Ulsan yard of Hyundai Heavy industries as Bunga Pelangi in 1992 and Bunga Pelangi Dua in 1995, and a series of ten intermediate container ships of 3,850 TEU and 1,725 TEU capacity throughout the 1990s decade. MISC had a big fleet of twenty two fully cellular container ships by 2005, however shipping industry opinion was becoming polarised on the world container ship market as making marginal profits, if any at all. Consequently, MISC exited the Asia to Europe container trades and resigned from the grand alliance in February 2011, and then made a full exit from its container liner businesses on 24th November 2011. This fleet of international and feeder container ships was sold off during the next year. This included their largest pair of container ships of 103,000 dwt and 7,943 TEU capacity completed in 2007 as Bunga Seroja Satu and Bunga Seroja Dua, and sold to Capital Maritime of Greece and renamed Archimidis and Agamemnon. However, the costs of this exit strategy were estimated at $400 million after MISC losses in the container trades for the previous three years had reached $789 million.

LNG Carriers and the Oil Trades

Shell first began prospecting for oil in North Sarawak in 1910, and later discovered huge reserves. The big Tapis oilfield came onstream in 1979, with the first cargo of Sarawak LNG exported in 1983, and much of the LNG was then utilised on the Malaysian peninsula. The Kikek offshore deep water Sarawak project began production in 2007, with oil production since then at around 862,000 barrels per day and gas production at 2.2 Trillion cubic feet per day. The oil trades were entered by MISC in 1973 with the completion of the ore/oil combination carrier Bunga Mawar of 166,950 dwt with five holds or tanks and eight hatches and a service speed of 15.5 knots from a ten cylinder Sulzer diesel engine of 29,000 bhp. She was employed on the Persian Gulf to Japan crude oil trade, and completed fourteen years of trading to MISC before being sold in 1987. She later disappeared without trace with her 32 crew after sailing on 16th September 1990 with ore from the Chilean port of Huasco for Japan under the name of Algarrabo, presumably overwhelmed by heavy seas.

Three product tankers of 30,000 dwt had followed in 1975 as Bunga Kesumba, Bunga Selasih and Bunga Sepang. The LNG natural gas trades from Bintulu in Sarawak to Japan and China were then begun in 1983 with the large ‘Tenaga’ quintet of 130,000 cubic capacity in five gas tanks. MISC LNG operations had technical support from Shell, and in return MISC signed a contract to purchase $34.7M of marine bulker fuel from Shell. Two palm oil tankers of 16,500 dwt were ordered in February 1993 to transport Malaysian palm oil to Europe, and MISC contributed to the cost of a palm oil bulk terminal in Pakistan and refining complex. The MISC oil and liquid LNG carrier fleet had grown to eighteen ships by 1995, and included two crude oil tankers of 87,000 dwt in Bunga Keranji and Bunga Kertas, the former purchased as Wind Conquest. MISC then expanded this fleet into the largest provider of LNG shipping services in the world. World demand for LNG began to outstrip the global shipping industry LNG carrier capacity. The growth of the Chinese, Japanese and Indian economies and their huge demand for gas from Malaysia, Brunei and Indonesia led MISC to launch a major expansion of its LNG fleet, ordering six new large LNG tankers in 1996.

By the turn of the Millennium the MISC fleet had grown to 136 vessels and included thirteen LNG carriers. Six more LNG carriers were on order for delivery in 2002, with a massive LNG project underway by Petronas and a number of partners in Sarawak at the beginning of that decade. MISC began bidding for a contract to supply LNG from Qatar to India at this time, and it was successful in 2003 when it won its first non Petronas time charter contract to Gaz de France for a three year contract with an option for another year. By the end of that year, a second non Petronas time charter contract was won to J. & S. Cheniere.

Two LNG carriers were long term chartered for twenty years in 2009 to Yemen LNG. A time charter contract was won in 2011 to supply LNG from the Australian North West Shelf (NWS) fields, and a FPSO contract for the Cendor Phase II project for Petrofac. The LNG carriers Tenaga Empat and Tenaga Satu became Floating Storage Units (FSU) in 2012 for the first regasification terminal project in Malaysia. MISC delivered a semi submersible floating oil production system in 2013 for the Gumusut – Kakap deep water field in offshore Sabah. The first commissioning cargo for the Petronas LNG regasification Terminal at Sungai Udang in Malaysia was transported by the LNG carrier Seri Bijaksana.

MISC LNG carriers soon began to be seen in worldwide trading from Qatar and Algeria for trading to Spanish, French and other European markets, as well as Western Mediterranean, Eastern Mediterranean and African gas markets. In 2005, MISC placed an order for ten even bigger LNG carriers for delivery up to 2009 and Thus Give A Very Large Fleet Of 29 LNG Carriers By That Year. This LNG Carrier Fleet Included The Vessels Tenaga Dua, Tenaga Empat, Tenaga Lima, Tenaga Stau, Tenaga Tiga, Seri Alam, Seri Amanah, Seri Anggun, Seri Angkasa, Seri Bakti, Seri Balhaf, Seri Balqis, Seri Begawan, Seri Bijaksana, Aman Bintulu, Aman Hakata, Aman Sendai, Puteri Delima, Puteri Delima Satu, Puteri Firus, Puteri Firus Satu, Puteri Intan, Puteri Intan Satu, Puteri Nilam, Puteri Nilam Satu, Puteri Mutiara Satu and Puteri Zamrud Satu.

American Eagle Tankers (AET)

American Eagle Tankers (AET) was acquired on 22nd July 2003 for $1.1 billion from Neptune orient Lines (NOL) of Singapore for $445 million in cash with the remainder as a bridging loan from a group of eight banks. AET contributed $342M in revenue to MISC in the first eight months after its purchase. Later that year, the first VLCC tanker was delivered to AET as Bunga Kasturi. AET began an expansion policy with many new tankers ordered, including three chemical tankers from the Okskaya yard in Russia. Eagle Tucson grounded in the Lower Mississippi river on 28th September 2009, blocking the channel to deep draft vessels, but she was refloated a day later. AET double hull tanker Bunga Kelana 3 of 105,784 dwt was in collision with a bulk carrier in the Singapore Straits on 25th May 2010, resulting in a spill of 3,500 tonnes of fuel oil and claims from 264 fishermen for damages to the fishing in the area. in 2012, the VLCC Eagle Virginia of 307,000 dwt built in 2002 became a Floating Storage Unit (FSU) off Aruba for Iranian crude oil, and also won long term contracts from Statoil of Norway for two shuttle tankers of 120,000 dwt. AET is the current market leader in U.S. gulf lightering and ship to ship transfers.

MISC Offshore Division

MISC launched its offshore oil Division in 2004, commissioning its first FPSO (Floating Production, Storage and offloading) tanker that year as Bunga Kertas. This offshore oil Division then won many contracts later in this decade, including a deep water FPSO to Murphy oil in 2007 as FPSO Kikeh, and a contract to supply a FPSO to Vietnam in 2009. By 2010, MISC had a very big fleet of 170 vessels, including 29 LNG carriers, six FPSOs, five Floating Storage and offloading Tankers (FSO), two Mobile offshore Production Units (MOPU), two Floating Storage Units (FSU), 46 VLCCs and Suezmax tankers, 36 Aframax tankers, two shuttle tankers, one Panamax tanker, 18 doubled hulled chemical tankers, and one liquid LPG tanker. There were well over thirty vessels on charter and finally, a semi submersible floating production system was about to be installed. All in all, the largest LNG carrier and offshore oil fleet in the world.

An explosion and fire onboard the chemical tanker Bunga Alpinia of 38,000 dwt at the Malaysian port of Labuan on 26th July 2012 resulted in the death of one seafarer and four others were posted as missing. The current MISC tanker fleet is fifty tankers with fourteen having ‘Bunga’ prefixes to their names e.g. Bunga Kenanga, and the remainder having ‘Eagle prefixes to their names e.g. Eagle Sydney. Eagle Sydney was operating in august 2014 in the crude oil export trade from the Tees to American ports. The VLCCs include Bunga Kasturi and Bunga Kasturi Dua of 300,000 dwt completed in April 2003 and February 2005 by the Universal Shipbuilding Corporation yard at Ariake in Japan.

Dry Bulk Trades

MISC had owned dry bulkers, both geared and ungeared, since 1973 with the completion of the Japanese built Bunga Chempaka of 34,201 dwt and wood chip carrier sisters Bunga Melawis and Bunga Tembusu of 32,800 dwt. Seven further dry bulkers of between 24,500 dwt and 33,000 dwt were completed by Japanese yards in 1976/77 as Rimba Balau, Rimba Cengal, Rimba Kerung, Rimba Meranti, Rimba Merbau, Rimba Ramin and Rimba Sepetir. They traded worldwide and particularly in the Far East to West Coast U.S.A. and Canada trades across the Pacific. The Western Europe bulk trades were also entered with several MISC bulkers calling at British ports.

The export from Malaysia of tin concentrates, bauxite, iron ore, kaolin, coal, ilmenite, zirconium as well as bulk sugar, timber, cement and other Malaysian bulk products was also a MISC trade. The total export dry bulk trade from peninsula Malaysian ports and those in Sarawak and Sabah is currently 114 million metric tonnes, and the total import dry bulk trade is 138 million metric tonnes. A dedicated provider of freight forwarding and management services, cargo handling and other logistics services was launched by MISC as MISC integrated Logistics Services (MILS) in 2001.

The MISC bulker fleet in 1995 was six Panamaxes and ten Handysizes, and in Millennium year it was twenty bulkers, consisting of ten Handymax bulkers of 44,000 dwt and ten Panamax bulkers of 73,500 dwt. They were engaged on the following voyages in November of that year:-

Bunga Melor Dua – Vancouver to Santos

Bunga Melor Empat – Fremantle to Yemen

Bunga Melor Lima – Tyne to Newport News

Bunga Melor Satu – New Orleans to Jakarta

Bunga Melor Tiga – Cape Town to Port Harcourt

Bunga Orkid Dua – Kisarazu to Brownsville

Bunga Orkid Empat – Singapore to Jakarta

Bunga Orkid Lima – Nagoya to Port Klang

Bunga Orkid Satu – San Vicente to Coos Bay

Bunga Orkid Tiga – Bremen to Kuwait

Bunga Saga Dua – New Orleans to Yokohama

Bunga Saga Empat – Newcastle to Vancouver

Bunga Saga Enam – Baltimore to New Orleans

Bunga Saga Lapan – Portland to Newcastle

Bunga Saga Lima – Baltimore to New Orleans

Bunga Saga Satu – Qinhuangdao to Rotterdam

Bunga Saga Sembilan – Valencia to Tubarao

Bunga Saga Sepuloh – Quebec to Alexandria

Bunga Saga Tiga – Fujairah to Umm Qasr

Bunga Saga Tujuh – Laem Chabang to Rotterdam

However, this dry bulk fleet was sold off in 2004, with most bulkers going to the restis group of Greece.

Tank Terminal Expansion

The onshore tank terminal MISC operations include more than 7.5 million cubic metres of oil storage capacity. In 2008, MISC founded a number of joint venture tank terminal partnerships with the Dialog group in Malaysia, and with Vitol Tank Terminals of Rotterdam, and in Nigeria to expand the MISC LNG, oil storage and maritime logistics businesses. MISC and the Vitol group of Rotterdam began a joint venture oil storage terminal project in 2013 with an initial capacity of 890,000 cubic metres located at Tanjung Bin in Johore State in Malaysia. A joint venture was also formed with the al Hilal Shipping agency in Dubai for shipping agency and storage services in 2010.

The four principal divisions of MISC are MISC LNG, MISC Petroleum, MISC Chemicals and MISC offshore. The four principal operating units of MISC Tankers, MISC offshore Holdings, MISC Tanker Holdings and MISC Tank Terminals are thus well placed for much future expansion. Turnover for MISC as a whole was $3.88 billion in 2011 and the company employs over 10,000 people in Malaysia and internationally. MISC offices and agencies in Malaysia are at Kuala Lumpur, Kuching, Penang, Pasir Gudang (Johore) and Bahru (Johore), and international agencies represent the company at a further fifty ports worldwide.

Postscript

The headquarters of MISC and Petronas are in the Malaysian capital of Kuala Lumpur, twenty miles inland up the Klang valley from the busy port of Port Klang. Penang was founded in 1786 and Port Kelang (Klang) in 1857 as the two major ports under British protection of Malaya. Kuala Lumpur means ‘muddy confluence’ in Malay, as it began as a shanty town at the confluence of the Klang and Gombak rivers, settled by Chinese coolies mining tin in the jungle. Petronas is of course well known for its twin tower headquarters building in Kuala Lumpur of 88 storeys and 1,488 feet in height and was completed in 1998, and is still the highest twin structure tower building in the world. The site was a catacomb of caves and unpromising for this large structure that cost $1.2 billion to build. Some 65,000 square metres of stainless steel cladding, 160,000 cubic metres of concrete, and 77,000 square metres of glass was used in its construction. It is located in the centre of Kuala Lumpur next to the Petronas Philharmonic Hall.

MISC has a dedicated terminal for operations in Port Klang, one of three in the port, as well as a presence in the east coastal ports of Kuantan and Kemaman on the Malya Peninsula.

The bright funnel colours of MISC consist of a fourteen pointed yellow star on a blue funnel with a broad red band divided by a white band. Hull colours are black or red with white ‘MISC’ or ‘MISC Malaysia’ in large capital letters. AET tanker hulls are orange with red boot topping, and they have white funnels with a blue disc showing an eagle head symbol. MISC ordered four more LNG carriers on 11th October 2013, and profitability figures for 2014 show rises of 62% over 2013. The MISC LNG and tanker fleet is by far the largest in the world, with MISC LNG carriers now transporting Qatar LNG to Malaysian, Japanese and Chinese terminals after the first Qatar cargo was loaded in June 2013.