Sri Lanka raises port charges to the dismay of trade

 The Sri Lanka Ports Authority (SLPA) has substantially raised its port charges and other related tariffs effective from January 1, 2019, a move that has taken importers, exporters and other key stakeholders by surprise, as it will drive up costs for manufacturers and consumers alike.

SLPA has more than doubled some of the tariffs and reduced the concessions available on demurrage among others in what could be termed as an overhaul in the tariff structure, Mirror Business reliably learns.For instance, ports wharfage tariff for export containers and import containers and handling of their LCL cargo or less than container loan cargo, has been exorbitantly increased.

“In fact the tariff increase was so intense in US dollar terms; wharfage tariff has been more than doubled,” a freight forwarder told Mirror Business on the condition
of anonymity.

According to him, the demurrage-free times have been reduced too. The twenty-foot rate has been increased to US $ 35 from US $ 16, and forty-foot price to US $ 70 from US $ 32.

In addition, the LCL charges have been abolished and a box rate has been introduced— which is an increase with a new mechanism, making small exporters and importers indirectly vulnerable for a greater increase than stipulated.

The new Port and Shipping Minister Sagala Ratnayake is said to be unaware of the development as the plans to increase port charges were believed to have been hatched during the tenure of Ratnayake’s predecessor, Mahinda Samarasinghe.

SLPA made headlines with the dawn of the New Year last week, for its handling of seven million containers— the largest volume it handled in its entire history, up from six million in 2017.

“What is the logic behind a tariff hike at a time when the SLPA is already making great strides in revenues through massive transshipment volumes and when it is relieved from the debt burden of the Hambantota port?”, a trader questioned.

He also opined that what the SLPA has done is in contrary to the government’s much touted trade facilitation programme. Last week, the Export Development Board (EDB) spelled out its plans to further uplift the country’s exporter community. The minister in-charge of Development Strategies and International Trade, Malik Samarawickrama, said the country needs to bring down the barriers to trade and should be more outward-oriented.

An exporter Mirror Business talked to said, the SLPA as a trade facilitation institution, should have reduced the charges to boost exports and helped the government to reduce cost of living of the consumers, specially at a time where transshipments are growing exponentially.

He further pointed out that a hike in charges with volume increases is not good management, and what is required is a reduction in unnecessary costs and elimination of delays to become more efficient to increase SLPA’s bottom-line performance.

Meanwhile, the hike in charges could be a double whammy for traders in the textile manufacturing sector, as they import a large volume of intermediary goods to be used in textile manufacturing.

One trader in the textile manufacturing industry claimed that the tariff revision is a clear violation of the freight payment gazette issued by the government.
He pointed out that as these tariffs are denominated in dollar terms, SLPA becomes the only beneficiary in the supply chain, which benefits from the currency depreciation.

Industry sources said that the new Ports and Shipping Minister Sagala Ratnayake and Prime Minister Ranil Wickremesinghe have been notified of the development.

“We expect a quick resolution from the minister, PM and the SLPA as it is an unjustified increase and a process change without understanding the repercussions and the country’s interest at a crucial time. Whoever is responsible for this should be questioned for such unprofessional behavior,” insisted a trader.