Whoever commands ports, attracts connectivity - Shippers Academy CEO | Sunday Observer

Whoever commands ports, attracts connectivity - Shippers Academy CEO

Fifty-five percent of containerised cargo is carried through the Indo-Pacific and 70 percent of the energy moves through this region which is a game changer for ports in the region and ship operators,  CEO, Shippers Academy, Colombo,  Rohan Masakorala said. 

He was speaking at the IORA (Indian Ocean Rim Association) conference in New Delhi on ‘Practical aspects of connectivity and ports and infrastructure’. 

If countries do not invest in infrastructure, trade suffers. Infrastructure is a key element for connectivity and to create economic value for economic blocks and individual countries, he said. 

Excerpts of the speech: 

“A shipping magnet once said, “Whoever who commands the sea commands the Straits”. In today’s context “whoever commands ports attracts connectivity”, which is also true in the Indian Ocean. If you look at ports in Singapore, the UAE, Malaysia and Sri Lanka, these connect nearly 65 percent of the Indian Ocean trades transshipment business, of these four ports, Sri Lanka holds 18-20 percent of Indian cargo while Dubai and Singapore hold the rest from the East and West Coast of India. This is the reality.   

“Fifty-five percent of containerised cargo is carried through the Indo-Pacific and 70 percent of the energy moves through this region which is a game changer for the region in terms of ports and for ship operators. 

“As far as maritime connectivity is concerned, most of the time we leave out the real business operators who make connectivity happen for many reasons. For instance, location and availability of cargo is one of the considerations, availability of maritime services, freedom of business are also key points, along with availability of competitive energy prices. Singapore is the world’s number one bunker supplier to ships, and the UAE is the second largest bunker operator and bunker supplier to the world shipping industry. 

“Singapore receives large volumes of crude oil supplies from the Middle East, it refines these supplies, and feeds it back into global markets. As many as 10,000 ships are in Singapore waters around any given time. Connectivity is also shaped by ship operators followed by waiting time and port efficiency. If ports are not efficient you do not get ships coming there.     

 “A World Bank study showed that the operator efficiency in the Indian subcontinent’s ports excluding Colombo is about 50 percent which is why ships do not make dedicated port calls to many ports. Also, in today’s context, ships are getting bigger and call at ports that possess the requisite infrastructure. 

“World markets are changing, speed is becoming an important factor in connectivity, ship owners prefer to go to ports where there is infrastructure to receive big ships and with good feeder network and handle them fast. It is on this basis that they classify ports; ports that have over 90 per cent transshipment are pure transshipment ports such as Singapore. If it is above 50 per cent it is called a transshipment hub like Colombo where 70 per cent of the transshipment takes place and the average of 25 per cent transshipment is called regional gateway and others are called gateway ports. 

Shipowners

“As far as who decides which port to call at, it is not policy makers or countries, instead shipowners who control 85 per cent of the container business worldwide will decide that factor(Mainly European, US and Asian carriers). They decide which port would be the hub or a feeder and this is the reality of the connectivity in the containerised business. It would be different for energy shipments based on refinery capacities and tankers, and bulk cargo depends on the demand and supply of the particular products for market.  

“The biggest container ships can carry over 23,000 TEU containers and DNVG has now signed to build a 25,000 TEU vessel. These vessels have been in evolution over the last 25 years from about 1,500 to 3,000 TEUs to 25,000 TEUs and there are plans to build containerships capable of carrying 30,000 to 40,000 TEUs. These would not call at all the ports, but would sail from the east-west corridor including the Indo-Pacific.   

“If countries do not invest in infrastructure, trade suffers. For instance, if the United States does not invest in infrastructure there will be losses in trade, revenue and jobs. Infrastructure is a key element for connectivity and to create economic value for economic blocks and individual countries.  

“India has taken a number of initiatives; it started the Sagarmala project, there is coastal shipping liberalization but more efficiency is needed in ports of the Indian subcontinent. As far as the IORA region is concerned, only two ports are in the first ten category of top ports in the world and another two including Colombo In the first 30. In the Pacific Ocean there are a number of big ports including the Chinese ports. 

“In another five years, the global container market is expected to be nearly a billion TEUs and most of these would originate in the Indo-Pacific region. Ships capable of carrying 25,000 TEUs may not call at many ports.  

In Sri Lanka, the Hambantota Port is a deep draft port and is a challenge to Colombo Port. We cannot have two ports in the same country competing; but that is going to happen, because Hambantota has a distinct advantage. It is 12 nautical miles or less from the main east-west shipping lane which means ships do not have to turn in to pick up transshipment cargo and come to Colombo for six hours diversion or go to Trincomalee Harbour. The Hambantota Port will be one of the key focus development ports in the world on the east-west shipping route. China has invested in Hambantota Port and the number of berths are planned for expansion from the present 5-6 to 33 deep berths. They are planning refineries there to connect energy as well as regional transshipment cargo to capture new business emerging out of the region. Today, nearly all the top vehicle carriers call at Hambantota Port. In the long run, the Hambantota Port will have a distinct advantage over Colombo Port id Colombo doesn’t compete with international partnerships. 

Sri Lanka is in the middle of the Indian Ocean and connectivity matters. Along with Singapore and UAE, these three hubs will dominate the Indian Ocean connectivity with Pacific Ocean maritime trade routes.  

The Port of Colombo is becoming a bigger port for bigger container ships and two years ago it was the second fastest growing port in the world. It has slowed down slightly due to Indian trade volumes on account of the economic slowdown in India.  

Whoever commands the sea, commands the trade which is a fact and Prime Minister of Malaysia, Mahathir Mohammed said a long time ago, that no matter how information technology advances, world trade cannot materialise without ports. This is extremely important for the littoral states of the Indian Ocean to understand that whoever commands the ports today, will connect the maritime industry. Ship owners will call at those ports, and no government or policy makers are going to make an impact on that because it is economics. 

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