Enhancing shipping traffic to Sri Lanka

Sri Lanka’s geographical setting attracts many networks of shipping companies which can service the other countries with the pendulum services. Generally, per day about 200 ships pass Sri Lankan waters while on average 10 ships call at Sri Lankan ports.

However, the ‘circum equatorial route,’ which is the shortest path to circumnavigate the world, is the so-called circum-equatorial route using the Panama Canal, the Strait of Gibraltar, the Suez Canal and the Strait of Malacca.

Furthermore, many ‘pendulum routes’ pass Sri Lankan waters; those are the maritime routes which involve a set of sequential port calls along a maritime range, commonly including a transoceanic service from ports in another range and structured as a continuous loop. They are almost exclusively used for container transportation with the purpose of servicing a market by balancing the number of port calls and the frequency of services as shown in the above map.

Maritime traffic will increase in 2014 too with the expansion of Suez Canal up to the level of container carriers which can carry 12,000 containers. Having all these positive impacts, Sri Lanka has the possibility of converting itself into the ‘maritime hub’ of Asia, but this has not been possible yet due to certain political, diplomatic and geopolitical reasons, apart from the maritime and port efficiency.

Sri Lankan ports enjoy many economies of scope, unlike many other competitive ports in the region. The Port of Hambantota is still at primitive stage, but has the high potential of agglomerating shipping traffic.

At the moment, RO-RO ships are attracted towards Hambantota because of the ample parking space, though other services are still at primitive stage. As automobile production became an increasingly globalised industry, the need to transport vehicles overseas increased. RO-RO (Roll On-Roll Off) ships suit such a purpose. Vehicles are rolled on the ships’ decks and parked. The deck height can be adjusted to carry bigger vehicles such as vans and trucks.

Sri Lanka has many port competitors; Singapore, Dubai, Karachchi, Chennai and Mumbai are a few of them. Among them, Singapore (25,866,600 TEUs), Dubai (11,124,082 TEUs) and Mumbai (4,061,343 TEUs) have better transhipment traffic than in Colombo (3,464,297 TEUs). TEU is the maritime jargon used for containers as Twenty Equivalent Units.This development was brought especially due to the high level of port services and with the competitive price schedules published by the ports. But in these ports sometimes contribute to the high level of transhipment traffic in the Colombo Port.

The reason is that 40% of Indian transhipment traffic is handled by Sri Lankan ports, especially the Colombo Port. This trend creates more business for Sri Lanka since there are many other small ports in the region which cannot attract big ships due to their depths and turning circles, which is the space to turn a ship.

Further, India is facing a legal constraint due to the ‘cabotage law,’ which prohibits maritime cargo movement from port to port of the same country (India has 21 seaports). But these small ports are supplied by different pendulum services which do not call at the Port of Colombo.

A competitive bidding system prevails in the maritime business and therefore port cost and port efficiency plays an important role. The main pendulum shipping line which does the pendulum shipping in the Asian Region is Orient Overseas Container Line.

The country needs to create an agreement with such shipping lines in order to develop the hub effect because there are three major shipping lines which works under the said company: Atlantic Express (ATX), European Union/Mediterranean (EUM) and South China Express (SCX). Hub efficiency improves only with its spokes, therefore there is a need to develop the spokes too. At present DHL conducts its business keeping Colombo as the hub, having South Asia countries as the spokes.

Having this background in the maritime business, there are many ways of enhancing shipping traffic to Sri Lanka. In a nutshell, political affiliations, service-oriented developments, port advertising, high efficiency of port operations and hinterland access (transportation systems towards the country suburb) are key areas which should be developed.

Sri Lanka is one of the few countries which are on the circum-equatorial route and also on the North South pendulum route. Therefore, the dream of Sri Lanka as ‘Asian shipping hub’ is not a hypothetical situation but a reality.

(The writer is a specialist in transportation systems and management. He presently conducts lectures on the subject for the Transportation and Logistics Management Degree and Masters in Maritime Safety and Environmental Management in CINEC Maritime University. He had published many articles on transportation and management and is presently working at the Central Bank.)