Bouquets, brickbats for shipping at CASA AGM

By Devin Jayasundera

The Ceylon Association of Ships’ Agents (CASA) last week expressed its optimism on the expansion of the ports and related infrastructure leading to the development of the shipping industry whilst listing some key concerns.

The state of the shipping industry, some recent achievements and key challenges was shared by CASA Chairman Nimal Ranchigoda at its AGM held last week. Ranchigoda was re-elected as the Chairman for the third consecutive term at the AGM. The other elected office bearers were Ralph Anandappa as Vice Chairman, Nimal Perera as Treasurer and Dhammika Walgampaya as Secretary General. The Executive Committee of CASA consists of Maritime Agencies Ltd., McLarens Shipping Ltd., Green Lanka Shipping Ltd., Aitken Spence Shipping Ltd., BTL Lanka (Pvt) Ltd., Malship Ceylon Ltd., Ceyline Agency Ltd., Prudential Shipping Lines (Pvt) Ltd. and ABC Shipping (Pvt) Ltd.

 

Losses and recovery

Speaking at the AGM, Ranchigoda stated that shipping companies incurred losses from the last quarter of 2008 to the first quarter of the 2010, but recovered and made profits at end of 2010.  Due to the decline of world trade volumes and very low freight rates, all shipping lines made losses in the first quarter of 2011, he said, noting however that these losses were minimal compared those recorded in 2010.

The CASA Chairman expressed his delight on acquiring three new gantry cranes and six rubber tyre gantry cranes for the Jaya Container Terminal (JCT), which was installed in the first week of June 2011.

He expressed his gratitude to the SLPA Chairman Dr. Priyath Bandu Wickrama for his efforts in procuring the equipment and pointed out that Port had already ordered 50 terminal tractors, three new gantry cranes, 12 rubber tyre gantry cranes and another extra 12 rubber tyre gantry cranes for yard operations later this year.

The highly-anticipated new FCL yard for stacking all local import containers and the widening of the road inside the port to accommodate six lanes of traffic will ease congestion at the JCT. This will allow the containers to be dispatched faster and raise JCT’s productivity levels.

Colombo Port Expansion Project

With regard to the Colombo Port Expansion Project (CPEP), Ranchigoda pointed out that five kilometres of the proposed 6.8 km of break water and dredging had been completed and that they were eagerly awaiting the commencement of the building of the first terminal. He emphasised on the importance of the CPEP and the urgent need to enhance it as a transhipment hub in the region. “We only hope the Government and SLPA will expedite the building of the first terminal on a top priority basis and as soon as possible,” stressed Ranchigoda. He also pointed out that the Port of Colombo had experienced a total growth of 4% in comparison to 2010.

H’tota and billing disputes

Ranchigoda also commented on the often criticised Hambantota Port project, revealing that there were ongoing discussions between CASA and the Ports Authority to divert car carriers to Hambantota Port as they are subject to berthing delays.

The SLPA tariff will be applicable with a 30% discount on all items except the professional pilot fees and tag charges for the ships that dock in the Port of Hambantota.

In resolving billing disputes between CASA and the SLPA, the proposed regular dispute committee meetings have been successful. “Now we must strive hard to reach a zero disputes situation,” stated Ranchigoda.

He requested CASA members not to dispute any bill without discussing it with the SLPA. He also thanked SLPA for agreeing to implement a direct billing facility in respect of all MCC operators effective from 1 November 2010, which will reduce billing disputes by CASA members.

Aggressive marketing strategy

SLPA’s adoption of an aggressive marketing strategy to highlight Sri Lankan ports was highly commended by Ranchigoda.

He congratulated the SLPA Chairman for his efforts in getting the International Association of Ports and Harbour Conference to be held for the first time in Sri Lanka. Dr. Wickrama will act as the chairman of the conference, which will be held in Sri Lanka on 8 and 9 March 2012.

Shipping lines’ charges

Ranchigoda noted that shippers in the Asian region had raised objections with regard to the allegations of anticompetitive practices levied by the shipping lines and stated that in November 2010, President Mahinda Rajapaksa as the Minister of Finance had expressed concern about Sri Lankan exporters being subjected to various charges imposed by the shipping lines. As a result, it has been alleged that Sri Lankan exports have been hampered and this has resulted in serious drainage of foreign exchange and tax evasion.

Ranchigoda reflecting on this matter explained the position of CASA, saying that there hadn’t been any drain of foreign exchange or tax evasion and the charges levied by shipping lines were universally applied in respect of imports. He stressed that some of these charges were for cost recovery and others were applied as a deterrent and therefore these charges were not peculiar to Sri Lanka.

“Exporters use freight forwarders, cargo consolidators and NVOCC operators. Shipping lines cannot control charges levied by them, therefore shipping lines cannot be held liable by this segment of the industry,” said Ranchigoda.

He highlighted that with regard to exports and imports, Terminal Handling Charges (THC), which is levied by shipping lines, is the total cost of recovery by the shipping lines and whatever is collected is paid to port terminals and containers in Sri Lanka.

Concerns regarding Customs

Meanwhile, CASA also expressed its dissatisfaction with Sri Lanka Customs and stressed the importance of the need to release detained containers as soon as possible. CASA has raised this issue with the Customs and proposed that it invests in a warehousing facility and arranges to unload the cargo from the detained containers and then releases the empty containers.

Ranchigoda professed the urgent need for the Customs to formulate an electronic data interchange system. “We are waiting to see the day when Customs will be in a position to tell us that it will not require hard copies of the manifests from CASA members any longer,” he added.

The special degree course in transport, economics and commercial shipping that CASA launched in collaboration with the University of Colombo, which commenced in 2010, has already proved to be a successful venture, Ranchigoda revealed.

Shipping industry’s crucial role

Chief Guest Minister of International Monetary Cooperation Dr. Sarath Amunugama addressing the event emphasised on the crucial role of the shipping industry in the country’s economic growth.

“We have seen a growth in all sectors – agriculture, manufacturing, services – in 2010 and a large part of the credit regarding the manufacturing services should go to shipping,” said Amunugama.

He was positive that there would be a quantum change in the economy with the development of the shipping ports. Dr. Amunugama also pointed out that the Colombo South Development Project was the biggest joint venture between a government and the private sector in the region. The project is funded by the Asian Development Bank and Chinese and Japanese Governments.

Investment and productivity are the two most important factors for economic growth, pointed out Amunugama, emphasising on the importance of both the Government and private sector joining hands to increase productivity.

“One cannot have salary increases without increasing productivity. As far as the Government is concerned, the private sector is the lead agent of economic growth,” stressed Amunugama. He reiterated that increasing productivity would bring about a win-win situation for both the Government and private sector.

The Chinese and the Russian Governments have expressed their interest in the Port of Hambantota due to its strategic location in commercial shipping lines and are of the opinion that it would be extremely beneficial for the economy of Sri Lanka, stated Amunugama.

Focus of growth

“The focus of our growth is the harbours. Presently all economies depend on an export-import economy.”

Amunugama pointed out that due to the Chinese Government’s policy decision to develop its southern ports, exports had been a major economic factor in the Chinese economy.

Amunugama expressed confidence that SLPA would collaborate with CASA in the future to uplift the shipping industry and be a major growth factor in the country’s economy.

Pix by Upul Abayasekara