Shipping trade goes through tough time

By Lalin Fernandopulle

The global shipping trade is experiencing a stormy time due the current economic slowdown, affected by the EU and the Middle East crisis with a weak US market. One of the most affected trade lanes is the EU-Asia and U.S Asia trade and freight rates have been very volatile with lower volumes and more ship capacity in the sector, said Shippers’ Academy CEO, Rohan Masakorala.

International maritime experts have forecast a challenging time for the global shipping trade owing to the slump in the US and EU economies which is adversely affecting the maritime trade.

The world shipping industry is also faced with challenges such as capacity oversupply which hounds the sector. Shipping associations have forecast a four percent GDP growth this year, similar to 2011.

Masakorala said that due to the global economic downturn shippers face many challenges such as sudden rate increases which in most cases are not transparent and does not reflect market conditions. As a result shippers face difficulties in establishing stable freight contracts.

“Already the industry is hit with high fuel surcharges and will have pricing problems across the board to manufacturers, retailers and those in the supply chain”, he said.

Regional competition will keep the demand for better services and competitive pricing on top of the agenda in the port business. Productivity is the key factor to overcome this situation. Sri Lanka has to do more to attract business to our ports. The slow growth of the Indian economy too can affect Sri Lanka's transshipment volumes.

However, with the acceleration of port development in the country trade volumes are expected to grow.

The expansion of the Colombo South harbour, the development of the Hambantota port and many similar projects in the offing will be a boost to the shipping trade, experts believe.

Sri Lanka's shipping trade volume is around four million TEUs throughput per annum and around 70-75 percent is transshipment trade. Growth in transshipment trade has been slow but shippers are confident that with the completion of the new South harbour large vessels will call at the port and attract more revenue for the industry.

“The Colombo port is restricted in handling a large number of ships until the South Harbour Terminals are in operation. Port congestion will ease when the Colombo and Hambantota ports add capacity by around 2013”, Masakorala said.“The role of the Shippers’ Academy is to provide training and improve human capital capabilities. Creating a knowledgeable workforce will always add to productivity and increase competitiveness. The Shippers’ Academy will develop course to suit the needs of businesses in international trade”, Masakorala said.

The Shippers’ Academy was launched in January 2011.