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By Ravi Ladduwahetty

The Colombo port does not have berthing delays and I believe that port of Colombo should at all times market together in consolidating its position further, Chairman of the Sri Lanka Association of Vessel Operators (SLAVO) Arjuna Hettiarachchi told the Daily News in an interview yesterday.

He said that the Colombo's marine fuel prices were comparatively high which was affecting transhipment cargo He said:" It is expensive. If the fuel prices do not come down, there will be a definite impact on the transhipment cargo volumes which relays over Colombo Port. This is happening even right now.

All feeders hubbing through Colombo has no option other than to purchase fuel from Colombo at high costs where as parallel services by passing Colombo and relaying cargo over competing ports of Spore / Port Kelang / PTP / Dubai etc., has got the cost advantage of purchasing fuel at a lower price and reducing the unit cost of the carriage of containers. No main line vessel will purchase fuel in Colombo at prevailing high costs, he said.

The interview :

Q: As the incumbent Chairman of the Sri Lanka Vessel Operators (SLAVO) How do you see the current peace initiatives?

A: We welcome any move by the Government that brings in peace to Sri Lanka as a whole .

Q: How do you think these developments will augur for the developments of the shipping industry, port related investments and overall investments by vessel owners in Sri Lanka ?

A: When peace prevails you will no doubt agree that investor confidence will be established. When there is a firm commitment, investment will zoom.

Q: Indications have been made in news reports that the Ceylon Association of Ships' Agents (CASA) defending the application of the Terminal Handling Charge (THC), where as the Sri Lanka Shippers' Council (SLSC) is taking the position that this should be a part of the freight Component. In that context, how do you see the role of the ship owners in the final resolution of this current scenario as shippers call it:" uncompetitive practice ?"

A: At shippers request THC was shown separately. Most lines are members of conferances and follow common tariff / surcharges otherwise they are in breach of agreement. While conferences maintain a common structure and recommend surcharge levels based on pooled costs it is up to the individual line / carrier to set their prices.

Q: The Sri Lanka Shippers Council (SLSC) is trading the allegation that this is a component of the freight rate in other parts of the world. Your comments ?

A: This is not correct. The current practice is in response to customer request.It makes no sense to take action arbitrarily in one country.

Q: The last time this occurred, the Sri Lanka Shippers Council went to the Free Trade Commission (FTC) which could not be enforced due to the absence of the requisite mandate to enforce it. I believe that the Shippers' Council has sought litigation for the last four years. Given this backdrop, what are your views on the slow litigation process in the light of the new bankruptcy laws that the Government is framing to expedite commercial/ shipping transactions ?

A: The Fair Trade Commission did not rule that the Terminal Handling Charge (THC) was illegal but ruled that CASA could not mandate lines to charge the THC. We believe in free market policies.

Q: You are the Chairman of Sea Consortium, which is one of the largest feeder operators. What are your comments on the performances on the Colombo Port is-a vis- a-vis the emerging Indian ports such as Nava Shiva, Cochin and Malaysia's Tanjong-Pelapas in terms of (a) waiting time for connections (b) productivity (c) berthing time (d) overall marketing strategies ?

A:Our geographical location on the world map cannot be changed. It is in the main east - west trade route where there is hardly any deviation.

From day one, SAGT introduced International Standards by establishing proper terminal services and taking responsibility. They now achieve 26 net crane moves per hour / crane. More over, EDI facilities at SAGT is the best in South Asia and are setting the bench mark for the region.

On JCT side, many improvements have being made and they have started following international standards and going on the right direction. On some vessels JCT has achieved between 20 -25 moves where as on some vessels over 30 moves. End of the day, Port of Colombo has become a world class port. There are no berth delays and I believe that port of Colombo should at all times market together in consolidating its position further.

Q: Granted that it is only a few weeks since the blue chip John Keells Holdings Group purchased Lanka Marine Services Ltd, the former Ceylon Petroleum Corporation subsidiary operating the bunkering monopoly at the Colombo port. JKH Director and Head of the Transport and Infrastructure Division of the Group Susantha Ratnayake told this newspaper in an interview ( Daily News- September 3, 2002) that the price structure will be reviewed to suit global marine fuel markets. But, the desired levels of price reductions have not yet taken place with marine fuel prices still high over both competitors-Singapore and Fujera. Your comments ?

A: Prior to JHK take over, CPC prices were way beyond the competing ports such as Singapore and Dubai. With the JKH take over we expect price structure to fall in line to suit global marine fuel markets.

Q: Colombo's price of IFO-180 CST is US $ 220 per tonne while Singapore's corresponding price is US$ 173 and Fujera is US$ 176 per tonne. Colombo's Marine Gas Oil (MGO) price is US$ 332 per tonne while the Singapore price is US $ 226 and Fujera is US$ 243. How do you see this ?

A: Obviously its expensive. If the fuel prices do not come down, there will be a definite impact on the transhipment cargo volumes which relays over Colombo Port.

This is happening even right now. All feeders hubbing thru Colombo has no option other than to purchase fuel from Colombo at high costs where as parallel services by passing Colombo and relaying cargo over competing ports of Spore / Port Kelang / PTP / Dubai etc., has got the cost advantage of purchasing fuel at a lower price and reducing the unit cost of the carriage of containers. No main line vessel will purchase fuel in Colombo at prevailing high costs.

Q: Could it be that Colombo's tank capacities do not give the leverage for economies of scale in terms of larger parcels of fuel being imported to take advantage of the freight factor and correspondingly competitive prices ?

A: Yes, that's correct. On refine products we have limitations up to a maximum of 40,000 tons at the dolphin pier and draft restricted to 10.5 - 11 meters. On crude oil, our capacity is about 180,000 tons where as its restricted to 90,000 tons due to regular maintenance. Therefore, we are not in a position to achieve economies of scale.

Q: How do you see the competition from Colombo's competing regional ports?

A: On container traffic, it is stiff while having the best product. We need to be cost effective taking other competing ports price structure in to consideration.

All that matters is the Price and Service which the others are offering and second to none. On Fuel, as I said before Colombo is very expensive and unless LMS become competitive in price we will not have a share from the purchases from the competing regional ports.

Q: Given the Government's vision of making Colombo as South Asia's transhipment, shipping and freight hub, it is believed that the Government has progressed very little in that direction with the exception of the peace talks. Your comments ?

A: It is not correct. Government has done a lot. JCT reforms are one clear example to retain our position. Joint marketing by JCT/SAGT will add more value to the port of Colombo.

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