'Ceylon Shipping Corp will regain its past glory'

By Ranil Wijayapala

Admiral Jayanath Colombage the former Commander of the Sri Lanka Navy is now functioning as the Chairman of Ceylon Shipping Corporation Ltd considered to be the national shipping carrier.

Arrival of the first crude oil vessel chartered by the Ceylon Shipping Corporation Ltd

Accomplishing the objective of President Mahinda Rajapaksa to revive the shipping industry, the Ceylon Shipping Corporation has now ventured into the crude oil and coal transportation to the country and has ordered two vessels from China to its own fleet of ships. The Sunday Observer had the following interview with Admiral Jayanath Colombage to find out about the future prospects of the Ceylon Shipping Corporation Ltd, as the national carrier in shipping.

Q: As the Chairman of the Ceylon Shipping Corporation Ltd you have undertaken a civil job compared to the responsibilities you have held as Navy officer and later as the Commander of the Sri Lanka Navy. How do you adjust to this position?

A: I was appointed the Acting Chairman of the Ceylon Shipping Corporation Ltd in October 2013 when I was the Commander of the Navy. When I retired from the Navy in 2013 the President wanted me to continue with the Chairmanship of the Ceylon Shipping Corporation Ltd because we were only seeing the results of the plans one year after I assumed office. So I did not find it difficult, because the President gave me another responsibility as Presidential Advisor on Maritime and Naval Hub.

Admiral Jayanath Colombage

I am quite happy to be here although I was not a business person. I was totally a military person and was not dealing with profit making ventures despite starting in the hotel industry when I was the Navy Commander. But I did not deal with profit and losses in the business sense. So this appointment became a challenge to me to come out from the Sri Lanka Navy and to assume full time responsibility as the Chairman of the Shipping Corporation Ltd.

My first exposure to commercial maritime aspect on the port operations as first senior Naval officer for harbour security for the Port of Colombo in the year 2000 and my involvement in preparing port facility assessment and port security plan for Sri Lanka to comply with the new security regime introduced in 2004 to the international ship and port security facility code when I was the Deputy Area Commander in the East, also helped me take up this challenge effectively.

I am still the Chairman of the Nautical Institute which consists of maritime professionals. That also gave me some additional inputs. With all these background knowledge I was appointed the Chairman of the Ceylon Shipping Corporation. It was a challenge and I accepted the challenge. I have been able to succeed in many ways and we can do better in the future.

Vision

Q: What was the requirement, according to your opinion, for the President to appoint you as the Chairman of the Ceylon Shipping Corporation?

A: I was appointed the Acting Chairman of the Ceylon Shipping Corporation Ltd in October 2013 when I was the commander of the Navy. At that time the requirement was to achieve Presidents vision to make Sri Lanka a maritime hub and to be the Wonder of Asia. He said we were not on the right track in many spheres though we were ahead in the port development sector. To make Sri Lanka a maritime hub there are many other sectors to be developed. At that time people were talking about becoming a Naval hub.

But, with the Secretary of Defence I worked hard to change it to a maritime hub. I believe that President had the trust and the confidence to revive the shipping aspect also. But how can we become a maritime hub when we don't have a single ship with us.

Like SriLankan Airline is the national carrier for aviation, the Shipping Corporation Ltd was considered the national carrier in shipping. Now we have a national carrier without a single ship. So, President Rajapaksa wanted me to take over and revive the shipping industry.

Q: What were the milestones the shipping sector achieved during the short period of time you assumed as the Chairman of the Ceylon Shipping Corporation Ltd?

A: Actually until 2013 the word Shipping was not in our Ministry portfolio. It was only the Ministry of Ports and Highways. Then the President immediately introduced a gazette notification to include the shipping subject also into the Ministry. Earlier the Ministry of Shipping was there. That means someone has forgotten the word shipping in the country and now that has been reintroduced.

Act

Q: According to the Ceylon Shipping Corporation Act there are so many functions entrusted with it when it was first formed in the 1970s. What are the current functions the Corporation has undertaken?

A: The Shipping Corporation Act came into effect in 1971. At that time we created a huge fleet of general cargo ships. There were eight ships under the Shipping Corporation at that time and they were running between London, Europe, Middle East and the Far East.

That was the best shipping company then. People still say that foreign earningwise the Shipping Corporation came first. The charter of the Shipping Corporation is still the same although it is not active.

If we are to list it out ship owning, management and operation and transporting all types of cargo is handled by us. We have the benefit of transporting the Government cargo, especially for the Foreign Missions when the Ambassadors are on transfers and when the diplomatic missions and High Commissions need their cargo to be transported.

Military also give their cargo for the government owned Shipping Corporation. We raise a lot of money through that and we also handle cargo as shipping agents for foreign ships coming into our place.

We also clear cargo through the customs and through the port. Lately we have embarked on some additional ventures such as transportation of coal and transporting of crude oil requirement of the country.

Q: As you said the Ceylon Shipping Corporation had its golden era in the 1970s and in early 1980s. How do you compare that period with the present situation of the Ceylon Shipping Corporation?

A: The golden era of the Shipping Corporation they said was in the latter part of 1970s and in early 1980s. There, we operated a fleet of general cargo ships. Then the general cargo carrying ships were going out and containerised cargo system came in.

That time we ordered eight container carrying ships. We were doing a lot of movements of containers within the region and the outside the region. But then after 1990s there was gradual decline of the Shipping Corporation. In the latter part of the 1980s the shipping sector was de-regularised compared to the total monopoly the Shipping Corporation enjoyed earlier.

Once it was liberalised anyone could get into the industry. Shipping Corporation being a typical government organisation would have been quite difficult for them to compete with the mushrooming private shipping companies. Eruption of the war was not really allowing the government to pump in money for the Shipping Corporation to purchase new ships.

Some of the Shipping Corporation ships were used to transport the humanitarian relief supplies to the North and to the war affected areas. Ships such as Lanka Muditha, Lanka Mahapola were involved in this process. The Shipping Corporation was running those ships at that time but when it came to about 2012 the shipping corporation did not have a single operational ship. Now, we want to have ships. How can we become the national carrier without ships.

Q: What have you done to revive the operations of the Ceylon Shipping Corporation Ltd to regain that past glory?

A: To achieve this, I have secured the exclusive right to transport the crude and coal to Sri Lanka through a Cabinet paper since it is very difficult for us to get into the container business at the moment. It is difficult to compete with the main line operators which are having huge ships and network internationally. But we are looking at some feeder operations in the region.

Since we have got the exclusive right to transport the coal and crude oil I have already placed the order for two 63000 Dead Weight Tonnage ships from Avic Ship Yard in China. That project is going on well. We are purchasing these two ships through a loan we have taken from People's Bank. The cost of both ships is going to be 70 million US dollars.

We did the steel cutting ceremony for the two ships in Wehai, China. Now with our supervisors and the classification society supervisors and the ship yard the welding work is going on. We hope the key laying that is to assemble the parts of the ship will start January 2015. We hope by the end of 2015 these two ships, the bulk carriers will be in service with the Sri Lanka Shipping Corporation Ltd. Those ships may be used for transporting coal, may be from Indonesia, Russia, South Africa, Australia or wherever the country we purchase coal from. Until these ships are delivered, we have entered into an agreement with some shipping companies to transport coal and crude oil basically based on a business model.

Already this month a ship carrying 90,000 metric tons of crude oil arrived in MT Gemini. She came and discharged the crude oil and sailed back. Now we are expecting the second ship and the coal ships are now coming into Norochcholai. We have already completed discharging two coal ships.

That will continue to come until April next year. There is an interim arrangement for that. My next target is to get a tanker. As we are having assured business we need crude oil on regular basis throughout the year.

Port

Q: How many ships and tankers does the Ceylon Shipping Corporation need if it is to carry on the transportation of crude oil and coal required for the country with the exclusive right the Corporation is enjoying in this business?

A: The annual crude oil requirement is about two million metric tons. That can be done with two tankers. Because when one tanker is loading in the port of origin the other tanker can unload here in Sri Lanka. So a minimum two tankers can fulfill that task.

The coal requirement is about 2 million metric tons per year. We can't do that with two ships because coal has to come from Russia, Indonesia or from South Africa. We need to have 12 to 15 ships to do that. We will have to do two trips per season.

Totally we expect about 40 shipments for coal. When the Sampur Coal Power Plantation is in operation the requirement of coal may be doubled and we will require coal throughout the year to the North Western coast at Norochcholai and to the East coast in Trincomalee. The requirement will be more. So by having two ships is not enough. But we have to start from somewhere. We cannot buy 10 ships at once and it is not practical also.

Our final objective is to have a sizeable Sri Lankan-flag-carrying fleet of ships to carry crude oil and coal. We are also thinking of other services and regional connectivity in the SAARC countries.

Advantages

Q: What other advantages can we enjoy by having our own ships for these operations?

A: If we have our own tankers and ships we can fly our Sri Lankan flag. The entire crew can be Sri Lankan and we can provide training facilities for future sea farers. One important thing about the two ships that we are building in China is that we have an additional deck basically for trainees. In Sri Lanka many of the senior maritime professionals are cadets of Ceylon Shipping Corporation.

They have started their career either as a cadet or a management trainee in the Ceylon Shipping Corporation and they are now holding very high positions.

Unfortunately there is a breakdown on that system, because we did not have enough ships to train the young deck and engineering cadets or seafarers. Now there is a vacuum.

With these three ships we have chartered on a business model and we have put a condition that 115 of our young sea farers will be taken for deck training, because they as per the International Maritime Organisation Standards, they have to complete theoretical base training on shore and also a practical on-the-job-training at sea.

When the ships are not there our young people lost that opportunity. Our task is basically to cater to creating a bank of future seafarers since they can earn huge foreign exchange to the country compared to the unskilled housemaids we send to middle East countries.

At this moment there are about 1,000 young men waiting for sea training. So we hope to create that as a major task because when you have your own career you can do things. But other people will not give us the space and money to train our seafarers. We need our own ships to train our sea farers.

Q: How is the financial situation of the Ceylon Shipping Corporation at present?

A: The shipping Corporation Financial Situation is very healthy. In the year 2013 we have shown 150 percent growth in our revenue. After 28 years in the beginning of 2014 we gave Rs. 10 million to the Treasury. That is an indication we are doing extremely well. But I am not blaming anyone who ran this institution. Nobody paid attention to the Shipping Corporation. It was sidelined and it was given practically a step-motherly treatment. Natuarally it was not functioning. Now everybody is focusing their attention towards this institution.

Q: Does that mean that Ceylon Shipping Corporation Ltd is now a profit making institution?

A: This is really a profit making venture. We have made Rs.800 million net profit in the year 2014.

Q: What are the other plans the Shipping Corporation has to expand its services?

A: We are thinking of connecting our ports within the region such as Dhaka, Chittagong, Kolkata, Chennai, Karachi and Colombo to bring in their transshipments to Colombo and to transfer them to main line operators in the port of Colombo. The port of Colombo, the Colombo South new port is the best port in the region. It is 90 metres deep and is having a huge capacity to handle containers. Due to this more big ships are coming to Colombo. We want to utilise that facility to attract more business to the country. So we need to have connectivity between our own ports in the region. We have already discussed this with the Pakistan Merchant Shipping Corporation and Bangladesh Shipping Corporation. We want to start discussions with Maldives also to have regional connectivity.

Q: Don't you have an idea to commence passenger ship service?

A: On and off there was a passenger ferry service between Thalai Mannar and Rameshwaran and subsequently one between Kurikadduwan and Colombo. Thalai Mannar ferry service has been stopped due to the escalation of war. Colombo Tutikorin ferry service also interrupted because of some business problem. But there is a possibility to restart it and we have not given up that idea. With the opening of the train service to Thalai Mannar we can again start the ferry service to Rameshwaran connecting the two countries. If that happens, the Shipping Corporation will play a role in that.

Q: How does the Government benefit from giving exclusive right of transporting coal and crude oil to a government owned institution?

A: After Shipping Corporation started transporting coal the freight rate per metric ton has come down from five dollars. You have to multiply that five into two million metric tons of coal imported to the country annually. That is a saving for the country. Similarly, the freight rate for the crude oil has come down by 1.5 US dollars per one metric ton of crude oil. That also has to be multiplied by two million metric tons per year. That is the saving for the country.

Q: So what are the targets you are trying to achieve to make Ceylon Shipping Corporation a national carrier for shipping?

A: My target is to make the Ceylon Shipping Corporation Ltd a profit making, recognizable, sizeable and respectable organisation. My objective is to bring back the lost glory of the Shipping Corporation. We also plan to have at least 20 ships and tankers by the year 2020. It takes time to build ships and we have six years to achieve that target. I think we are not far away from that objective. We also want to be the maritime hub contributing to the development of the country.