SLPA responds to Galhena’s article on Will East Container Terminal bid go in the right direction for

The Jaya Container Terminal

1: JCT would be obsolete and be relegated to a feeder terminal. SAGT and CICT are world class terminals.

How does one define a world class terminal? Are there hub ports without panamax and post panama facilities? Has the advent of super post panamax facilities relegated the panamax facilities in any of the world hubs?  Rotterdam Antwerp Singapore Port Klang and many other hubs are standing examples for this. A hub comprises of all classes of facilities just like a palm with five fingers of different sizes and shapes. Can one make a fist without the index finger? The latest addition to Port of Rotterdam is Rotterdam world Gateway Terminals. This state of the art fully automated Terminal includes 1,050 metres of feeder berths with below panamax equipment. Will it make RWG obsolete? Have the older facilities in Tanjong Pagar and Brani Terminals become obsolete after commissioning of Pasir Panjang Terminals in Port of Singapore?

SAGT and JCT are offering similar berths and equipment for ships requiring a draft of less than 14.25 metres. Only CICT is capable of taking larger ships. How come SAGT is categorised as a world class facility and JCT as something lessor?

When newer facilities are created it is quite natural that the existing facilities suffer loss of business in the short term. SLPA was well aware that the existing terminals would face this situation when it created South Harbour and CICT. When larger ships enter the main services it is quite natural that they shift to deeper berths irrespective of who manages them. Was it wrong? SLPA as the port operator wants to see port of Colombo growing. “Not that SLPA loves JCT less; but that it loves Port of Colombo more”. Although the writer is not aware, CICT is fast reaching its full capacity during peak period. It is a matter of time before the business volumes flow back to JCT thus ensuring optimum utilisation of all port facilities. We at SLPA do not panic when a natural phenomenon occurs. JCT will very much be a partner of progress of Port of Colombo and will never become redundant with SLPA at the helm. 

2: ECT bidding criteriaLowered qualification criteria

Firstly the writer has not understood the basic difference between this bid and the last bid for South Container Terminal. The bidding process for SCT had only one phase that was the direct Request for proposals (RFP). For ECT project SLPA and the government have decided to have two rounds of bidding i.e. Expression of interest stage which is the pre-qualification stage and the RFP stage which would be open only for pre-qualified parties as the final hurdle.  Therefore any comparison between the two projects is not realistic. On the other hand the fact that a particular strategy had been used for one project should not cause all future projects to follow same.  The strategy should be changed to suit the requirements of the port and the current practical situation. SLPA has done that.

3: Requirement to have handled 600,000 TEU of Transhipment containers 

There is no need to have a clause requiring a party to have handled transhipment volumes. Container Terminal operations and management are standard technology common to all Terminals irrespective of Domestic or Transhipment cargo. In fact many world class ports in China are among the top 10 ports in terms of volumes handled and efficiency but they do not handle Transhipment containers. Major ports in USA and India do not handle Transhipment containers. If we limit this to Transhipment handling ports, that would close the doors of EOI for such countries. This clause thus would attract many world class Terminal operators. 

Writer says. “People who understand the container port industry will know that catering to domestic and transhipment businesses are two different ball games.” For his information SLPA and its professionals not only understand container port industry but also have experience in it for several decades.  Our team has professionals who have had long term experience in working in other world class hub ports as well as shipping lines. On the other hand this is a PPP project where SLPA stands as one of the shareholders.  SLPA is well experienced in handling transhipment operations. When SLPA is already a successful Transhipment hub operator asking for a bidder to be experienced in handling transhipment is totally illogical.

4: Experience in handling 2.4 million TEU the capacity of ECT

Terminal management and operations are not Rocket sciences anymore. Any Terminal operator who handles a million TEU can easily handle a Terminal of 2.4 Mil TEU capacity. All that is required is a professional management team, right equipment right manning coupled with an efficient TOS system. Many new operators who had no past experience have proven this fact by becoming world class Terminal operators. Westport of Malaysia that is a major transhipment hub operator is a classic example. If a Terminal operator can handle a million TEU, that operator can easily cope with a 3.0 M TEU throughput. The technology and expertise required in handling a million TEU is quite adequate to handle three million TEUs. This clause requiring only 1.2 M TEU past experience would allow a large number of competitors to compete for this bid.

5: Allowing river port operators to bid

If we limit the bidding to Seaport Operators most of the world class Hub port operators would be disqualified. The writer mentions only port of Montreal as an example indicating poor knowledge on world’s busiest hub ports that are river ports. Antwerp Hamburg and Thames Port are three of the major river ports in Europe that are global hubs.Port of Rotterdam is partially located in a river. China too has major river ports that are among the top world ports. They have some of the latest Terminals with state of the art facilities that can cater to the largest of ULCC.This clause would allow such parties to be eligible to create a good competition. 

Eliminating Global Terminal operators (cannot bid independently) – Common user status

SLPA decided to require a top range shipping line as a partner of the ECT considering its aim to become a global hub. Today the cargo movement is not determined by the global port operators. They are in competition while Lines determine the choice of a hub. This is why almost all global hub operators have moved into joint ventures with shipping lines.Global port operators have joined with lines in bidding for new terminals realising the need to have assurance of cargo volume commitments.

The latest move by CMA GGM, the world’s third largest line in signing a JV with PSA in Singapore and another with Adani ports in Mundra, The world’s second largest shipping Line MSC developing a large JV Terminal with Adani Ports in Mundra prove this criticism has no meaning.

6: Port of Rotterdam is a clear example

The latest addition to Port of Rotterdam, the Rotterdam World Gateway Terminal has CMA CGM, APL and Mitsui OSK lines together with DP world as partners. 

The involvement of shipping lines has not compromised the status of those hub ports as common user ports. 

There are many such new developments. Writer doesn’t seem to have wide knowledge on this subject.

If Colombo is sending a ‘distorted message’ by using this strategy its simply following world leaders in hub port business who have ‘blundered’ as well.

7: Conflict of interest (SLPA partnering CICT and SAGT)

There is no need for the bid document to provide an exhaustive list of conflicts of interest anticipated. SLPA is well aware of the requirements and the Technical evaluation committee the CANC and the cabinet of ministers would decide whether there is a conflict of interest in a particular bid once the bid is evaluated. Writer’s poor knowledge and lack of practical experience in handling this type of complex bids seems to have left him in the blues.

8: Restriction on competing hub port operators

SLPA does not see the need to restrict any such operators from bidding as the bid has been structured adequately to protect Colombo’s interest as a growing hub. 

9: Port Regulatory mechanism

SLPA has recognised the need for this and has already moved through the government to create this mechanism. 

10: Sinister/hidden hand

Since the bidding process is a wholly transparent exercise based on a common criteria for all bidders there is no sinister /hidden hands as indicated by the writer. The only sinister/hidden hands we see are well reflected by the various destructively critical articles on the subject and on SLPA in general appearing at random carrying individual agendas hidden behind so called expert advice.

11: SLPA is a global port operator 

The writer of the article has undermined the experience and the knowledge of the SLPA and its professionals who have successfully transformed a minor port of Colombo to what it is today. SLPA has already successfully handled two PPP bids and created a world class new harbour that can cater to any ship planned for the future. They are well aware of the existing and emerging threats and opportunities. That knowledge is well reflected in the steady growth port of Colombo has achieved over the years.

It is unfortunate that some individuals refuse to acknowledge SLPA’s expertise in handling its affairs in spite of its proven track record.