Full-steam ahead in push for Sri Lanka’s shipping hub

17 May 2013 07:33 am - 0     - {{hitsCtrl.values.hits}}

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The last time Sri Lanka built a breakwater to protect its fleet of ships, the teardrop-shaped island off the coast of India, was called Ceylon and was still under colonial rule. Today, this independent country of 21 million people is a regional rising star and the government is capitalizing on the island’s strategic location to promote it as an economic hub in South Asia.

The new breakwater at Colombo Port is part of a US $ 500 million port expansion - supported in part by US $ 300 million ADB loan - that is moving Sri Lanka toward this goal.
Colombo’s new breakwater has a depth of 18 meters, compared to the previous 14 to 15 meters - a crucial difference in a world in which ever bigger cargo ships require ever deeper docking berths.



 
“Most of the main [shipping] lines use vessels with a capacity of more than 8,000 containers and due to the limitations at Colombo Port we have not been in a position to service them,” says Shanthikumar Sadanandan, Group Director of the shipping company Hayleys Advantis, which uses the port.
Priyath B. Wickrama, the Chairman of the Sri Lanka Ports Authority, the state-owned custodian of all Sri Lanka’s ports, agrees, saying that the new deepwater facilities are an important breakthrough for Colombo.
“This is a development we have been discussing for five to 10 years,” he says. “It will definitely reduce freight rates, make us more competitive and attract more ships to call at Colombo.”
 
Makings of a hub
 
The breakwater was completed in April 2012. The next stage of the project involves the completion of two 400-meter-long terminals by July 2013. A third 400-meter terminal is also in the planning stages. These will make it possible for Colombo Port to accommodate the latest generation of mega-container ships, which carry 18,000 containers and more. According to Wickrama, the project will eventually increase the port’s capacity to 12.5 million containers per annum from a current five million.
“We are looking at this project to convert Colombo to the biggest transshipment hub in the region,” Wickrama said. 
Wickrama adds that most big shipping lines want to make the few deep seawater ports in the world into transshipment hubs, delivering cargo to these ports that is intended for many ports in the region. These companies would then use smaller ships to move the goods from the hub to shallower “feeder” ports, which are unable to accommodate ever bigger vessels.
Sri Lanka is strategically located on the main east-west shipping route, positioning Colombo as a favourable candidate for South Asia’s transshipment hub. Hanif Yusoof, the Chief Executive Officer of Expolanka Group - among the biggest freight forwarders in the country - adds that Colombo’s efficiency levels are among the best in the region.
 
Direct to market
 
Around seven hectares of sea was reclaimed for the breakwater, which features 34,500 specially designed boulders - along with an additional five-meter-high wave wall - that can defend the port against the most inclement weather.
The main breakwater and access channel enable the development of the three container terminals. The first of these, the South Container Terminal, is being developed under a public–private partnership. While some 70 percent of the cargo that passes through Colombo Port is for transshipment, local exports include tea, garments, coconut and rubber-based products. Imports are largely white goods, consumer electronics and vehicles.
For the Cargills group, one of Sri Lanka’s biggest importers and owners of the largest local chain of supermarkets, a larger port will be a boon for business.
“This will facilitate the arrival of mother vessels direct to Colombo. Previously, we had to depend on feeder vessels from other major ports,” says Delano Dias, Executive Director, Millers Limited, a subsidiary of Cargills group.
He adds that the company often experiences long delays in imports at other busy ports, particularly during peak seasons such as Christmas. The group imports approximately US $ 1.5 million in goods per month and expects this to increase by 20 percent year-on-year once the new terminals are ready for business.
Top tea exporter Dilmah also expects exports to grow by 5 percent to 10 percent annually because of the new terminals. “The increase will be moderate, but we expect greater efficiency and lower costs,” says Malik Fernando, Director, Dilmah, which exports about 3,000 containers per annum.

 
A promising future
 
According to Rohan Abeywickrema, Director at freight forwarder Sathsindu Group, the lack of a deepwater port and berthing facilities in Colombo has in the past resulted in business loss to other countries.
But, according to Sri Lanka Ports Authority Chairman Piyath Wickrama, Colombo Port will soon be able to accommodate not only the new 18,000-container capacity ships, but even the next-generation 22,000-container capacity ships.
“We are looking at this project to convert Colombo to the biggest transshipment hub in the region,” he says.
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