October 16, 2019
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    Country needs to develop shipping industry

    September 19, 2019

    India is a giant before us and we find that they are not only awakening to modernisation, to automation, change of bureaucracy which is a serious threat to Sri Lanka. But we must take them into our confidence and ensure that the production base is used as a transit point.We should capture their full potential so that we will be able to reap the benefits of this, said Power and Energy and Business Development Minister Ravi Karunanayake. Joining the debate on the Merchant Shipping (Amendment) Bill in Parliament yesterday, Minister Karunanayake said the foundation laid by his mentor Lalith Athulathmudali 40 years ago in the shipping field has helped us reap the benefits today.

    “The most important aspect in shipping is that it’s not static and it is a vibrant industry. We need to be in a position to compete with other countries. We find that there is a new breath of fresh air with our new minister that has taken over the sector. But, I like to keep abreast with the situation that is prevalent that we need to seize certain objective advantages that would be for the betterment of our country. We find that Sri Lanka is seriously not taking advantage of the business opportunity. We need to wake up from a business reality point of view because I find that Sri Lanka does not have a sense of urgency. I take this opportunity to say that we need on a thrust industry basis to use the full potential that is there for shipping.”

    He pointed out that shipping is the future. “As a result we know the benefits that would come in for the logistics industry and the freight forwarding industry and I think these are not fully exploited as yet. Singapore has grown owing to Sri Lanka’s past civil disturbances and the lack of coherency, consistency and the policy adaptiveness being delayed. This has resulted in paving the way for Singapore to go forward.”He noted that Dubai on the other side has taken advantage of being in-between the Far East which Sri Lanka could have played a pivotal role. The lost opportunity went to Fujairah and Dubai has taken full advantage before it goes into Europe.
    However, he said it’s never too late to get moving. “At this point when we are moving around 7.3 to 7.4 TUs, when the potential should have been 15 to 20, we should be able to seize the opportunity that is there for us. But unfortunately we are having capacity problems and we see the ECT as the future that is there that needs to be taken. But move one step forward and ensure that we develop the North Port as well. The North Port development would enable us to achieve that sizable development that can be planned well into the future. You could see that CICT is roughly moving around 2.3 to 2.4 million containers when the potential is about 2.6 to 2.7 million containers. Then we have the JCT which should be handling about 2.6 to 2.7 but its averaging around 2.1,” he said, adding that this is underperforming and also the productivity is something that Sri Lanmka should be looking at.

    He commended SAGT for doing an excellent job by being able to handle 2 million when their capacity is only 1 million. They are well above capacity owing to modernisation. “So these are the ways we need to take full advantage before the ECT comes in to support us with another 2-3 million containers which will help us stem the tide that is there. If we are unable to meet the capacity problem, you will find these shipping lines going away, never to come back to Sri Lanka. That has been our folly. We have been sitting on this advantage when we should have had this operational 2-3 years ago and ensure that that is in full potential in the next 12 months or so.”

    In the process, he said the delays that are taking place in the port is unbearable. Inter-terminal operations is far too slow. “We need to have a reality check because the shipping industry which is buzzing with this sense of inefficiency and the lethargy that has crept in needs to be corrected with immediate effect. The delays in inter-terminal transfers is so long that ship delays are taking place and this is cause for concern in the shipping industry. We need to check these shortcomings and correct them immediately. We need to have a professional team as if we are unable to achieve our goals owing our lack of pre-planning, let’s ensure that the efficiency is brought in so that we don’t lose the opportunity that is before us. Let us bring the automation of documentation in. The Customs is not giving its full assistance to make things much easier and quicker. They are still stalling and not contributing in the process and they are part of the lethargic system,” he said, adding that this needs to be corrected with immediate effect as competitiveness is the need of the hour.
    Karunanayake noted that out of the 7.3 million containers, around 75%-76% of transhipments do take place to his knowledge and this is a good position to be in.“But, we need to ensure that much more is used so that the idling capacity is converted to profit in our country. Last year we lost around Rs. 8-9 billion. This is owing to the lack of prudent financial borrowing that took place before.
    That’s one of the areas, when it comes into the ECT there is an asking as to why foreign loans are taken. There is a necessity to take foreign loans. But, we must ensure that they are capped and hedged so that the impact that we went through before is not repeated once again. The mother ships which previously went through Sri Lanka is now going through India’s Chennai and Nagapatnam. Hence, we need to get these mother ships coming into Sri Lanka. We must ensure that we provide the hunger element that is there in the shipping industry and look at bringing in the biggest vessels by improving our productivity,” he added.
    Merchant Shipping (Amendment) Bill passed with amendments
    The Merchant Shipping (Amendment) Bill was passed in Parliament with amendments yesterday.The Second Reading debate was moved by Ports and Shipping and Southern Development Minister Sagala Ratnayaka yesterday and was passed without a division.Moving the Merchant Shipping (Amendment) Bill, Minister Ratnayaka said the Merchant Shipping Secretariat operating under the Ministry of Ports & Shipping and Southern Development is entrusted with the responsibility to make laws, regulate marine and merchant shipping activities of Sri Lanka.

    “It is the local contact point in Sri Lanka for International Maritime Organisation of the United Nations. The activities of the Merchant Shipping Secretariat are basically governed by the Merchant Shipping Act No.52 of 1971, Licensing of Shipping Agents act No. 10 of 1972,” he said.
    “The Merchant Shipping Secretariat deals with ensuring the safety of life and property at sea, maritime education, training, examination and certification, registration of ships under Sri Lanka flag, Licensing of Shipping Agents, Container Depot Operators, Container Terminal Operators, Container Freight Stations, Freight Forwarders or a Non Vessel Operating Common carriers and implementing provisions of all applicable international Maritime conventions and national regulations,” Minister Ratnayaka said.
    “Annually, we collect US$100 million income by issuing Continuous Discharge Certificate (CDC) to seafarers and revalidation. It approves and audit Maritime Training Courses, conducting examinations and certification of seafarers (CoC) and also regulate the maritime training establishments. Registration of Ships under the Sri Lankan flag and survey of ships for the issue of necessary statutory certificates and also conducting of inquiries based on complaints received from seafarers working on foreign vessels that reach Sri Lanka. The Secretariat also ensures the safety of navigation around the island by removing of obstructions and mapping. It is responsible for the removal of shipwrecks around Sri Lanka and also to take unseaworthy vessels into custody.The Secretariat disseminates the functions of the Marshal of the Admiralty Court under Admiralty Jurisdiction Act No.40 of 1983 including the arrest and auctioning of ships,” he added.
    He noted that the Merchant Shipping Secretariat is responsible for all these important activities that attracts US$ 100 million per annum.The Merchant Shipping Secretariat is tasked with the enforcement of relevant legislations and the promulgation of necessary regulations to give effect to the mandatory IMO conventions and the major functions of this are entrusted to it. The IMO being the specialised agency of the United Nations in relation to global shipping activities conducts mandatory audits on member states in terms of IMO resolution A1070 (2018), which is commonly known as Code 3 to ascertain the implemetation of mandatory conventions of the IMO.
    The Minister stated that the Merchant Shipping Secretariat has identified the need of amending the Merchant Shipping Act No.52 of 1971 with the development and the transformation of the industry in the world while fulfilling the international obligations effectively and efficiently as a flag, a port and a coastal state.“As desired by the Merchant Shipping Secretariat, the IMO organised and conducted a mock audit in 2014 to ascertain the compliance with the mandatory instruments prior to the scheduled mandatory member state audit in 2016. During the mock audit it was revealed that Sri Lanka has not fully transposed several mandatory IMO instruments into domestic legislation to give those instruments full and complete effect. Accordingly, the then Minister of Shipping submitted a Cabinet Memorandum Merchant Shipping Act No.52 of 1971 in order to bring in the amendments in line with the IMO mandatory conventions. During the Cabinet meeting held on April 29, 2015, it was decided to grant approval to amend this Act thereby paving the way for necessary amendments to accommodate the IMP mandatory conventions into domestic legislations,” he said.

    SLPA needs more jetties with sufficient depth to berth mega-ships - Minister Sagala Ratnayaka
    The Sri Lanka Ports Authority (SLPA) has no jetties with sufficient depth to berth mega-ships. Therefore, the development of the Eastern Terminal is done in keeping the controlling stake with the SLPA,” Minister of Ports & Shipping and Southern Development Sagala Ratnayaka told Parliament yesterday.
    “We are working towards obtaining a loan from the Government of Japan, with an interest rate of 0.1% and a grace period of 12 years subjected to a payment period of 40 years,” he added.The minister noted that increasing the container throughput, the Government aims to earn US$ 64 million from the proposed Eastern Terminal development project, which will conclude by the end of next year.
    He highlighted the urgent need to construct terminals with more depth, length, and capacity to accommodate mega vessels. “Already the terminal, which is 440 meters long is developed but it needs to extend to 1,350 metres enabling three mega vessels to berth at the same time. We will fit equipment to 440 metres during the first stage. Unless we take the correct decision now it will be a loss for the country. We are looking at starting the operations of this terminal by the end of next year.”According to Minister Ratnayaka, the government annually earns US$ 15 million from SAGT and US$ 25 million from CICT while the Eastern Terminal is expected to generate an income of US $ 64 million.

     

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