Operating a business becoming much more normal in Sri Lanka: Maersk official

By Zahara Zuhair
Creating history, the world’s largest ship, Triple-E liner, owned by Maersk Line, called on Colombo recently, which is 400 meters in length with the capacity of 18,000 to 20,000 TEUs. Certainly it’s a big moment for Sri Lanka, in its endeavour becoming a maritime hub.

Maersk Line, the global containerized division of the Maersk group, has a fleet of more than 500 vessels along with 1.9 million containers.
To get more insights on this development and to learn about his views on improving Maersk’s strategic relationship with Sri Lanka, Mirror Business recently met with A.P. Moller-Maersk South Asia Group Relations Senior Director Julian Michael Bevis.
Below are the excerpts from the interview. 
 

Could you tell us the reason to bring in a vessel of that nature?
It’s a significant step forward. It shows our commitment to here. It’s a very large sophisticated piece of equipment and not every port can handle it. 
This will come in weekly rotation. It’s like a bus service—every Friday afternoon the ship will arrive on its way from Europe and every weekend the other direction. That’s how all our services work. They arrive and depart on set times all the time. That gives reliability and regulatory to exporters and importers.

I think what is interesting is there has been a bit of change of government policies here and thankfully the fighting here is over and the process of reconciliation and reconstruction is well on its way.
Sri Lanka is becoming a country where operating business is becoming much more normal. The government, we directly heard from the prime minister at the recently concluded maritime conference; he is very keen to attract further investment to develop Sri Lanka as a maritime hub in the centre of the Indian Ocean, which is really encouraging. So there is no doubt that there will be further investment opportunities here.

And it’s not just investment—more in terms of building more terminal capacity but also investment in providing more additional and more sophisticated shipping services. And that is what in a way about the arrival of Triple-E liner, which is one of the world’s largest container vessels, which underscores our commitment to here. Because boarding a vessel of that size and capability clearly shows we are serious about this market. It also underscores the ability of Colombo to bring in a vessel like that. It’s good news for Sri Lankan importers and exporters. It’s a very positive story and we are very keen to participate in it.
 

How about the size and the scale of your operations in Sri Lanka and what kind of growth has it seen in the past few years?
We have three businesses here currently. Maersk Line, which is the world’s largest container shipping operator and the market leader here, and Damco, which is a freight forwarding business; they undertake logistic services by sea and air domestically.

And we also have a share in the first private terminal built in the Port of Colombo – South Asia Gateway Terminals (SAGT), which we operate with our partner John Keells.
We represent about 25 percent of the total of the Port of Colombo, that’s in volume terms.
 

According to you, how should Sri Lanka capitalize on its advantage of being closer to the main east-west shipping route?
Yes, clearly. I mean there is no getting away from the fact of Sri Lanka’s location; it is a huge advantage. I mean every ship in the world is going through east and west has to go pass Sri Lanka. And therefore, the country is brilliantly placed to take advantage of that, but I think one of the points to make is, it doesn’t necessarily follow that a country or location to be on a trade route. 

Necessarily, to have profit from that, it has to have the right facilities in terms of physical infrastructure and also the regulatory infrastructure. Businesses have to be able to operate competitively. I mean there is no question Sri Lanka has done really well; it has developed into a successful transhipment hub and all credit to the maritime community here to having made that possible and to the shipping lines. They provide the service to make it work. But the world doesn’t standstill. India is developing its own capabilities and Sri Lanka will have to continue to ensure that it will be able to compete and I’m sure it will.
 

What are your thoughts on Sri Lanka transforming into a maritime hub and how do you intend to support Sri Lankan government’s vision on that?
We have progressively built our level of coverage through Maersk Line, the services we provide here to Sri Lankan importers and exporters. The export market is not growing rapidly at the moment. If somebody is exporting tea, rubber or garments, Maersk Line has the ability to take those goods to almost anywhere in the world. It’s because of the size we are enjoying and because of the space in that service network Sri Lanka enjoys. We will continue to build on that as I said.

We will continue to look into investment opportunities here. We have already invested in people. We employ 100 people in the office here. We have invested in the infrastructure in the port through our partnership with John Keells and we will look into if there are other investment opportunities. 

And of course, there might be other opportunities as the port develops. They may need storage capabilities, but it doesn’t follow automatically when governments keep changing and adopting different economic policies. There should be the right commercial environment to find the right business opportunities and that has to be the need of having the right regularity environment. It is a complicated subject that needs the government involvement in tax, labour market, etc. 

For example, how they regulate the shipping industry. My general view would be that the government’s intervention should be minimal in regulating the market. Eventually it brings about inefficiency because people will be able to shelter behind those barriers. In the long run, it is not a good thing; it’s painful sometimes. But the important thing is what’s the right thing for the country, we can only make arguments, end of the day it’s up to the politicians.
 

What sort of support do you expect from the government?
I think there are two levels: one is to be able to talk with the government about the regularity environment and for the government to work on the basis on those discussions, to provide the right commercial regularity environment. 

I must emphasize it’s not up to us to tell the government to what to do; it’s up to the government to determine. We can express views and other people express their views. That’s how democracy works. So we are not looking for subsidy or anything like that; we are looking for the creation of a competitive environment and I’m sure having listened to the prime minister it is something he is trying hard and working on.
 

According to you, what are the challenges Sri Lanka’s maritime industry is facing at the moment and what are the areas the infrastructure should be improved?
Well, there is a whole range of them and there is always will be. Every business faces its challenges.
You know, you read the newspapers. The container shipping market is extremely challenging at the moment and that means there is considerable pressure and that determines people who are providing administrative services or infrastructure service have to ensure what they do is competitive in every sense of work they do and it’s not just how much you charge to lift the container on and off the ship, it’s about how quickly you can do it, infrastructure lies behind that. 

In terms of customs process in all aspects, there should be continuing enhancement in physical infrastructure. I mean the regulatory environment; it has to be competitive. There are port clusters in the Indian Ocean, Dubai, Singapore and in other areas where regulations are benign and that means, if Sri Lanka needs to compete, has to consider on emulating a production of that sort of environment.
Sri Lanka will have to continue to make sure to be cost competitive compared to others and that market will change. At the moment, India doesn’t have a transshipment hub, but in the years to come, who knows! Sri Lanka has to keep an eye on that; Sri Lanka will have to compete.

Everything always has to be looked at, the operational services, costs levels, etc. You need to ensure Sri Lanka stays ahead. That is not necessarily saying it’s poor, otherwise we wouldn’t be here. It is something I’m sure we hope the government will continue to see to improve. We very much hope we can continue to contribute.

What are your plans in order to be responsive to the competition in Sri Lanka?
It’s about all services. Maersk Line gives the ability and scale to a wide range of services and that includes almost every destination in the whole world Sri Lankan exporters do business with. If you come to Maersk Line you get the whole deck of cards, in terms of destinations, with reliability, with consistency and delivered by high-quality people, that’s what we do.

So what are your other plans in building a good working relationship with Colombo?
There will be more opportunities to develop our shipping services here. It depends on the commercial development of the market. Sri Lanka’s international market will grow and we will continue to build infrastructure and hope to find the right commercial regulatory environment.