- CASA suggests open tender enabling a beneficial consortium to avoid the geo political tussle in future development
The Ceylon Association of Shipping Agents (CASA) is the ‘voice’ of the shipping industry in Sri Lanka. The prestigious association consists of over 130 member companies, who represent every global shipping line and the regional shipping companies. Every export cargo or import cargo container would be shipped out or brought in to Sri Lanka by one of its member companies which represents the shipping lines. In this context CASA’s membership works very closely with all exporters and importers and other stakeholders in the shipping industry. In this interview CASA shares its views on the development of new terminals in the Colombo Port.
Q: How has the delay in operationalising ECT impacted the local shipping trade?
The impact of the delay has been colossal in terms of the loss of opportunity and the upward growth trajectory of the Port. From a shipping line’s perspective, they look at the additional capacities that are coming on stream in ports, so they can estimate the future capacities and plan their services accordingly, so as a result of ECT remaining idle for a period of five years, we may have lost many lines which could have called Colombo. Currently, the Port of Colombo has almost reached its capacity and is facing congestion.
In quantifying the volumes according to Port statistics from 2017 to 2018, the throughput increased by nearly 13.5% as capacity was available with CICT being in full operation. This enabled the volume handled in the Port of Colombo to exceed the 7 million TEUs in 2018.
Without any capacity being introduced in 2019, the volumes increased only marginally. The volume increase between 2018 and 2019 was only 2.6% due to the port of Colombo reaching saturation point. In 2019 the Port could only handle 7.2 million TEUs. This is where we are stuck now but if they had brought ECT in we could have expected a similar kind of increase as seen in 2018 which was 10-13%. Thereafter, we see a drastic drop in 2020 due to the COVID situation, capacity crunch and the delays faced.
The shipping lines we represent would definitely like to bring more volume to Colombo. But we are unable to do so as we do not have adequate berths with deep draught. If ECT was ready, many of the shipping lines which have larger ships would have called at Colombo but regrettably we are unable to cater to their request due to limited deep draught berths. It is only Colombo International Container Terminals (CICT) who has the deep draught berth where the larger vessels could berth. ECT could have increased the capacity manifold, surmise it to say, the local trade has lost out in terms of opportunity cost, volume that could have been handled, knock on income, additional services and all the economic benefits that could have been accrued to the country as a result of more ships being served.
Q: What should be the next move in order to overcome this stalemate?
We, as the key stake holders in the industry, have been stressing on the importance of the terminal becoming fully operational in the shortest possible time due to capacity constraints which is affecting the progress of the Colombo Port in maximising its full potential as the transshipment hub of this region. With the recent events unfolding and the decision taken by the government to continue to own and operate ECT as a 100% SLPA terminal we are relieved that development can now be fast tracked.
With immediate effect SLPA needs to procure Post-panamax ship to shore Gantry cranes and Rubber Tired Gantries (RTGs) through a fast-track procurement process. SLPA should place the order before 31 March 2021 for delivery before the end of the first quarter of 2022, fast-track construction of quay up to 600m, dredge adjacent quay wall area to 18m + and expand yard area. All of these measures above should take place concurrently.
Urgently operationalising ECT ensures additional capacity to the Port of Colombo which is now congested as the current capacity is about 7.4 million TEUs (handled in 2019 – 7.2 million TEUs). A further delay means that the current volume is in danger of moving to Indian/ or other regional ports. Urgently addressing this matter enables SLPA to regain the lost volume due to the congestion caused by COVID-19 pandemic (handled in 2019 – 7.2. million TEUs against 2020 – 6.9 million TEUs). It will also ensure that SLPA has berths to handle deep-draught large vessels, maintain Colombo’s role as the transshipment hub of the Indian Sub-Continent and create other opportunities for the shipping industry (bunkering, crew transfers, ship supplies, etc.)
In addition, the implementation of online clearance and cargo handling processes, promoting ‘ease of doing business’ can be a vital selling point for SLPA. Minimise and streamline Customs processes while benchmarking best practices of top hub ports such as Singapore, Dubai and Port Klang.
SLPA should also optimise operations with the existing facilities. The crane productivity needs to be increased to 25 moves per hour with current cranes, employ dedicated yard equipment and Terminal Operations System (TOS), procuring additional dedicated Prime-movers for quay-side and yard operations or outsource same, improve the speed of ITT movement at ECT as currently severe delays are experienced (at least 2 or more operators will bring in competition and improve service delivery) and the setting up of a central operations centre to coordinate all operations between terminals and pilot station.
The fullest support of all CASA members is guaranteed in operationalising the terminal as speedily as possible. We are willing to liaise with SLPA to canvass for additional volume to be handled at ECT with shipping lines. Those who have the expertise in shipping and port management would be willing to serve on a committee in consultative capacity which could be set up with the Ministry and SLPA Management.
Fast tracking ECT also means the opportunity to garner new business and focus on creating customer centricity. To regain confidence, it will be of utmost importance to contract long term support of the shipping lines to commence moving volumes through ECT and POC. Moreover, it is of utmost importance to set up a strong marketing team to meet with the lines and negotiate on guaranteed berthing, productivity and tariff matters, commence online dialogue with shipping lines through agents, implement ‘Free Terminal’ (free of customs intervention) concept in ECT which will encourage lines to bring in large quantities of a cargo for storage and re-handling in the terminal on transshipment status.
Q: What is CASA’s suggestion for the operationalising of West Container Terminal without embroiling it in a controversy similar to ECT?
While we expedite the operations within ECT, it is imperative that we explore further possibilities for growth through WCT. Unlike the controversial procrastination in operating ECT due to it being used as a pawn in a political power play with the idea of a PPP in 2016, operationalising in 2018, trilateral MoC in 2019 and the Government takeover in 2019 which has only resulted in excessive disadvantages and lost opportunities, WCT can be propelled further and faster by floating an EOI which gives a more transparent and broader opportunity such as a consortium with foreign shipping lines and International Terminal Operators. This could result in more independent, high volume, ship to ship relay operations which are taking place in Singapore and Port Klang among others.
The success of a terminal depends on the volume it can attract. Floating a tender is a measure to nullify the geo political tussle and enable an open playing field for the shipping lines, terminal operators and other interested parties to express their interest under the terms and conditions stipulated by SLPA which will prove to be beneficial for the shipping trade and Sri Lanka.