SLPA seeks to diversify transshipment business

Looks at joint international marketing plan:

By Chandani Jayatilleke

With a big increase in the number of mega-container carriers calling at the Colombo Port, the Sri Lanka Ports Authority (SLPA) is keen to have a joint international marketing effort for the harbour together with the two private terminal operators, says SLPA Chairman Dammika Ranatunga in an interview.

It also wants to ensure that the new investor in the East Container Terminal, for which preliminary bids have been called, will bring in new business, and the government has decided that the Public Utilities Commission of Sri Lanka (PUCSL) will be the port regulator.

Excerpts:

Q: What is the level of international interest in Colombo port's East Container Terminal for which the SLPA has called Expressions of Interest (EOIs) in the pre-qualification stage to build and operate the terminal?

A: We are at the EOI stage and the deadline has been extended to September 22. This was the second extension. Bidders will not be known until the bids are closed.

However, judging by interest shown by key players in the field, there are very encouraging signs of stiff competition among them.

The majority, we believe, is from the subcontinent. The government has given us a directive to consider a strategic partner from the subcontinent who has more than a 20 percent share. However, it is not mandatory to qualify at this stage.

Once they appoint a committee to proceed with the process, the committee will go through the requirements.

Q: As the chairman of the SLPA, what is your view on choosing an investor?

A: The SLPA should get an investor who can bring new business; that is crucial for us. We already have three terminals at the port of which two terminals (CICT and SAGT) are run by the private sector which own the majority shares. The other terminal is operated by SLPA.

At present the three terminals are competing and my view is that it is not a healthy situation. I believe we need to do a concerted marketing plan, putting our strengths together and get more volumes in.

We have had preliminary discussions. I have spoken to the two CEOs. We should market the Colombo port as 'one port' and sell everyone's strengths. We have deep draft terminals and a good feeder vessel network.

There's enough business for everyone to grow. We are already a competitive and an established transshipment port. We need to let the world know who we are, together.

We do not want an investor to come in and take a share of the business we already have.

When you develop a new terminal the tendency in the past was to take away some of the business the other terminals had.

We want new businesses in the East Terminal. There was a 160% growth in bigger vessels coming to the Colombo port last year.

Q: What was the overall growth in the first half of this year?

A. In the first six months of this year, the Colombo port is the only port which showed a double digit growth - a little over 11% compared with global ports.

It's a good sign, given the fact that the industry is not performing so well at present.

Q: How can the Colombo Port reduce dependence on a few key markets such as India to generate container volume growth, especially since India is expanding its own container ports?

A: We are not depending on India or any other country. But India does more volumes with us and we need each other for this business.

That is the reason why we are looking at other markets such as Bangladesh, Myanmar, the East Coast of Africa, Pakistan and the Gulf.

To encourage transshipment we offer rebates on stevedorage for east coast of India cargo that includes Bangladesh and Myanmar. We also provide a lot of value addition such as Multi Country Consolidation, entrepot and bonded cargo handling.

On the other hand, India has lot of plans to develop ports around the country.

It has lot of potential to grow and every country prefers direct shipping for its export-import cargo. Indian ports should develop because the cargo should get in and out of India. We also have a strategy to develop our terminals simultaneously.

We also need to look at other businesses within the industry. Our services need to be improved and we are working on a plan now.

The Colombo port is an international transshipment hub with an excellent feeder network, with a deep water harbour with two more terminals to be built within the new South Harbour with 4.8 million 20-foot equivalent container capacity.

Our tariffs are very competitive and I believe it will not be easy to match our tariffs by any new comer.

We are a 24-hour port which is an advantage. Many other ports do not have this advantage - as they have to stop business sometimes due to high tide.

Q: What are the plans for the Colombo North port? Is it for containers or other business?

A: The North port is currently at a conceptual stage. The SLPA conducted a study on future development options in 1996 and identified the area north of Port of Colombo has potential for containers.

Looking at the trends of the container business, while the capacity created with the completion of the Colombo Port Expansion Project will fulfill the capacity requirement in the near future. There are strong prospects for North Port development.

Q. How do you hope to develop the Trincomalee port where Singapore's Urbana is drawing up an urban master plan?

A: The port of Trincomalee commands a large natural and a wide body of sheltered water. The SLPA has plans for Trincomalee to give a considerable contribution through services and investments to improve the living standards of the Eastern community and give more benefits to the economy of the country.

The SLPA hopes to develop the port of Trincomalee in accordance with the government's 'Megapolis' plan and also the national port master plan developed by the ADB.

Q: What are the development plans for Galle, Hambantota and Kankesanturai (KKS) ports?

A: Galle has been identified as a leisure port, apart from being an industrial port. There are plans for building marinas and two investors have shown interest in it.

The KKS port has the potential to be developed as a regional port to serve the Northern and North Central provinces.The Indian government has completed the dredging work and wreck removal. Further the Indian government has expressed its willingness to give a credit line for the development of this port.

The Port of KKS has potential in the import of raw materials for the cement manufacturing industry as well as cement powder imports and exports of consumables.

Under phase 1 and 2 of the Hambantota Port development project, massive infrastructure facilities have been developed with the financial assistance of the Chinese government. In spite of the lack of business there, we are making every effort to bring in more business to the port and earn revenue.

Q: When will an independent port regulator be set up to regulate the different State and private sector port terminals, especially since more private terminals are planned?

A: We submitted a Cabinet memorandum on March 28, 2016 to the Cabinet of Ministers and it was referred to the Committee of Economic Management for recommendations. They decided to let Public Utilities Commission of Sri Lanka become the overall regulator.

Q: What is the delay in the e-commerce initiative? When will we see all documentation for import/export and port entry/exit and cargo tracking go digital as is done in modern ports?

A: There is no delay in deploying our planned ICT initiatives as our systems in SLPA do already offer many of the trending e-commerce application features to our clientele.

For example many important areas in the export/import cargo modules are already using electronic transfers such as e-release with Customs, Electronic Manifest, electronic services order request facility and EDI messaging.

But to implement a full-fledged e-commerce application, our systems need to be linked with all the other stakeholders such as the Customs, banks, shipping agents, and container operators.

In industrial technology, this is called the Port Community System where seamless integration with a Single Window concept to share information between all stakeholders in our business is achieved and this is what we are targeting. We have already commenced deploying initial stages of the above initiatives and these features would be implemented in phases in the future.