Sri Lanka has the potential to be a world-class maritime regional hub. It would take personal enterprise, funding and dealing in collaboration with the general public sector to mobilize the imaginative and prescient to actuality, and that for this a part of the world may be fairly difficult at the perfect of occasions.
We’ve seen not too long ago, there have been plenty of points at Colombo, low productiveness at terminals inflicting delays and backlogs in clearances. How is the scenario now at Colombo terminals?
The Port of Colombo consists of three terminals: CICT, the newest and the one deep draft facility in South Asia, SAGT is the primary personal terminal that was established in 1999 and naturally, Jaya Container Terminal (JCT) which is a authorities operated terminal. All the three terminals, like many within the area and globally did, on the outset of the pandemic, have some disruptions, however I’m happy to say that the three terminals working in shut operational collaboration have now normalized the port operations in Colombo.
There was additionally disruption from the liners and a few service cancellations and likewise it has affected the vessel schedules and the planning on the terminal. So, how a lot of it affected your terminal and the way a lot it has impacted the cargo volumes?
Total, at year-to-date the Port of Colombo is about 12% down on the finish of 2020 versus the earlier yr 2019, however clearly if you happen to have a look at the final 6 months maybe within the second half of the yr which is historically additionally a better uptick in volumes while you evaluate the complete yr, the second half of the yr is 60% of the complete yr, we definitely have been way more impacted when it comes to the volumes.
You talked about about void sailings, however there’s a entire plethora of things behind it. Issues such because the lengthy dwell of containers within the port was just because importers couldn’t clear it, Customs and shipping strains are working limitless hours, folks haven’t had the contingencies in place to deal with the payments of lading, banks are working limitless hours, truck drivers couldn’t come as a result of they have been sometimes in lock down areas. So, there’s a entire plethora of issues. To be honest, the entire business throughout the globe responded extra swiftly than many individuals anticipated and I believe simply wanting again to when Indian ports went into lockdown, as you recognize India is the elephant within the room for the area and for many a part of international commerce, that definitely despatched lot of shockwaves to the system however it appears virtually like a distant previous now as a result of at present we’re working virtually again to regular.
What’s your future outlook?
Up to now once we converse to our clients, the shipping strains, a lot of them themselves don’t appear to have a deal with on what is perhaps the long run? We’re starting to see a brand new provide chain when it comes to sourcing. I talked about this even final time once I was on the programme the place importers are on the lookout for close to sourcing and their conventional sourcing, so that you might need sourcing from China after which someplace halfway level. We’re seeing much more cargo or commerce between ASEAN block of countries and South Asia primarily India and to some extent Bangladesh. So, these are a few of the evolving modifications that now we have seen. The actual fact I discussed in regards to the container dwell time within the ports, purely as a result of importers couldn’t take supply and so forth and so forth, only for SAGT in 2019, the typical dwell time for transshipment containers was lower than 3 days. In the middle of the final quarter of 2020, we have been averaging about 14 days. So, this had a extreme impression on the yard density, the flexibleness of the yard, impacting the vessel productiveness on the jetty facet. These are some parts that no person might’ve even predicted, going from 3 days common to 14 days. So, that was a swift transfer that occurred simply in a single day and never progressively. Within the meantime cargo was nonetheless coming in as a result of the Port of Colombo remained operational proper all through. We by no means closed the door to say we can not deal with ships. We did have some disruptions for certain, however at no stage did we are saying, we’re not dealing with ships. So, at occasions, we couldn’t deal with as many ships as now we have performed prior to now however definitely the restoration and the engagement I believe was one thing fairly creditable. The Sri Lanka Ports Authority Chairman together with his army background, introduced in some army precision when it comes to the bringing events collectively to a standard purpose – be it the transport corporations, the shipping corporations, Customs and all different stakeholders collectively. I’m happy to say that the Port of Colombo is working again to regular, the inter-terminal trucking is again to regular. Finally, these mixture of things, if there’s a tip of the steadiness and you’ve got extra containers discharged in a single terminal extra so than you’d usually have, then it modifications the sample of that ITT truck motion. We attempt to keep away from a single truck motion like transferring a truck from SAGT to CICT which in flip brings the field again to SAGT. So, these are issues that now we have recognized the place we might enhance and we proceed to do this.
The challenges that you’ve talked about which impacted the enterprise at Colombo are as a result of pandemic and it is a momentary phenomenon, as issues would spring again to regular. However you’re a transhipment hub at a really strategic location and now we have been listening to talks about Indian authorities selling transhipment hubs on Indian coast, one is already there after which couple of extra they’ve been pondering. After all, there’s an intent. I have no idea how a lot of stroll the discuss the federal government would do and the way a lot of it’s performed would get materialized however the intent is there. So, are you fearful about these developments and what else Colombo is doing to retain its place as a transhipment hub?
The Port of Colombo’s strategic geographic place alone is not any extra its aggressive benefit. Our clients are on the lookout for end-to-end when the ship involves the port until it will get out of the port, the optimum working time which implies that the ship that’s crusing between ports is definitely incomes cash reasonably than sitting within the port, so we acknowledge that. Now, within the South Asia area, CICT within the port of Colombo is the one deep draft facility. So, the three terminals within the port of Colombo are complementary to one another as a result of every has its distinctive worth proposition. After we speak about competitors, we think about Jebel Ali to our west and to our east is Singapore and Tanjung Pelepas to some extent in Malaysia. So, these are the hub ports for competitors. We see the port of Colombo truly as an extension, if you need complementary, to India’s import, export group. If you happen to actually take into consideration as you fairly rightly talked about, 70% to 80% of our throughput is transhipment of which India alone represents about 75% to 85%. We would like India as companions with us as we additionally must place ourselves and I believe there’s some work to be performed to win the boldness of Indian importers and exporters. We’ve performed many visits to India selling what we do within the Port of Colombo, doing roadshows, presenting the worth proposition of how Sri Lanka or Port of Colombo may be complementary.
Now, this isn’t to say that you simply don’t must have direct providers going to the Indian ports. That is along with these. You’ll be able to have a quick ship, a sluggish ship and on many events the transhipment vessel arrives at vacation spot quicker than the direct vessel. So, I believe it’s having choices accessible to the tip buyer and in that regard, I believe Port of Colombo continues to have some necessary worth proposition to the South Asia companions. For India, Pakistan and even Bangladesh it is smart to relay cargo out of Colombo in case you are going in the direction of Europe or to the East Coast of USA. There can be some dialogue or debate saying that it is perhaps quicker to go from Bay of Bengal over Singapore, Malaysia if you wish to go to west coast of the USA, however it all is dependent upon the place the shipping strains have their networks additionally. What we’re doing is specializing in that key deliverable which is popping that vessel round not simply on the important thing facet however from the time she will get into Port of Colombo waters until she departs and that features the tugs, pilots and all of these different ancillary providers which can be very integral to the terminal efficiency additionally.
Aside from India being a significant accomplice in enterprise, even Bangladesh can also be one other necessary accomplice for you. So, what’s the replace from Bangladesh?
I believe Bangladesh has not shocked too many individuals when it comes to their progress. We’ve at all times recognized that Bangladesh had some challenges when it comes to the infrastructure, ships getting out and in. There’s some improvement regarding the River Mouth terminal that’s getting underway. So, definitely Sri Lanka once more will place itself because the gateway to South Asia; that’s to not say that the others usually are not necessary. I believe they’re complementary however we’re a lot nearer to the East West major commerce routes. So, our place to Bangladesh notably with all that garment cargo that is available in, now we all know that at varied occasions and over the previous years, you would possibly see some congestion in Chittagong, some challenges in Colombo, Nhava Sheva and so forth and so forth. These usually are not uncommon, however it’s how shortly every of these amenities can reply swiftly to the challenges at hand and I believe the entire area has performed a exceptional job the place after the preliminary onslaught and the second wave, that we’re at every flip enhancing in the best way we truly reply to those challenges and preserve the enterprise transferring fairly, seamlessly.
I see from the media experiences that your Delivery Minister and Sri Lankan Ports Authority Chairman discuss quite a bit about bringing lot of give attention to port improvement in Colombo. So, what truly is the intent of the federal government when it comes to creating or enhancing Colombo as a hub?
Very often folks have a look at the hub idea as merely transferring containers round however I believe once we speak about a maritime hub, you might be speaking quite a bit way more than simply container motion. So, as I discussed, we’re in strategic location. I wish to see us develop worldwide movement centre the place you may carry partially accomplished items and end them off in Port of Colombo inside the customs-controlled space after which re-ship them out. So, that is re-shipping of transit for re-export. We wish to see a better functionality of kit restore and ship upkeep so to do that. You don’t have to enter dry dock, now we have these capabilities round. Maritime arbitration, Singapore has performed a beautiful job in that regard is to get maritime arbitration, all of those elements, I believe, contribute to positioning a location as being efficient maritime hub. So, we’re not only a transhipment hub, I would really like and that’s what has been the political rhetoric is also that we wish to place ourselves as a maritime hub. The minister’s imaginative and prescient that he has set is the aspirations of the place he wish to be. It would now take personal enterprise an funding and urge for food, working in collaboration with the general public sector to encourage and to mobilize the imaginative and prescient to actuality, and that for this a part of the world may be fairly difficult at the perfect of occasions. It takes time, however I believe all events, all stakeholders are one voice that whether or not or not it’s ECT, we’re already 4 years too late, and there’s a lot different stuff that may be performed however I believe equally we will’t all level the finger at authorities and say what are you doing about it? Authorities’s job is to facilitate, to place the laws in place that will likely be conducive for personal enterprise to return in and make investments. So, I believe the federal government is doing that now and sadly Sri Lanka, you recognize, the previous couple of years, we had plenty of political upheavals, change of presidency, change of insurance policies and so forth. So, I believe now we’re starting to see some traction. The potential to be a world-class maritime regional hub has by no means been unsure. The execution requires a collective mindset to place the pursuits of the better good first. That’s how I’d summarize it.
Because you talked about about ECT, I wish to carry up that topic. After all, there’s plenty of geopolitical situation and nationalism across the terminal proper now, however leaving that apart, as a port operator, what’s your perspective; how necessary is ECT and what’s the benefit for the commerce and even for the nation?
The business desperately wants the potential 3 million teu capability that ECT will carry to the Port of Colombo. As I stated it’s already 4 years too late, perhaps extra. The module for ECT, as I perceive it, is identical because it was for SAGT and CICT – construct, function and switch over a period of time period perhaps 30 to 35 years. The possession of the land will stay sovereign to Sri Lanka always. Fairly truthfully from the place I sit, it’s a no brainer. So, there’s plenty of emotion round nationalism and sovereignty and all that however actually, it’s no totally different to a few of the different very impactful investments that the maritime sector has skilled, each with SAGT and with CICT. From a cargo standpoint, as now we have already talked about, India performs a giant position, South Asia for that matter, and these will proceed to develop; not simply organically, as I discussed, there’s plenty of commerce now between ASEAN block nations and South Asia; we are going to see this proceed to develop, and I believe you’ve touched on this, having an Indian entity concerned in ECT, I believe might be incredible, proper, given the presence of Indian cargo by the port, the throughput. I believe it can give much more confidence to Indian importers and exporters to know that there’s a flag planted at ECT or wherever within the Port of Colombo the place they contribute a lot throughput and we welcome that. As a terminal operator within the Port of Colombo, I’m saying we might welcome any individual from India to place that stake out as a result of I believe we have to have the shopper in thoughts at all times and the shopper instantly to a terminal is a shipping line, however we additionally take into account the shopper’s buyer, which is the import, export, what we name the BCO, Useful Cargo Proprietor.
We talked quite a bit about commerce situation. Let’s speak about SAGT. You’ve gotten, I believe, simply accomplished about 2 many years of maritime excellence in actual fact 21 years of existence on this commerce. So, what are the important thing milestones that SAGT has handed and what’s the future imaginative and prescient that you’ve for the terminal?
SAGT kicked off in 1999. It was the primary private-public partnership infrastructure venture launched at the moment, fairly a watershed second. A lot of at present’s baseline operational efficiency benchmarks within the Port of Colombo have been established by the early successes of SAGT, bringing international greatest apply to the port. We’ve 4 shareholders John Keells Holdings is the native firm; APM Terminals, a worldwide terminal operator; Evergreen, is a worldwide shipping line and the Sri Lanka Ports Authority. So, you may see it’s a really combined bag however all taking part in definitive position in that success. When it was established, the design capability was just for 1.1 million teu. Within the successive years of 2018 and 2019, SAGT achieved a throughput in extra of two million teus. A terminal unique designed to ship 1.1, persistently delivering in extra of two million is sort of a exceptional end result. Now this has been potential by strategic operational planning, efficiency monitoring and execution. So, wanting on the particulars proper by, all of it with a transparent give attention to security and customer-centricity. We’ve been being attentive to what the shopper desires and we regularly attempt for it, however very often we might fail, however the engagement with the shopper leaves him with good confidence that we’re at all times working in the direction of that aspiration of delivering higher and higher every time. A lot credit score to the SAGT staff previous, current and people within the pipeline, however I believe you will need to acknowledge different stakeholders as properly such because the Sri Lanka Ports Authority who truly are liable for all of the ancillary providers, the tugs, the pilots, the harbor all of these dealt with by the ports authority and naturally our clients whose vessel planners make it potential for optimum crane deployment. Not too way back, SAGT was acknowledged by JOC (Journal of Commerce) as being the most efficient terminal in South Asia, and quantity 4 on this planet. That’s a while in the past, we will’t relaxation on our laurels as a result of different ports have come alongside and now obtained forward and there’s plenty of work we have to do, however I believe 2 million might be across the mark of what most closely fits us. Some would possibly argue that 1.8 is extra snug. However I believe coming from 1.1 to 2 million was even for ourselves, many people within the group a change in mindset the place we form of broke by that barrier that we will get to 2 million. Now sustaining it efficiently when it comes to delivering the productiveness metrics that clients search for as a result of 2 million on a 3-day common twin time could be very totally different than 2 million attempting to ship on 14-days common. We simply don’t have the yard area to manoeuvre. So, I believe now we have to method a mindset whether or not we modify the yard configuration, sorts of ships, all of these items are evolving however our focus stays on attaining that quickest flip time for vessels and I believe that’s all the shopper expects from us additionally. Speaking in regards to the future, it’s thrilling simply as it’s also unpredictable, cargo flows we try to work out what’s going to occur with the commerce spat between China and USA. China will aggressively have a look at alternate markets, and positively while you have a look at the ASEAN and the South Asia area, that’s the place you’ve the larger or blooming middle-income earners who’re going to be driving these economies. So, I believe there’s plenty of potential for that. Incremental efficiencies will come within the type of digitization and digitalization. Info sharing in actual time, transparency, and seamless end-to-end serviceability, these are the points that our clients are demanding of us. So, merely transferring that container quick will not be solely sufficient, they need the data of when that field was loaded, so in flip their clients, the tip customers even have the transparency and all within the safe atmosphere. So, all in all, I believe that’s thrilling, these are the areas of future worth that can evolve in assembly the shopper’s expectations. It’s not solely about laborious property however plenty of the opposite smooth, simple of doing enterprise points additionally.
You talked about about digitalization. In the course of the pandemic, once I was speaking to lot of corporations, both terminals or service suppliers, one factor got here out fairly widespread is because of this pandemic, the digitalization course of has been accelerated. In actual fact, everyone seems to be now taking a look at remodeling right into a digital group. So, while you stated digitalization, the place precisely you might be utilizing this digitalization. At what stage you might be and likewise it’s not that you simply as alone, the entire digital atmosphere, the ecosystem must be there. So, in Sri Lanka, precisely what’s occurring on this digital area?
There’s a giant distinction between digitization and digitalization. Digitization is simply changing to digital type, the laborious copy, and digitalization is the continuation of end-to-end, encrypted messaging. SAGT is happy to be the primary adopter of TradeLens within the Port of Colombo. As a method to help our clients’ promise to their clients for seamless real-time cargo data and cost-efficient, safe and sustainable platform. TradeLens after all relies on blockchain know-how providing integration of end-to-end individually digitized data data which can be safe, clear and unchangeable. Now, it’s best suited to teams of numerous but associated stakeholders in a broad community. So, you fairly rightly stated that it’s not one or two, it’s a couple of broad community and never solely within the nation particular, so that you name it ecosystem. So, within the context of a shipper and consignee, the data from buy order by to supply receipt is on a single provide chain platform. It permits for seamless incorruptible data sharing beneath safe entry. So, when SAGT got here onboard at the moment, for us, it was about collaborating as a part of this larger ecosystem. We have been the primary within the Port of Colombo and hopefully that can even be a conduit to different stakeholders be it Sri Lanka Customs, Sri Lanka Ports Authority, the opposite terminals, and a few of the larger import, export homes to additionally come onboard. Just lately I do know ONE, Hapag Lloyd have additionally joined TradeLens which suggests the highest 4 of the highest 5 shipping strains are actually on TradeLens. So, I believe as it can solely get higher, however we’re nonetheless on the embryonic stage of getting extra folks, extra stakeholders onto the platform, and extra individuals who come onboard, the extra related and extra impactful it will likely be however definitely, I believe the uptake in locations like Europe and USA is way more speedy than in South Asia as a result of we nonetheless are caught notably on customs and authorities associated businesses are nonetheless caught within the conventional computerization and nonetheless not capable of switch however I believe it’s across the nook and the advantage of that can solely be decided by what number of extra folks come onboard however for us we’re definitely completely happy to be part of it.