Shipping industry sees growth

US $ 273.1 m invested in last five years:

Sanjeevi JAYASURIYA

The country’s shipping industry will continue its growth momentum as several mega port development projects were launched during the last five years.

A sum of US $ 237.1 million has been invested. This year surpasses the previous figure and of which port related investment records an increase including a US $ 500 million for the third terminal to be constructed at the Colombo Port.

The policy initiatives of the Government encourages growth in the shipping sector and one of the key policy initiatives introduced by the 2012 budget is to open free areas in the Colombo, Hambantota and Trincomalee ports. This will give a huge boost for logistics related value added services and could attract major FDIs, Colombo Shippers’ Academy CEO Rohan Masakorala told Daily News Business.

The government needs to further liberalize the trading environment to attract global players to come into Sri Lanka. “This should be in line with BOI investment policies to secure large investments of capital and services related projects into the transportation business,” he said.

Investment in both port operation and infrastructure building being promoted through PPP where private investments are likely to raise to US$ 440 million in two years from 2011 while investment is expected to reach US$ 2.8 billion during the period from 2017 to 2020.

However, the shipping industry globally has seen a dip due to the ongoing economic crisis in the EU and USA. As a result the freight market has been volatile and unstable.

The local transshipment business too has seen the negative effects and overall volumes in Colombo is stagnant due to this reason and capacity shortcomings have not been looked at a decade ago.

The Sri Lankan shipping industry too has suffered due to the instability of the market. On the infrastructure side we have seen remarkable achievements in the port sector which would no doubt help the economy move forward during the next decade.

“The government has embarked on a capacity expansion drive with all major ports having accelerated projects overcome the shortcomings,” he said.

The Colombo south harbour project will see that Sri Lanka will be the only south Asian port that will have the capability of handling the largest container ships by 2013/2014. This will help eliminate current capacity issues faced by the SLPA and to bring in more business to Sri Lanka and enhance connectivity. This is a pre-requisite to increase transshipment business and logistics services.

The Hambantota port to will see the gradual increase in bulk cargo handling as projects have begun operation. This facility will also help us on our bunkering and ship chandelling capabilities as a regional hub.

“But we need to understand that global giants are now looking for alternative locations for services. Asia is an emerging market whilst our infrastructure projects are being upgraded, we need to improve our services and trade facilitation measures to make the business processes simple and transparent,” he said.

“To make the shipping and logistics successful we now have to work towards an integrated plan with ports and airports and other related service providers, hence Customs laws, BOI, merchant shipping and logistics related laws have to be redrafted to attract investors,” Masakorala said.