Shipping

H'tota port work completion ahead of schedule

An artist’s view of the proposed Hambantota port

Hambantota Port near the main shipping route across the Indian Ocean is part of a Chinese effort to enhance trade activities, news reports say.

It is being built mainly with a Chinese loan and by two Chinese construction firms. It is envisaged first as a bunkering facility and later a port for general cargo vessels and eventually to tranship containers.

Hambantota was chosen as the site for the new port because of its proximity to the main shipping lane across the Indian Ocean.

The report, "Joint Operating Environment 2008," was produced by the Norfolk-based U.S. Joint Forces Command, The Washington Times said. The Washington Times quated a US Chinese Embassy spokesman Wang Baodong said: "It's true that China is conducting cooperation with some Asian countries in various fields including ports developing, but it is justifiable business for China and the joint ventures are for commercial purposes only," Wang was quoted as saying. "People should see China's activities with a sensible and more balanced approach. As facts have proven, China's activities are for mutual benefit and peaceful purposes, constituting no threat to anyone else."

Construction work is ahead of schedule, Sri Lanka Ports Authority officials said.

Economic downturn-Evergreen chops jobs

Evergreen Line is chopping jobs from its North American agency workforce as it responds to economic downturn.

The job cuts at Evergreen Shipping Agency (America) will impact workers across the United States and Canada. The number of jobs to be slashed was not released, but a media report suggests it could hit at least 10% of the agency's work force.

The staff reduction is an effort to "deal with downturn in ocean shipping business due to the worldwide financial crisis," the agency said.

"The worldwide economic turmoil has created a situation we have not seen in our lifetimes," the company said in a statement to North American employees. Based in Taiwan, Evergreen Line operates the world's fourth largest containership fleet, with 150 vessels. Reductions in the shipping agency arm follow capacity reductions on several of Evergreen Line's trade lanes.

Under the cuts, the Salt Lake City office will close, with its work assigned to Dallas.

Offices in Baltimore; Charleston, South Carolina; Chicago; Norfolk, Virginia, and Toronto all will suffer cuts. The changes are set to take place 15 March.

Proposals for new container terminal

The Sri Lankan government will call for proposals from the private sector to build a container terminal in a new port being built next to Colombo port before the end of January, a senior port official said.

Sri Lanka Ports Authority (SLPA) official said that they have requested for proposals for the first terminal in the new south port project has been drawn up.

"We have finalised the proposals and will call for tenders before the end of the month.

We need to finalise the tender and award the contract before November 2009," he said.

The terminal contract was cancelled more than a year ago when the government could not decide between the two main contenders, Port of Singapore Authority (PSA) and Hutchison Port Holdings of Hong Kong. A Cabinet tender board chose PSA Corp but the SLPA preferred HPH.

The Asian Development Bank has loaned the bulk of the funds for the infrastructure work on condition that the first terminal be built and operated by the private sector.

SAGT, a money spinner

Hiran H. Senewiratne

John Keells Holdings managing container terminal bringing lot of money to the country, which is nearing its full capacity, analysts and port officials said.

South Asia Gateway Terminals (SAGT), a JKH associate that was originally managed by P&O Ports, saw container volumes surge last year, although growth slowed down towards the end of 2008. Volumes at SAGT have been growing rapidly in recent years and the private operator has managed to accommodate the growth through higher efficiency and new cargo handling equipment.

The terminal was originally designed to handle just over a million containers when it was modernized and commissioned by P&O Ports after the government privatised the facility.

Volumes handled by SAGT, which operates Colombo's Queen Elizabeth Quay container terminal, rose 11.6 percent in 2008 to 1,726,424 TEUs (Twenty-foot Equivalent Units or containers) from the year before.

SAGT was one of the two main contributors to the profits of John Keells group in recent years.

The other contributor was the ship fuel or bunkering business of Lanka Marine Services (LMS), a former state monopoly, which became a JKH subsidiary in a privatization exercise. But the business was affected when JKH was forced to return its fuel tank farm to the port when the privatization of LMS was challenged and overturned in a Court case.

The Court also ended the effective monopoly LMS held in bunker fuel supply in Colombo port.

The loss of the fuel storage tanks and competition will affect the profitability of LMS, which opted to use floating storage, a more expensive option.

Analysts have been warning that SAGT was nearing capacity as its volumes continued to grow last year, although the growth was slower than in 2007 when volumes went up 15.8 percent to 1,546,497 TEUs compared with 2006.

Most of Colombo port's container volumes come from transshipment business from the Indian sub-continent trans-shipment accounts for about 70 percent of Colombo's total box volumes.