By Sugeeswara Senadhira/Daily News
Colombo, September 18: Maritime trade has been the lifeblood of the modern global economy, and Sri Lanka, with its close proximity to the main East West trade lane, has immensely benefited from its geographic location. The Port of Colombo recorded a throughput of 7.2 million TEUS in 2019. However, the bitter truth is that Sri Lanka will have to be highly competitive and grow further if the country wants to maintain its supreme position as the most important trading hub in South Asia and it simply cannot rely only on the advantage of its geographic location. In other words we need to build capacity.
This was emphasized by President Gotabaya Rajapaksa when he discussed the future activities of the State Ministry of Warehouse Facilities, Container Yards, Port Supply Facilities and Boat and Ship Building Industry Development on Tuesday (September 15). He said that Sri Lanka can use its unique location advantage to become one of the world’s leading maritime hubs. Pointing out that the goal could be achieved speedily by developing our port facilities by emulating the world’s most advanced ports, he emphasized the need to develop our ports to a higher level to make them capable of attracting world’s largest cargo ships each with a capacity of 24,000 containers.
To enhance our port capacity, the development of the Eastern and Western Terminals of Colombo Port should be accelerated, he said. Further the port system should be developed to cater to the needs of international vessels plying close to the country and in parallel to these initiatives ports in Colombo, Galle, Trincomalee, Kankesanthurai and Oluvil should be developed.
During the discussion, special attention was paid to upgrading the reshipment handling capacity, offering warehouse facilities and container terminals as well as supply facilities of international standard. Construction of new warehouse facilities in areas such as Ratmalana, Peliyagoda and Veyangoda was discussed.
The government should intervene to construct fuel storage tanks and supply fuel to vessels. The President authorized the construction of a docking bay in Beruwala to facilitate the launch of large boats into the sea. “It is necessary to expand manufacturing, repairs and maintenance of ships and boats aiming at the global market. The expansion of facilities to exchange naval staff centering the main ports is also important”, President emphasized.
Sri Lanka is strategically located at the center of the Indian Ocean, roughly 10 nautical miles off the traditional East-West maritime trade route. The region sees some 60,000 ships passing through annually. A recent survey revealed that in 2018, Sri Lanka accounted for 24% of container traffic in the South Asian region and typically grew faster than the regional average. Much of this success is attributed to the performance of Colombo Port. Ranking 24th on the Lloyds List in 2019, Colombo Port is a significant player in the region, acting as a major trans-shipment hub connecting to India and other countries.
All the experts were of the view that in order to mitigate port capacity, constraints at Colombo Port, planned port developments including the delayed East Terminal project, should be taken up. A recent research publication stated that private sector-oriented solution like forming a public-private-partnership, through a competitive tendering process with a multilateral development bank playing an honest broker role could be one way to approach this issue. Whatever solution is ultimately adopted, the best possible financial terms for Sri Lanka should be ensured as Colombo Port is a strategic national asset while considering the sensitivities of the neighborhood.
The research paper said that seen in purely commercial terms, Sri Lanka’s trans-shipment trade is heavily dependent on the Indian market and such trade seems at risk. Geopolitical concerns in Indian policy circles have prompted investment to upgrade major Indian ports through the Sagarmala Initiative and a planned trans-ahipment port in the Andaman and Nicobar Islands.
The Eastern Terminal of the Colombo Port was inactive for five years since 2015 due to mismanagement and poor decision making, Ports and Shipping Minister Rohitha Abeygunawardena said. “When we handed over the Eastern Terminal, all its work had been completed. As soon as the Government changed, it decided to cancel the order for importing cranes for this terminal. Due to this poor decision, the Eastern Terminal ended up being inactive due for lack of cranes during the last four and a half years. This is a humongous terminal that could accommodate any large international vessel,” he noted.
Last week, the Ceylon Association of Shipping Agents (CASA) had warned that Colombo’s status as a maritime hub is under threat due to the failure to expedite capacity expansion and to improve ease of business. Port development moves by neighboring India is also a threat. “If we are to remain competitive and grow further we just cannot only rely on our geographic location. We need to build capacity,” CASA Chairman Iqram Cuttilan said.
“As the shipping industry, we are extremely concerned over the undue delay in operationalizing East Container Terminal. Despite 450 m of quay length of East Terminal having been built, the terminal is not being made use for the purpose it was built. It is very unfortunate that this facility has been lying idle for five years due to indecisiveness,” Cuttilan pointed out at the CASA Annual General Meeting last week. He expressed the hope that the concerned Minister under the leadership of President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, will fast-track port development.
“The need of hour is to operationalize ECT immediately so that we don’t lose out our competitive advantage of our geographic location. We as the industry are requesting you to fast-track the operationalizing of ECT as well as commence development of West Terminal if Colombo is to continue as the transshipment and maritime hub. Any delays in operating ECT will affect Colombo’s position of being the TS hub of the Indian Sub-Continent,” he said.
The Indian Government is developing deep water ports which are going to be a threat to Colombo. The Port of Vizhinjam and the ambitious $ 1 billion project in Nicobar Islands will directly compete with Colombo. Unless we continue adding deep draft capacity in Colombo, we are going to be the losers. The fallout of this will be that the service strings which have mega vessels will not call at Colombo which will result in stagnation of volume growth in Colombo. Our importers and exporters will not be able to secure space for their cargoes as well as enjoy the competitive freight rates.
President Gotabaya has appointed a five-member committee to examine and report on the concerns about the development of Jaya Container Terminal (JCT) and the East Container Terminal (ECT) of the Colombo Port. Regarding the ECT project, the committee will look into the: “Financial implications and cost-benefit analysis of ad-hoc decisions taken by Sri Lanka Ports Authority (SLPA), Line Ministry and the Government; Recommend the way forward to develop the above mentioned two terminals to get the maximum benefits for Sri Lanka for development in Trade, Shipping and both in domestic and foreign investments.”
During the discussion on Tuesday, it was stressed that Sri Lanka, being a strategic trading nation, should also push key policy measures which will not only aid the post COVID-19 recovery process, but also address the growing maritime competition in the region. At the national level, the ports will have to be streamlined to minimize interference with carriers and ensure swift unloading and loading to ensure quick departures, invest in port modernisation, upgrade to world class customs/trade facilitation systems, and better link into global shipping networks.
As President Rajapaksa pointed out, the policy guidelines have been laid down and it is for the ministers, state ministers and officials to implement them to ensure the country gains the prestigious hub status in the shortest possible time.