Over regulation threatens SL’s trade with region: SLANA

From left: SLANA Vice Chairman Nalin Abeysekara, KPMG Sri Lanka Managing Partner and Country Head Mohamed Reyaz Mihular, SLANA Chairperson Harsha De Silva, Ports and Shipping and Southern Development Ministry Secretary Admiral S.S. Ranasinghe, SLANA  Secretary Swabha Wickramasinghe and SLANA Treasurer Ananda Senanayake
Pic Waruna Wanniarachchi

By Nishel Fernando 
Sri Lanka’s non-vessel owning common carrier (NVOCC) agents warn of potential disruptions to Sri Lanka’s trade with the region unless there’s no revision to current excessive regulations prohibiting shore-based cost recovery.

“It is worthwhile noting that shore-based charges are an important part of the sustainability of NVOCC operations and the inability to collect terminal handling charges in Sri Lanka has put tremendous pressure on the NVOCC operating model and if a change does not occur soon, this could see a reduced interest in NVOCCs operating their containers to/from Sri Lanka in the medium to long term,” Sri Lanka Association of NVOCC Agents (SLANA) Chairperson Harsha De
Silva stressed. 

He made these remarks addressing the third annual general meeting of the SLANA, held in Colombo, last Thursday. 

In 2014, the regulations banning the terminal handling charges (THC) and other surcharges levied by container lines came into force, following the successful lobbying of influential apparel
exporters at the time.

However, NVOCC agents charged that these regulations were imposed without having held any consultations with the industry stockholders. Since the ban came into effect, De Silva revealed that at least 10 NVOCC principals have pulled out
from Sri Lanka.

He noted that NVOCCs operate to destinations that main lines avoid, playing a crucial role ensuring Sri Lankan exporters have an uninterrupted access to these markets, in particular in the Middle East. Further, the NVOCC principals cover many inland destinations in addition to base port locations, providing access to Sri Lankan exports to reach these hard-
to-access destinations.

Hence, De Silva cautioned that Sri Lanka’s exporters would face disruptions in exporting their cargo to these markets with more NVOCC principals losing interest and pulling out from Sri Lanka in the future. 

“We, as an association, are of the view that as Colombo is a hub port in the Indian Sub-Continent region the shipping policy of Sri Lanka should be in line with the policies followed by other regional hub ports such as Singapore and Dubai, specially when it comes to THC,” De Silva said. 

The NVOCC agents noted that only Bangladesh and Ghana have imposed similar regulations.  

De Silva opined that these excessive regulations are against the free market principles and are limiting choices for exporters and importers.  According to Ports, Shipping and Southern Development Ministry Secretary Admiral S.S. Ranasinghe, NVOCCs contribute to 10 percent of the throughput of the Colombo Port.  However, NVOCCs had contributed 14 percent of total throughput of the Colombo Port with 500-600 TEUs per annum, prior to the excessive regulations came into place. 

In spite of the current regulatory environment, De Silva said that over 50 active NVOCC principals are operating container services in and out of the country, giving their local agents an opportunity to compete with the main line agencies for valuable import and export cargo of Sri Lanka.  

NVOCCs are virtually considered to be mini regional shipping lines, which own fleets of containers, which range from general purpose dry containers to refrigerated containers, liquid carrying ISO tank containers and project cargo carrying flat rack and open top type dry special containers. 

The majority of NVOCC principals operate in the Indian sub-continent, Middle East and Southeast Asian regions covering the Far East ports, reaching all the way to China.
However, De Silva noted that some specialist operators such as liquid ISO tank operators have worldwide coverage.