ICCSL seeks state intervention to charter a subsidised feeder vessel to ease burden on exporters

• It is to support SME exporters in particular in their survival
• Current supply chain issues to remain at least until April-May 2022
• Lack of containers for export, high freight rates are critical problems int’l trade faces 

By Nishel Fernando 
With the exporters grappling with the skyrocketing freight charges and container shortages, the International Chamber of Commerce Sri Lanka (ICCSL) seeks urgent state intervention to charter a subsidised feeder vessel between the shipping hubs and bring the empty containers to the Port of Colombo, in order to ease the burden on the exporters and for the survival of the export sector at large.

“We request the government to charter a feeder vessel between the shipping hubs and bring the empty containers to Colombo and support the exporters even with a subsidised freight to move back to the shipping hubs,” the newly-elected ICCSL Chairman Anthony Shanil Fernando appealed.

He made this request in his inaugural speech as the new ICCSL Chairman, at its Annual General Meeting, held last week.

Fernando outlined that the government intervention is critical to support the exporters, in particular SME exporters at this juncture, as  it may determine their survival. 

“The cost involved in bringing adequate containers to Colombo from other shipping hubs will mitigate the survival of the export sector. Supporting the exporters at this moment is very critical, as they are unable to bear the high freight rates. As they will lose the international buyers, the workers in these factories will also lose their jobs in the long run. The government intervention and a subsidised feeder service with the other shipping hub to push the supply chain to international markets has become a nasality,” he elaborated.

As imports and exports are interlined in the global shipping business, Fernando noted that the import controls also partly contributed to the current situation, in addition to the global supply chain issues.

“Sri Lanka in its history as a nation is coming into an extremely critical financial situation, mainly due to the restrictions on tourism and less remittances from the expatriate Sri Lankans, who had returned due to COVID. The government had to impose import restrictions to balance the foreign exchange reserves. 

As a result, one of the biggest critical problems facing international trade is lack of containers for export and high freight rates,” he added. Commenting on such a feeder service,  a top maritime industry expert opined that the government intervention could help to ease the exporters’ burden to a certain extent. However, he noted that the current supply chain issues to remain at least until April-May next year.  “This will help the exporters to some extent but it will be shipping lines that will ultimately decide on using the feeder,” he said.  He pointed out that there are multiple reasons for the current state of maritime trade apart from the low volume of imports seen, due to the import controls early on. 

“There’s severe congestion at the Singapore Port, which has led so many shipping lines to avoid Singapore. Some of our imports are also stuck there. Our rates are much lower compared to the ports in South East Asia and Singapore. Further, the ban on  container lines from levying terminal handling charges (THCs) and other surcharges is also taken into account by shipping lines. Due to these reasons, the priority given by the shipping lines for our imports has dropped and in return, this has also caused a shortage of empty containers for our exports,” he said. Although earlier, prior to the pandemic, most shipping lines used the Colombo Port as a top-up port, the container vassals already get filled before reaching the Port of Colombo, due to the high demand in China and South East Asia. Meanwhile, Fernando urged everyone to come together and move in one direction  based on expert advice to overcome the present critical economic solution. “All should get together and follow in one direction by getting the correct expert advice to find a solution to come out of the present critical economic situation that the country is faced with. If not, it’s a matter of time that a few critical sectors will be affected badly and maybe too late. Sri Lanka’s vision and plan should continue with policy consistency,” he said.

Outlining  his plans for the ICCSL for the term, he emphasised on the key focus on the specialised areas handled by ICC Paris, which includes arbitration, trade facilitation, support for SME sector, climate change financing and all the areas promoted by ICC Paris.

“We are creating a new trade felicitation committee to identify the bottlenecks and lobby for the improvement in the Ease of Doing Business Index to promote trade and investments to Sri Lanka. We are also planning to facilitating a Shark Tank or the new SME entrepreneurs. Some of them are badly impacted, due to the COVID situation and need a boost,” he revealed.

The ICCSL  is the domestic chapter of Paris-based International Chamber of Commerce (ICC). Some of the key services provided by the ICCSL include issuance of Certificate of Origin and issuing of ATA Carnets, which is an internationally accepted Customs document enabling duty free and tax-free temporary importation of items as commercial samples, exhibits at fairs and professional equipment.