All at sea over mysterious shipping Gazette No. 2069/38

Shipping industry sources are baffled by a secret publication of a gazette by the Shipping Ministry on 4 May, in complete contrast and contradiction to the Government policy on liberalisation announced in the 2018 Budget proposals.

Allegedly this gazette has provided space for a cartel tariff, protecting the local shipping agents against market forces and efficiency. 

The Daily FT has obtained a copy of the letter issued by the Central Bank of Sri Lanka to the Ministry of Ports and Shipping, Merchant Shipping Division, dated 20 March, instructing them to remove its role as a regulator and to allow market forces to determine tariffs between ship owners and agents which was a condition laid way back in a 1991 gazette when shipping was partially opened.

In a surprising move the Ministry of Shipping receiving this letter from CBSL instead of removing the clause has issued a fresh gazette and included the “protectionist clause” under the preview of the Shipping Minister.

When inquired by respective policymakers, we learnt that the Ministry of Policy and Planning under the Prime Minister or the Ministry of Finance or the Cabinet were not aware of such an amended gazette reversing the very fundamental Government policy on pro-liberalisation. 

Ports Authority sources said, since 1991, even when a SLPA Port tariff was revised for cargo handling, it was mandatory that the Treasury Department of the Ministry of Finance was consulted, and the Port Board sought approval from Treasury before implementation. Many industry analysts say that this process that has happened is illegal, highhanded and arrogant.

Both ship owners and exporters should go to courts as this kind of price fixing allowed for Ceylon Association of Shipping Agents (CASA) is market manipulation and affects transhipment, manufacturers, consumers and the public at large. Another source said that this is the action of a monopoly group within CASA and that they were quite surprised that a so-called learned Minister is continuing to support such monopoly activity, violating basic free market principles. 

This in fact has happened at a time when MP Vasudeva Nanayakkara has filed action against monopoly behaviour of shipping agencies and the process is going on in courts.

This is more than evident how this lobby is throwing money and harming Sri Lanka’s interest. They say that this is a case for global competition bodies to act upon as no other open economy in shipping has such draconian controls over market pricing. These are two private party tariffs (ship owner and agents) which is now protected by a Government intervention to benefit one party who doesn’t want competition (agents) who are becoming irrelevant in today’s shipping world.

One shipping agent said that they are not for this action by the CASA, but all matters are controlled by a few at CASA and have influence over the authorities and the Minister. The export sector seems to be unaware of this move as they are the direct parties that would suffer consequences in addition to the terminal operators of port of Colombo, he said. 

It is hoped that exporters and other affected parties take up the matter to the attention of the National Economic Council, the Prime Minister’s Office and Finance Minister who is legally and ethically in charge of such decisions on imposing tariffs, etc. This action will harm Sri Lanka’s maritime image internationally as this group of agents on a private agenda is driving the country’s maritime aspects down to the bottom of the sea, he said.

Another shipping industry personality says that CASA was publishing many articles to show its importance/relevance to the public on a weekly basis but is keeping very silent and with secrecy on such important regulation change which was going to protect its interest at the cost of the public and the country. 

“They know no sensible businessmen in this country will endorse such monopolistic price fixing activity, it seems that the Director Merchant Shipping and the Shipping Ministry too are not doing their job under some influence of the agents. We hope the trade chambers and associations will take up this issue with the Government, as we too as agents feel this will harm our own interest,” he said.