Malaysia will build a new container port along the western coast of the Malay Peninsula facing the Malacca Strait, one of the world’s busiest sea lanes, as the country prepares to capture logistics demand created by global supply chain shifts.

The estimated 2 billion ringgit ($425 million) port will utilize artificial intelligence to improve operational efficiency, becoming the first port in Malaysia to do so. Local property developer Tanco Holdings, through its subsidiary Midports Holdings, will lead the development in collaboration with China-based marine engineering company CCCC Dredging Co., a group company of state-owned China Communications Construction Co.

The parties signed a memorandum of understanding earlier this month.

According to an announcement, the port will be developed in the city of Port Dickson, in the state of Negeri Sembilan. Close to Kuala Lumpur and the midpoint of the Malacca Strait, it could benefit from high traffic and connectivity to key industrial regions in Malaysia.

“The construction of this port will contribute to Malaysia’s goal of establishing a modern and efficient port hub, accelerating economic development in Negeri Sembilan, and bolstering Malaysia’s global trade position,” Tanco Group Managing Director Andrew Tan Juan Suan said in a statement.

“This collaboration with CCCC Dredging marks a pivotal step towards realizing our vision of a world-class port in Port Dickson. The expertise and resources brought by CCCC Dredging will ensure the successful implementation of this project, which is set to drive economic growth and create job opportunities in the region.”

The proposed port will feature a 1.8-kilometer jetty, terminal and container operation area of approximately 809,300 sq. meters. It will be able to accommodate the largest container ships, according to Negeri Sembilan Chief Minister Aminuddin Harun, as cited in a report by Malaysian national news agency Bernama.

The companies have yet to announce an expected completion date.

As global companies diversify their supply chains, Malaysia has emerged as a beneficiary, attracting investments from electronics and other manufacturers. Klang Port, the country’s largest, plans to double its capacity to capture demand, operator Westports Holdings recently told Nikkei Asia.

Aminuddin said the new port could greatly boost the nation’s logistics and marine transport services industry, as a network of roads and highways will connect it to major industrial areas.

According to the announcement, AI technology will enhance the port’s operational efficiency, reduce human error and lower the accident rate. The AI system will analyze traffic data, schedule ship movements, track marine operations around the port and manage automated logistics.

These advancements are anticipated to streamline processes, reduce operational costs and minimize environmental impact. The port will also feature automated cranes, self-driving trucks and top-tier cybersecurity measures with the capacity to receive large container ships, according to the announcement.