brand logo

Economic crisis: Port operations hindered only by capacity constraints

05 Jun 2022

  • Port operations ongoing, freight charge rise a global issue: Masakorala
  • Speculation and misinformation affecting SL’s image and recovery
  • Lack of capacity at Colombo Port affecting growth potential
  • Business as usual: SLPA
By Tanya Shan Contrary to many local and international news reports on the Colombo Port’s operations being hindered by the prevailing economic crisis, the maritime industry of Sri Lanka says that port operations are being carried out as usual.  Maritime shipping expert and Shippers’ Academy Colombo Chief Executive Officer (CEO) Rohan Masakorala downplayed the concerns raised in news reports, telling The Sunday Morning that there was only a ‘small’ issue due to the incidents that unfolded around the country on 9 and 10 May. .  “The 9 May incidents had a small impact on the country’s port operations. However, with regard to the crisis, it does not have a major impact on port operations. The maritime industry is a dollar earner. The reports that were published were merely due to some wrong communication. Whatever was claimed in those reports is not true,” Masakorala stated. Several news reports published over the past two weeks claimed that ships were being diverted to neighbouring ports of Sri Lanka due to the economic crisis in Sri Lanka. Further, these claims noted that the mainline operators were now looking to ports in India, Singapore, and Port Klang to avoid Colombo. Following the news reports, the maritime bodies along with the Sri Lanka Ports Authority (SLPA) refuted the rumours and assured that services of global shipping lines, container operators, and conventional operations were being carried out without interruption. According to them, the continued and unhindered operations at the port are also receiving attention at the highest level of the Government. Accordingly, inter-terminal trucking between terminals and transport for logistics services to move domestic laden and empty containers are receiving priority. The connections for transshipment containers are going smoothly, it is learnt. Clearance of imports and export shipments are moving at desired levels, notwithstanding delays in the clearance of some import cargoes due to a shortage of foreign currency. “Port operations are going on as usual because exporters are paying in dollars instead of rupees. Basically, this is a dollar-earning business. Freight payments are done in the dollar-to-dollar terms. Freight rate charges going up is a global issue. It affects any port around the world in the same way. The port is operating continuously,” Masakorala stated.  He noted that when rumours were spread around the world about Sri Lankan ports, it negatively impacted the confidence placed in the country, thereby impacting the country’s exports too.  When asked about the target set for the year, Masakorala stated that there was no target as such, adding however that they were looking at proportionate transshipment growth for the Indian subcontinent.  “Last year, India grew by about 20% in terms of transshipment and Bangladesh by nearly about 14%. Our growth was merely 4%, but ideally it should have been 18%. Our lower growth is due to the lack of capacity in the Colombo Port. We will continue to lose many chances, not because of the crisis but because of capacity constraints,” Masakorala stated. He added that large ship owners were now increasingly relying on the Colombo International Container Terminal (CICT), failing which they go to Singapore. Construction on the Colombo East Container Terminal (ECT), which has been at a standstill since 2015, commenced in January this year. The total investment for the ECT is $ 600-700 million and involves $ 200 million for civil construction, $ 20 million for terminal operating systems, $ 300 million for equipment acquisition, and $ 100 million which has already been spent on previous construction. Construction on this terminal is scheduled to end by 4 July 2024. Construction of the first 600 metres of the terminal is scheduled to be completed by 4 July 2023. Masakorala stated that the capacity constraints were expected to prevail until the ECT was developed. Meanwhile, a senior industry person told The Sunday Morning that rumours have heavily impacted the reputation of the Colombo Port and stated that such misinformation is often generated by the local industry itself without foreseeing the impact on the industry.  The Sunday Morning also spoke to SLPA Managing Director Upul Jayatissa who too assured that Colombo Port operations were being carried out as usual despite the local developments and multiple crises.  “Some vessels went to India for services and unloading cargo on 9 and 10 May due to the social unrest in Sri Lanka. It was just a temporary move to India, but it’s business as usual now,” Jayatissa stated. In terms of performance, the Port of Colombo continues to grow and figures for the first four months up to April 2022 reflect an overall growth in volumes of 100,356 TEU (4.3%) and in transshipment of 92,099 TEU (5%) over the same period of 2021 – recording steady progress while continuing to play a pivotal role as a regional transshipment hub with strategic intent. The Port of Colombo (POC), being identified as an essential service, catering to vital transshipment, exports, imports, and related logistics services, has received and is assured of an uninterrupted supply of electricity and fuel to maintain the demand required. The Colombo Port is a rapidly-growing maritime hub of the South Asian region. Cargo originating from and destined for Europe, East and South Asia, the Persian Gulf, and East Africa is connected through the Colombo Port.  The Colombo Port is primarily a container port. The original port had a harbour area of 184 hectares. In 2008, the South Harbour area (285 hectares) was developed to accommodate deep-water berths and the latest generation of mainline vessels. The harbour is served by a two-way channel with an initial depth of 20 m and a width of 570 m. In addition to the container terminals in the original port area, SLPA planned to develop three terminals (each having a capacity of 2.4 million TEUs) in the South Harbour, the first of which was built and in operation on a Build-Operate-Transfer (BOT) basis by CICT, a joint venture company of China Merchants Holding (International) Co. Ltd and SLPA. Meanwhile, World Bank and S&P Global Market Intelligence in their recently released report on ‘Transport Global Practice – The Container Port Performance Index 2021’ ranked the Colombo Port as the most efficient port in South Asia and the Indian subcontinent, third in the Indian Ocean rim and 22nd among 370 ports globally.


More News..