The Colombo Port which is fast becoming a key transshipment hub in the region will benefit immensely with the proposed liberalization of the shipping industry in terms of ownership structure, a leading shipping line chief said.
“We feel that the sector should be fully liberalized in terms of ownership and restrictions on tariffs and duties removed, to send out the signal that Sri Lanka is open for business. This will create a win-win situation. The free market policy augurs well for the shipping industry where it will also open up further opportunities for the industry,” Managing Director South Asia Maersk Line India Pvt. Ltd Steve M. Felder said.
“Sri Lanka has one of the most efficient ports in the world. It serves the domestic market well. However, it will need to be more competitive to gain the advantages of being located at a strategic point. Therefore, we see the need for more dredging and the country should focus on this to drive further growth,” he said at a press meet held in Colombo last week.
“Modern vessels are becoming bigger in size and large berths are the need of the hour. With the East Container Terminal, the country will be ready to accommodate the influx of ships. This will send a positive signal to the global shipping line industry. The Hambantota Port should also be made in to an efficient port where the country could benefit,” he said.
The Colombo Port has the terminals: Jaya Container, Colombo International Container, South Asia Gateway and Unity Container at present. The construction of the East Container Terminal is underway.
“It is a privilege to serve the South Asian market where 20 percent of the global population is accounted for. The sector has a significantly growing middle income class that brings business for the container shipping industry market. Maersk Shipping Line has embarked on digital initiatives to improve ease of business. This will simplify the supply chain and further empower customers,” he said.
“Digitization will enable customers to have online accessibility where innovative digital tools will be used for business transactions such as online booking, trade cargo online and payment gateway. This will transform the shipping industry for the better as 60 percent of the global GDP is derived from international trade, up 15 percent from last year. The contribution made by the global shipping industry in this regard is significant.
“The company is a strong patron of the Colombo Port. It had made great strides. By joining hands with John Keels Holdings the partnership has enabled Maersk to localize its operations. The collaboration has optimized the utilization of the Port. As most of the industries such as apparel, tea and rubber are export oriented, simplifying the supply chain by digitalization is important. It is all about real time. It also provides the facility of refrigerated cargo which involves much more risk. It also has the ability to remote control management which enables the importer or the exporter to obtain required information, he said.
“Our digitalization initiatives will help support the customers to concentrate more on their core business activities, integrate trade and delegate the responsibility of shipping to the company. We will take care of greater options of the supply chain such as clearance and exporting to the final destination.
Digitalization
The digitalization process uptake is pretty solid. Sri Lankans are tech savvy and easy adaptors in technology. Therefore, the online transactions are done seamlessly with cost benefit to the company,” he said.
Elaborating on policy changes in India on cabotage and its impact on Colombo, Felder said that “moving containers full or empty were limited to Indian flag operators.
With the policy change, basically the foreign shipping lines are allowed to carry cargo in Indian shipping lines. This has enabled the Indian Ports to effectively compete for transshipment traffic.
“The Indian Ports are now on the map. However, it is too early to speak of its impact on Colombo, though there are few concerns. The Colombo Port has to be competitive on cost, connectivity and has the advantage of strategic location. To what extent it will affect cannot be estimated and this will be an excellent opportunity for the Colombo Port to make continuous improvements and be more competitive in the shipping business. Every port should compete on its merits”, he said.
Mearsk considers Sri Lanka as a key market and a key transshipment hub. It has achieved 2 percent growth which is slower than last year.
Its transshipment business growth is mainly from Asia and Europe. The company expects Bangladesh to be a lucrative market with the country’s growing apparel sector.
However, there is a mis-match of growth in the shipping industry as the benefit of the growing sectors does not accumulate to the sector because of the change in the mode of transport.
Maersk, the world’s largest container shipping company is known for reliable, flexible and eco-efficient services. It provides integrated logistics solutions in all parts of the world. The company has propelled Sri Lanka’s supply chain for 25 years.
Minister of Finance and Mass Media, Mangala Samaraweera in his 2018 budget speech highlighted the importance of liberalizing the shipping industry.
Presenting the Budget, he said, “At present, five Sri Lankan companies control the agencies of shipping lines that account for 74% of the global shipping market. These five companies are of an average age of 115 years.
While these companies have opposed liberalisation of the sector, Sri Lanka’s apparel exporters (JAAF and the Sri Lanka Apparel Exporters Association), the Tea Exporters Association of Sri Lanka and the Sri Lanka Export Association, have all hailed the move to liberalise the shipping industry since it enables competitive pricing and better services to the entire export industry.
“By linking with global value chains in goods and services, taking advantage of the trade-investment nexus, Sri Lanka can truly fulfill its position as an economic hub of the Indian Ocean.
The Hambantota Port PPP will generate FDI, create exports and most importantly create jobs that will empower Sri Lankan youth,” he said.
SLPA
The Sri Lanka Ports Authority (SLPA) as a leading public sector institution has achieved a revenue of Rs.45.6 billion in 2017. This is a significant increase compared to 2016. The net profit after tax for 2017 was Rs.13.3 billion compared with Rs.1.03 billion achieved in 2016.
Although the state run terminals, especially the Jaya Container Terminal (JCT) of the SLPA signaled a slight drawback during the first three quarters of last year, with the efficient manoeuvre of port activities, all SLPA terminals have significantly progressed to record a positive growth of 9.2% for the 4th quarter of 2017, the trend continues through 2018.
Sustainably retaining this positive growth approach, the SLPA has recorded a total growth of 15.3% for the 1st quarter 2018.
Total growth of the Port of Colombo for the same period is 16.2%. Meanwhile, SLPA owned ports of Trincomalee and Galle have also recorded profits for the year 2017. Creating history, the Port of Colombo for the first time recorded 6.2 million container operations for the year 2017. The Port that had been ranked as the 18th Best Connectivity Port by the Drewry Port Connectivity Index, up by five places and ranked the 13th best Connectivity Port in the world in the 4th quarter 2017. According to the rankings the Port of Colombo also became the top best connectivity port in South Asia.
For its dedicated performance to uplift the position of the Port of Colombo in the world maritime map, the SLPA was awarded the Ports Authority of the Year Award by the Global Ports Forum (GPF) in 2018.
With the latest initiatives implemented by the SLPA, all sectors of port operation showed a rapid growth compared to similar periods during the past. SLPA at present has prepared a Three Year Development Plan to expedite the port sector development process in the country to further increase container volumes.