SLFFA Cargo Services plans to invest Rs.500mn in off port facility

SLFFA Chairman Roshan Silva

• Move aimed at handling LCL cargo, transhipment cargo and entrepot trade
• Will help Colombo Port to free up space, which can be utilised for ship-related activities
• Expects govt. support with provision of State-owned plot of land for the project 

By Nishel Fernando
SLFFA Cargo Services (SLFFACSL), the commercial arm of Sri Lanka Freight Forwarders Association (SLFFA) is planning to invest Rs.500 million to setup an off port facility to handle LCL cargo (less than a container load), transhipment cargo and entrepot trade allowing warehousing space inside the Colombo Port to be utilised for more lucrative ship related activities. 
“Given the experience SLFFA Cargo Services has in carrying out a similar operations at the airport and given that SLFFA Cargo Services is willing to invest up to Rs. 500 million for the project, I am confident that all stakeholders would benefit from it,” SLFFA Chairman Roshan 
Silva revealed. 

He was addressing the Annual General Meeting of the Association in Colombo, last week.

Speaking to Mirror Business yesterday, SLFFACSL Chairman Diren Hallock revealed that SLFFACSL has already identified a few land parcels with existing facilities for the project, while noting that it is open to a proposal from the government to develop the facility in a Sate-owned land. 

“We are looking at buying into an existing facility, because there’s lot of excess capacity in warehousing at the moment. In the meantime, the government is looking into making some initiative in this regard, hence, we are also keeping our eyes open to see what the government has in mind,” he added.

The State Minister of Warehouse Facilities, Container Yards, Port Supply Facilities and Boats and Shipping Industry Development, Jayantha Samaraweera recently expressed the government’s intention on certain port related development activities, including warehousing and logistics. 

However, Hallock emphasised that State-owned land must be leased out at a concessionary price given the vast benefits this project provides to stakeholders including to Sri Lanka Port Authority (SLPA). 

“Based on our previous experiences, we find that the rates for State-owned lands are quite high. These types of projects cannot have high capital cost and to make money. If the government wants us to develop this project on a State-owned land, they should give us land on a concessionary rate. Therefore, we are looking at what type of place and price they would offer, then we can take a call on that,” he said. 

Hallock shared that SLFFACSL has been struggling to get this project off the ground for almost 10-15 years. However, he is optimistic on getting this project implemented in the current environment.  

“Since we are upbeat about making a direct investment, we are hopeful that the government will encourage this. The government is certainly interested in encouraging investments, and the decision making process seems to be much easier under the present regime. We hope this would be the catalyst to get us started,” he elaborated. 

Highlighting the project benefits to various stakeholders in the industry, SLFFA Chairman Silva pointed out that it would also help the Port of Colombo to free up space, which can be utilised for lucrative ship-related activities.

“This project would improve operational efficiency; reduce losses and pilferage, which in turn would help many exporters and the total industry. This project would help to free up space at the port which could then be used for more lucrative ship related activities,” he stressed.

Elaborating on his point, Hallock stressed that other leading ports have shifted activities relating LCL cargo outside of their respective ports. 

“There’s valuable land inside the port where they are currently holding warehouses. The port can use this land to earn much more revenue by using it for ship-related activities. This is the only port which discharges and keeps LCL cargo inside the port. All these activities are done off the port in leading ports such as Singapore and Hong Kong,” he elaborated. Further, the private sector-managed terminals of the Colombo Port—South Asia Gateway Terminals (SAGT) and Colombo International Container Terminals (CICT) have also moved LCL cargo off their terminals. 

The project is also expected to open up an opportunity for more SLFFA members to invest in SLFFACSL equity after 26 years. 

Currently, SLFFACSL is made of a consortium of 20 companies including some of the leading blue chip companies, international freight forwarding companies and leading local freight forwarding companies. 

SLFFACSL plans to kick start the project by June 1 next year subject to approvals of Sri Lanka Customs (SLC) and the finalisation of a land plot.