Sailing Sri Lanka towards the right direction

After the end of 30 years terrorism, Sri Lanka is now on a path to developing the country to a major financial and a services hub, connecting the Indian subcontinent with the East and the West.

The opportunities for the country to become a centre of maritime activity seems to be growing day by day as the global economic activities are increasingly moving towards Asia with trade inflows and outflows growing rapidly as regional giants China and India are emerging as major economies of the world.

Over the last two and half decades, Sri Lanka has been recognised by the international shipping community as a transshipment hub in South Asia, mainly through its container services via the port of Colombo.

However, the period from early 90s to 2006, the port sector in Sri Lanka was sluggish in its growth and little policy directions were implemented to take the country towards becoming a major maritime hub.

Many in the shipping industry as well non industry personalities and the public at large have little understanding of the role of the maritime sector which is one of the major facilitators in the global supply chain. Some of the common questions that I have seen in respect to port sector in Sri Lanka are:

Why Hambantota?

It is often questioned, why Hambantota instead of Trincomalee which is considered as a natural deep draft port. It is a well-known factor in the shipping and logistics industry that in the modern context, speed is a new tool for competitiveness. For a shipping line, diverting a ship is a costly affair, and business decisions could revolve around such costs to call a port or by pass it.

Hambantota being on the edge of the ancient "ocean silk road" which is today the international shipping route for east-west cargo movement is an ideal location to service hundreds of ships as the diversion time is minimal.

At the same time, the economically poorer region has enough land resources towards the hinterland for port related activities that would attract many logistics and related services to come and anchor themselves to service the maritime sector. With the development of Hambantota port it will be just a matter of time that new businesses relating to the shipping industry will move to Sri Lanka.

This will include ship bunkering, ship supplies, ship repairs and related support services whilst providing a good stop over facility for the cruise shipping industry where Sri Lanka would be a hot spot for tourism.

Why Hambantota and Colombo?

Many also question, why embark on investing and developing two major ports, namely Hambantota and Colombo South harbour at the same time which is costing a huge investment to the government coffers. Indeed the decision to embark on multiple projects is the correct decision.

The shipping industry consists of vast areas of expertise and services and need different facilities to handle different types of ships.

Over the last one and half decades Sri Lanka has been missing many opportunities in the port sector, as timely decisions have not been made to add capacity with new infrastructure to handle the ever increasing and evolving demands of the industry whilst many Asian ports have moved ahead. As a result a considerable amount of businesses moved to regional ports.

In the global shipping industry, around 30% of goods are serviced via container ships as shown in the graph.

A majority of ocean shipping activities take place, in other types of ships which are tankers, bulk carriers, car carriers, general cargo ships, passenger ships etc. As a transshipment hub Sri Lanka did not have the facilities to service non containerised ships as necessary capacity and infrastructure was not available.

Indeed it was a prudent decision to invest on Colombo South harbour to expand containerised cargo handling capacity to meet the regional demands and at the same time plan out and execute a mega port in the southern city of Hambantota to capture new market segments of the shipping industry.

Given the development plans and the infrastructure created, Sri Lanka would be gearing itself as a country that could provide services to any type of ship without any restrictions over the coming years.

The development of the maritime sector, will not only create large amount of employment opportunities, but would be a stepping stone to become the logistics hub of South Asia and the gateway to India.

Standard of living

Citizens of Sri Lanka would certainly reap the benefits of these projects in the coming years, and the government's effort to eradicate poverty and to increase the standard of living will be supported by working towards the goal of becoming a maritime, aviation and logistics hub.

The challenge to Sri Lanka would be to have the necessary human resources to manage these infrastructure projects efficiently and effectively.

Whilst appreciating the hard work done by SLPA a word of caution is important, as end of the day businesses would look for excellence and would decide to position investments in countries where the environment is conducive for business with cost effectiveness combined with efficiency.

If Hambantota port offers service excellence it could surely be a global giant in port business.