Stakeholders positive on proposed East Container Terminal model - Port Chairman | Sunday Observer

Stakeholders positive on proposed East Container Terminal model - Port Chairman

Colombo Port
Colombo Port

The Port of Colombo will be a leader in the Indian Ocean, Middle East and East African hub ports and is to become an efficient logistic hub attracting sustainable investment and trade to facilitate the national export strategy (NES), according to the National Port Master Plan completed in March 2019, by NIRAS mtbs and funded by the Asian Development Bank and Japan Fund for Poverty Reduction.

To retain Colombo’s dominant position as a hub port in the region, the Master Plan stresses on a threefold focus: 1. Maintaining a world class transshipment hub serving the Middle East, East Africa, India, Pakistan and the Bay of Bengal; 2. Becoming an efficient logistic hub for imports and newly developed exports; and 3. Becoming a sustainable port.


Kavan Ratnayaka  

The report adds, “The Colombo Port is the leader in the Indian Ocean as a transshipment hub port and ‘should stay competitive with other national and international transshipment ports’. To achieve this, the focus should be on operational excellence on marine services, cargo handling services, auxiliary functions and on inter-terminal traffic. The marine activities and handling activities are one of the core activities of the Sri Lanka Ports Authority (SLPA). Port designs are adjusted and future capacity is planned to stay ahead of demand. Innovations and new technologies will support this development.”

“The port of Colombo should also become more efficient to facilitate the NES on targeted export sectors as well as improving logistics on import cargo. As many trades are transported by containers, the container logistics chain is a prime focus to become more efficient. This can be created for better infrastructure on port and hinterland connections as well as on administration and procedures.”

In this backdrop, the government has embarked on ambitious plans to transform Sri Lanka into a vibrant maritime hub in the region.

One of the developments that took place recently as far as the plan implementation process was concerned, was the signing of a Memorandum of Cooperation (MoC) by Sri Lanka, Japan and India to develop the East Container Terminal (ECT) of the port. The shipping community has welcomed the decision with enthusiasm. Now, the three governments will work out the details based on the MoC at joint working group meetings, and advance their cooperation towards early commencement of work and operation of the ECT.

Chairman, SLPA, Kavan Ratnayaka said the SLPA retains 100% ownership of ECT. The Terminal Operations Company (TOC) conducting all East Container Terminal operations is jointly owned. Sri Lanka retains a 51% stake, and the joint venture partners purchase a 49% stake.

Japan has agreed to provide a concessionary loan to develop the ECT and the estimated cost is approximately US$ 500 million.

Justification

Explaining the rationale behind the ECT project and justifying the model they are currently working on, Ratnayaka said it is vital to retain Colombo’s dominant position as a hub port in the region with modern expansion programs. He was speaking at a meeting held at the SLPA last Monday.

The envisaged Japanese loan carries one of the best loan terms Sri Lanka has obtained. The 51% stake is also one of the best in SLPA joint ownership endeavours. SLPA’s majority ownership in the new ToC represents a significant step in prioritising national interests.

At present a 20-member Japanese group including Japanese Prime Minister’s Special Advisor, Dr. Hiroto Izumi is in discussion with Sri Lankan and Indian authorities on setting up of a ‘joint working group’ to develop the East Container Terminal (ECT) located in the Colombo South Port. Dr. Izumi along with Japanese Ambassador Akira Sugiyama met Prime Minister Ranil Wickremesinghe and several senior Ministers on Friday to discuss on some of the development plans in Sri Lanka.

“The Japanese team is currently in discussion to determine what the working group should look like. The team will also have talks with the Indian officials,” Chairman Ratnayaka said.

Apart from the ECT project, the Port authorities are currently working on several other development projects to increase the efficiency of its terminals.

The life span of SLPA-managed Jaya Container Terminals (JCT 1 to 4) is also coming to an end. “They need to be modernised. With JCT terminals having capacity and efficiency issues, it is vital to have the ECT at operational level to meet the future demand of the Colombo Port,” Ratnayaka said.

The Colombo port’s current capacity with JCT, South Asia Gateway Terminals (SAGT) and Colombo International Container Terminals (CICT) is 7.5 million Twenty-foot Equivalent Units (TEUs) and last year the volumes handled amounted to 7 million TEUs, up by 13.5% from 2017. 80% of the volume is transshipment.

India and Bangladesh

The Colombo Port is ranked 11th in connectivity (Drewery, 2018) and 22nd among global ports (Alphaliner, 2018) and is one of the fastest growing in the world.

The Master Plan states, the JCT modernisation plan should include the development of the JCT to keep operations at competitive levels and enable berthing of two large-sized container vessels simultaneously. The main works proposed in the plan comprise (i) an extension of the berth; (ii) dredging; (iii) procurement of new equipment; and (iv) procurement of a new IT system.

Meanwhile, East India, West India and Bangladesh will remain Sri Lanka’s key markets for transshipment containers, accounting for an estimated 89.9% of throughput in 2050.

According to the National Port Master Plan, the base case demand for transshipment via Colombo port is forecast to be 5.8 million TEUs by 2025 and to 6.4 million TEUs by 2030 and 12.6 million TEUs by 2050. The high case transshipment demand forecast is estimated at 7.3 million TEUs by 2025 and 8.5 million TEUs by 2030 and to 21 million TEUS by 2050. The base case demand for domestic containers (import-export) is 2.1 million TEUs by 2025, 2.5 million TEUs by 2030 and 3.2 million TEUs by 2050; the high case scenario is 2.2 million TEUs by 2025, 2.7 million TEUS by 2030 and 4 million TEUS by 2050.

The Master plan forecasts annual transshipment volumes to increase from 3.89 million TEU in 2015 to 12.67 million TEU in 2050.

“A dip in volumes can be observed around 2030, due to the expected implementation of several competitive projects. Due to increasing direct trade shares and increasing pressure from competing transshipment hub groups, growth of transshipment volumes is expected to decelerate after 2035.”

Transshipment of containers accounts for approximately 75% of Colombo’s total container traffic; the remaining 25% comprises local containerised cargo, driven mainly by exports of garment, tea and rubber and imports of consumption products, industrial and agricultural equipment.

The port handled 81.8 m tons in 2016 including 5.7 m TEU of containers. In 2016 the port had about 4,405 ships arrivals and was ranked as the 23rd largest container port in the world. The port handles the largest container vessels in the world having dimensions of 400m in length and a capacity of 21,500 TEU due to quays with ample water depths of CD-18m and state-of-the-art terminals.

To match the future human resources and administration demands and needs, Ratnayaka said, the Port complex will also receive a facelift soon and new spaces will be created for offices and special job fields with the setting up of a maritime facilitation centre in the premises. - CJ 

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