Colombo Port needs global partners to retain hub status

• Shipping expert says without global partners, Colombo Port could lose biz to Chinese-managed H’tota port in future 
• Says decision to scarp ECT deal with India and Japan could challenge Colombo Port’s hub status 
• Points out having established global network remains a crucial aspect in global shipping business
• Calls govt. to adopt landlord port model for ports and draft comprehensive shipping sector policy

By Nishel Fernando
Failure to get global shipping industry players onboard as joint venture (JV) partners in operations and development of the Colombo Port could potentially threaten its status as a top transshipment hub in the region, as Chinese-managed Hambantota Port plans to begin handling containerised cargo over the next 5 to 10 year period, according to a shipping industry expert.

“Hambantota Port has laid plans to commence handling containerised cargo in another 5 to 10 years. Hambantota Port being located approximately 10 nautical miles from one of the busiest shipping lanes, the only way for Colombo Port’s survival is to build strong partnerships with leading global maritime industry players,” Shippers Academy CEO Rohan Masakorala told a recent forum organised by the Colombo-based think tank, Advocata Institute.

Therefore, he lamented that the recent decision to develop and mange the East Container Terminal (ECT) of the Colombo Port by the Sri Lanka Port Authority (SLPA) is likely to spell trouble for the retention of hub status of the Colombo Port.

The government recently pulled out from an agreement entered into with India and Japan for developing the strategic terminal.

Masakorala questioned SLPA’s ability to attract businesses for ECT, as having established global network is a crucial aspect in global shipping business.

“80 percent of the global shipping business is carried out by three alliances. In every country, there are integrated options to manage the terminals and there is a reason for that,” he said.
Therefore, he opined that once the West Container Terminal (WCT) comes into operation under a possible joint venture with an Indian party, the ECT would lose out businesses to WCT.
He claimed that the port worker unions were misguided by certain outside parties with their propaganda that SLPA-managed Jaya Container terminal (JCT) would go out of business if ECT was given to foreign investors.

However, he stressed that JCT is unlikely to go out of business in near future, as a number of other terminals, which have even shallower depths, continue to operate across the world.  

Meanwhile, State Minister of Urban Development, Coast Conservation, Waste Disposal, and Public Sanitation, Nalaka Godahewa noted that Hambantota Port was never intended to be given away to a third party, and it was planned for industrial purposes.  Therefore, he blamed the previous regime for leasing the whole port to the Chinese, without considering consequences.  

“The Colombo Port was planned for transshipments and the Hambantota Port was planned for industrial purposes. It is difficult to establish an industrial zone in Colombo due to the shortage of land,” he stressed.

Moving forward, Masakorala urged the government to adopt landlord port model for ports, moving away from current hybrid model. He noted that much of the world has adopted the landlord port model acknowledging the current dynamics of global shipping business.

He further pointed out that India is now moving forward to privatise the State-owned Jawaharlal Nehru Port Trust (JNPT), which is considered to be the only remaining State-owned container terminal, due to the inability to compete with other container terminals operated by the private sector.

In addition, he urged the government to develop a long-standing policy for the country’s shipping sector.

He pointed out that there had been six different policy documents for the industry since 1994.

He blamed that Colombo Port has lost business to newcomers in East Asia and Middle East over the past several years due to inconsistent polices.