COLOMBO: Sri Lanka’s Colombo International Container Terminals handled over 2 million twenty-foot-equivalent units for the first time ever in 2016 as volumes climbed 28 percent on a year-over-year basis. CICT attributed passing the 2-million-TEU mark to synergies through the network of parent company China Merchants Port Holdings. “The ability to access the CMPH global network was the key factor in gaining and attracting new transshipment volumes to the Port of Colombo,” said Tissa Wickramasinghe, CICT’s general manager of commercial and marketing. More than 70 percent of volumes handled during the year were carried to the facility by mega-ships, the company said in a statement.
The throughput news came as a leading domestic shipping association warned that reported delays to Colombo’s planned new East Container Terminal would jeopardize the progress made towards becoming a major regional transshipment hub. The Ceylon Association of Shipping Agents, or CASA, which includes among its members the foreign lines using CICT for transshipment needs, said further delay to the development of ECT would likely result in a shift in container volumes to other transshipment hubs.
CICT would eventually come under capacity pressure and the lack of a solution at a time of intensified regional competition ahead of the reset of the alliance networks in April was worrying, the association said in a statement. The THE and Ocean alliances will begin operations then, as will a rejigged 2M Alliance that includes a slot-sharing agreement with Hyundai Merchant Marine. “CASA reliably understands that the government is trying to introduce new conditions after the EOI [expressions of interest] bids have been closed, which totally contradicts the initial conditions. These new conditions will eliminate all or most of the bidders, which defeats the transparency and good governance processes.” Berth utilization at CICT was already at 65 percent and this would be used up further over the course of 2017 as the number of mega-ships calling at Colombo’s only deep-sea container facility continued to grow, CASA said. The fact that CICT cannot berth three, 400-meter (1,312-foot) vessels at the same time is a negative factor for lines considering adding services to Colombo, the association said.
“Development of regional ports with modern facilities will create major competition for the Port of Colombo in that these ports are going to attract vessels to call directly there.” “New regional ports will offer early bird/special discounts to attract volumes. Once volumes [are] moved from Colombo to regional ports, it is very difficult to bring back the same as lines would enter into long-term partnerships with respective terminals of regional ports,” the association said. CICT’s strong volume growth over 2016 was achieved despite data showing that demand by Indian shippers for Colombo’s transshipment services may be slowing. The volume of transshipment traffic through Colombo that originated in India’s 12 major public ports in fiscal 2015 and 2016 was flat at 1.19 million TEUs compared with the previous year, despite a 14 percent year-over-year increase in India’s total transshipment volumes. Colombo is easily the dominant handler of India’s transshipment cargo, although its share of that business fell from to 42 percent in fiscal 2015 to 2016 from 48 percent the previous year.
The flat volume performance was better than that of the next two hubs handling Indian cargo, Singapore and Port Klang in Malaysia, both of which experienced volumes of India-origin cargo fall. An easing of cabotage restrictions in India likely resulted in more business handled by the country’s own ports, which is an important government strategy to help grow the country’s export sector. Dubai’s Jebel Ali also managed to expand its volume of India-origin transshipment business in fiscal 2015 and 2016, albeit from a much smaller base. India wants to do more of its own transshipment business and is developing two new deep-sea ports in an effort to achieve that. The practice of being so reliant on international transshipment adds significant costs to Indian exports, hurting their competitiveness on the international market.
