China ups stake in Colombo South container terminal

January 23, 2012, 12:00 pm 

With Aitken Spence announcing its withdrawal from the consortium with China Merchant Holdings to design, build and operate a container terminal at the Colombo South Port, the Sri Lanka Ports Authority (SLPA) and Board of Investment (BOI) have granted it approval to sell its entire stake to its former Chinese partner. After the deal is finalised, China Merchant Holdings would increase its stake from 55 percent to 85 percent. SLPA would continue to hold its 15 percent stake in the country’s single largest private sector led project, estimated to cost over US$ 600 million.

"Colombo International Container Terminals Ltd (CICT) has received letters from the SLPA and BOI both dated January 20, 2012 granting the approval for China Merchant Holdings (International) Company Ltd to purchase the entire 30 percent sharholding of Aitken Spence PLC in CICT," Aitken Spence said in a letter yesterday (Jan. 23) signed by Company Secretary R. E. V. Casie Chetty.

"Hence, we are now finalising the formalities of the transfer and will keep you informed when the transaction is competed," the letter addressed to the Colombo Stock Exchange said.

The project was estimated at US$ 500 million but cost escalations and delays have pushed the cost up to almost US$ 600 million.

Aitken Spence had pulled out of the consortium after financing from the China Development Bank fell through. Differences between the management of the two firms did not help matters either, source said.

Earlier, SLPA Chairman Dr. Priyath Bandu Wickrama said the SLPA was keen to buy over Aitken Spence’s stake, but now it seems the SLPA has allowed the stake to go over to China Merchant Holdings.

Aviation hub: Lanka increases capacity but freight, ground services need some liberalisation

January 22, 2012, 12:00 pm 

By Mario Andree

Passenger and cargo handling at the main Bandaranaike International Airport (BIA) has exceeded capacity, good signs of the potential for the country to establish itself as an aviation hub, but industrialists are concerned that freight and ground services were not liberal enough.

Airport and Aviation Services Chairman Prasanna Wickramasuriya said that the BIA handled more than 6.4 million passengers, exceeding its capacity while cargo handling also showed an increase.

However, he pointed out that the current scenario was not sufficient to become an aviation hub and said that the country needs to attract more transits passengers and cargo in order to achieve its goals. Passenger transits had increased 50 percent last year compared to 2010, he said speaking at a forum convened by the American Chamber of Commerce.

To facilitate more transits and encourage a high number of tourist arrivals, the Mattala Airport would be completed by the end of this year with 60 percent of the project already completed. The AAS would initially add a million more passengers and 100,000 cargo handling capacity to safeguard the BIA’s interest.

Wickramasuriya pointed out that more expansions were on the way for both BIA and the Mattala Airport. The BIA would able to absorb another 6 million travelers and Mattala 5 million.

In addition to these international airports the AAS has drafted plans for domestic airports. The Ratmalana Airport which was once used for military purposes would be developed as a city airport to cater to the growing number of cooperate jets flying into the country, a 28 percent growth in cooperate jet arrivals was seen last year compared to 2010, he said.

He said by end 2018, the country would have a total passenger handling capacity of 18 million and for the country to become an aviation hub the private sector would be required to establish other services and facilities to support it.

At the forum, several industrialists voiced their concerns that the freight policies were not so conducive for businesses with several issues plaguing the industry.

Industrialists also pointed out that the monopoly status enjoyed by the national carrier Sri Lankan Airlines for ground services such as catering and baggage handling, discouraged competition and made Sri Lanka a relatively expensive destination for airlines as a result.

“In order to become an aviation hub, some of these would have to be liberalised in order to attract investment and more players,” an industrialist said.

Developing the domestic aviation sector also requires the government to create a level playing field, with private operators finding it difficult to compete with the heavy military presence in the sector, industrialists pointed out.

Global recession in 2012 will dip transshipment volumes, freight rates - SLPA Chairman

January 15, 2012, 7:13 pm 

It is going to be a tough year for the Sri Lankan shipping and port sectors in 2012 with global recession which is expected to spill over from last year. Freight rates and transshipment volumes are also expected to dip with the supply of vessels exceeding the demand arising from recession. Here, in an interview with The Island Financial Review, Sri Lanka Ports Authority Chairman Dr Priyath Bandu Wickrema addresses the contentious issues revolving round the shipping and ports industry in this backdrop.

Q: How do you see the backdrop for volumes for Colombo port in the light of the global recession not expected to improve in 2012?

A: Of course 2012 will be another tough year for the Sri Lankan shipping and ports sectors. It is envisaged due to the global economic slowdown which started last year to continue in 2012 as well.

If you analyse the transshipment handling on a quarterly basis last year, transshipment volume growth percentages dropped gradually (cumulative comparison) which says that it is 8.9% in the first quarter, which reduced drastically to 3.3% in the second quarter, down to 0.6% in the third quarter but slightly up from that to 0.9% in the fourth quarter. Transshipment had a healthy growth in the first quarter and gradually dropped to 0.9% at the end of 2011.

However, on the contrary, domestic volumes show a healthy growth from the beginning towards the end of last year. There has been a steady growth in the 1st quarter of 8.3%, the 2nd quarter has reported an increase of 10.2%, and the 3rd quarter increase has been 10.5% and the 4th quarter, the highest of the quarters, up 12.3%.

Q: So, correspondingly and parallely, do you think that freight rates will also dip?

A: Yes. A lot of new ships will add to the existing fleet – where more supply will be over demand and due to the economic slowdown, there will be less trade demand will result over supply which will result in freight rates dropping further. According to the Alphaliner projections, the cellular containership fleet is expected to grow by 8.3% in 2012 and last year it grew by 7.9% with 127 deliveries. The order book reached 620 ships on December 2011 representing 28% of the existing cellular fleet.

Q: So, how do you see vessels sailing Colombo under those circumstances?

A: Colombo too, will be impacted. However, if you look at the last global recession compared to other regions, this region had a less impact. The number of vessels calling will not have a big impact but what will be impacted will be the volumes.

Q: A lot is being done for the development of ports in Sri Lanka. However, there are specific issues like the berthing congestion at both the Jaye Container Terminal (JCT) and South Asia Gateway Terminals (SAGT). Are the remedial measures taken by the port, in line with the port users’ expectations?

A: Both the JCT and SAGT have added new and additional equipment to their terminals to turn around the ships faster, turn around trucks faster and meet the expectation of the port users. Additional berths, more yard space, road widening, navigational improvements and human resource developments will help to serve port customers and shippers better.

Q: What are your views in respect of container vessel operations?

A: With all this new developments container vessels operations will improve a lot.

Q: The delays at times in the sailing of container vessels where operations have been completed, cause a loss of opportunity to the port, adds to the costs of the vessel operator and does not do much for the image of Colombo being marketed as a regional hub; What are your views vis a vis the limited pilots on duty at any given time and related operational constraints of the port, matters that could be addressed without capital expenditure?

A: There were some disruptions during last year with regard to sailing /berthing of vessels mainly due to the channel dredging and relaying of the pipe line with regard to Colombo Port Expansion Project. There are no delays now other than bunching up vessels at times. We have enough well trained pilots to man 24/265 with sufficient number of tugs.

Q: On the Installation of new gantries with twin lift. Have they made an impact on port performance at the respective container terminals?

A: There are only two twin lift gantries. Yes. Now every JCT berths we offer four gantry cranes. We need higher crane intensity to turn ships faster.

Q: On the Navis system at JCT. Has it improved reporting procedures, minimized physical documentation, where containers have reportedly gone missing in the interim phase between Navis and the introduction of Navis?

A: After the introduction of new Navis system we have simplified the processes, increased handling capability, and real time monitoring and improved accuracy. There have not been any containers which have gone missing.

Q: How do you see the performance of the new contractor in inter- terminal trucking?

A: There are no issues and complaints while there are no delays in inter-terminal trucking.

Q: What are your views on car carrier operations, vehicle yard congestion and the resulting delays to car carriers, sometimes up to one week?

A: The SLPA is preparing a Ro Ro vehicle yard (which is approximately 2.75 Hectares) at the Hambantota Port on a temporary basis very close to the berth. As a long term measure, a separate Ro Ro Terminal will be built at the Hambantota Port and that would address the issue that you are talking of.

Q: On the pace of transformation / reform and especially car carrier operations i.e to move the surplus cars for storage at private yards under customs supervision/joint port security in the outskirts of Colombo or to insist that car carriers call at Hambantota; What are your views on the mechanism for the Port / Customs to work together as many car carriers operators are known to have lost severely due to berthing delays in Colombo? o your comments?

A: This problem will be partially solved with the Ro Ro yard at Hambantota.

Q: What are your comments/ views on the limited use to date of the port at Hambantota, where lots more could have been done in the past few months had the support services been in place (even in) temporary accommodation e.g. navigation services, customs, banking facilities for payment of duty, OPL bunkering and so on? For example, car carriers could have been diverted to Hambantota and as the cars are cleared in small lots, road car carriers could have been used to transport the cars to the importers…

A: Irrespective of how much good planning is in place and how good the drawings are on board, the confidence of the shipping lines is really built up when the actual port infrastructures are built. For long years in the past, the port of Hambantota was much discussed but nothing came true. Now the infrastructure is in place and operations are being commenced, slowly but steadily. It is quite usual to occur some mistiming when the projects of this scale are implemented among all government procedures. It was same for these projects too and the project is in now the transition period. All issues are being solved and achieving good progress at present.

Q: Have the Hambantota Port tariffs been published ?

A: The Sri Lanka Ports Authority Board of Directors has taken a decision to offer quite lucrative discount at Hambantota Port within the years 2010-2012, being a green field port. However, this tariff would be revised in the near future.

Q: When do you think that the cranes will be installed?

A: With the changing demand, the type of the cranes was changed lately. Now all due approvals are obtained. It is expected that by the middle of this year, the cranes will be available.

Q: Recently, the Sri Lanka Ports Authority published asking for Expressions of Interests for projects at the Hambantota Port where 27 companies have responded. Almost a year has lapsed. Has the industry been kept informed of what was happening in this regard?

A: As we mentioned earlier 27 proposals altogether were received. Out of them 22 proposals were short listed by an initial screening. Cabinet of Ministers has approved four proposals and these include setting up of Petrochemical plant, Cement Plant, Sugar and Fertilizer processing plants. The approval of the Cabinet of Ministers was sought for further four two proposals for warehousing and two proposals for petrochemicals. Further Requests For Proposals ( RFPs) are also being planned for new proposals to cater to the present demand.

Q: The breakwater of the Colombo Port South Harbour has been completed. Has the industry been kept informed of when the construction of the terminal would begin so that their principals and stakeholders could be kept informed?

A: The business community has been invited for terminal construction commencement and published in newspapers. Hence, the industry is kept well informed.

Q: On the question of tariff, billing and accounting queries. What are your comments on its application and resolution in day to day operations?

A: There are very few disputes after the implementation of the new terminal management system. Disputes are resolved after discussing with the relevant party and there is a dispute meeting every Thursday. 

Q: Finally, on the much vexed question of bunkering. Almost four years have lapsed now after the liberalization of the bunkering industry (landmark Supreme Court Judgment of July 2008.) Bunker price differentials over Singapore  and Fujairah remains  at plus (on average) US$ 60 per tonne for fuel  oil   and over US$ 100 for gas oil over Singapore & Fujairah.  What are your thoughts on this?

A: When ownership of Bloemendhal Oil Terminal was restored the Sri Lanka Ports Authority in September 2008, immediate steps were taken to identify the problems prevailing to develop Sri Lanka as a bunkering hub. Possible facilities such as arrangement of an alternative berths for oil tankers at new North Pier, enhancement of storage capacity, purchase of a new boiler and engine pump etc. were taken in order to maintain efficient and productive services pertaining to the supply of bunkers to the ocean going vessels. Replacement of existing pipe lines from the Bloemendhal Oil Terminal to the Port of Colombo will commence in February 2012.

Ten holders of bunker license have registered for the supply of bunkers. We are of the view that the Sri Lanka Ports Authority , a public enterprise should be given an opportunity to import store and supply bunker fuel oil and marine gas oil with the private sector license holders to make it competitive which will result attractive prices which could be offered within the territorial waters of Sri Lanka.

Q: Arising from that, the desired competitive prices for Colombo have not come and the prospect of bunkering at Hambantota despite all the hype, has not commenced. How would you comment on that in the light of Hambantota Port’s ambitious intent of being a regional hub for bunkering?

A: The SLPA would have a definite edge over the other competitors with the fully fledged Tank farm connected to two oil terminals at Hambantota on commencing full operations. Out harbour bunkering is also facilitated with bunker barges presently on order. The SLPA, therefore, could offer most competitive prices and therefore our plan is to become a regional hub for bunkering.

Capacity squeeze sparks Asia-Europe rate revival

January 8, 2012, 7:12 pm 

Shippers are struggling to find space on containerships heading from Asia to the US and Europe, with cargo being left on the quayside and lines newly able to jack up their prices.

According to a report in IFW’s sister publication,Lloyd’s List, ocean carriers have managed to lift freight rates on the eastbound transpacific trades, reversing a slide that started in mid-2011 as a weak peak season fizzled out.

Spot headhaul transpacific rates rallied 27.6% in the past week, according to Drewry’s Hong Kong-Los Angeles container rate benchmark, rising from US$1,436 to $1,832 per feu.

The upturn began after action by Transpacific Stabilisation Agreement (TSA) members and removal of capacity for routine maintenance over Christmas. Similar conditions in the Asia-Europe trades has abruptly shifted the supply-demand balance.

Nearly all lines are now rolling cargo, according to analyst Drewry’s Philip Damas, a situation not seen since mid-2010. The squeeze on capacity reflects a mini-surge in shipments out of Asia ahead of factory closures during the Chinese new year holidays, when, traditionally, fewer ships are deployed.

TSA lines announced plans in November to individually raise all-in freight rates and charges by a minimum $400 per feu from1 January, as an interim step before publishing annual service contracting guidelines.

However, despite the latest increases, prices remain lower than they were a year ago. Current spot rates quoted by Drewry are almost 14% below those of 12 months ago, when they stood at more than $2,100 per feu.

- IFW

Rate war on Asia-Europe set to heat up

The Asia-Europe trade is set to get even more competitive as carriers prepare for capacity additions and an intensifying rate war.

According to analyst Alphaliner, competition on the trade will increase this year, as carriers restructure their networks and reshape their alliance partnerships.

"With all gloves off on the Asia-Europe trade in 2012, the rate war is expected to intensify - spelling disaster for all carriers on the trade," said the analyst.

At the end of 2011, the Grand Alliance (Hapag-Lloyd, NYK, OOCL) and New World Alliance carriers (APL, HMM, MOL) announced the creation of a "G6 Alliance", pooling their fleets on a consolidated Asia-Europe network. 

This move closely followed the announcement of the MSC-CMA CGM alliance on the same trade.

Alphaliner said that both initiatives were aimed at countering Maersk’s extensive coverage of the Far East-North Europe trade through its Daily Maersk service.

If Maersk intended to kill off competitors with comprehensive coverage of the route, it has not worked, said the analyst.

Additionally, the usual year-end surge in bookings did not materialise in 2011, forcing carriers to postpone the traditional peak-season surcharge on the Far East-North Europe trade.

According to Alphaliner, carriers will have one last chance to raise rates this month, prior to the lunar new year, which falls on 23 January. 

"However, with a weaker outlook for Chinese exports next year, any rate gains will likely be short-lived," it said.

"The much hoped-for rationalisation of Asia-Europe services is not bound to materialise, as the consolidation of services under the new partnerships fails to remove any excess capacity. And new tonnage will continue to flow from shipyards." - IFW

New Latin trade corridor takes shape

January 8, 2012, 7:12 pm 

This year will see the start of construction work on a new cross-Andes transport corridor connecting Chile with Argentina. 

The 204km Bi-Oceanico Aconcagua Corridor will connect Punta de Vacas in Argentina and Saladillo, Chile, and, according to the respective governments, enable transit times of just four hours. The development will be accompanied by seamless Customs and border controls.

According to a report in IFW’s sister publication,Containerisation International, currently, an estimated 85% of cargo shipped between Chile and Bolivia and the eastern seaboard of South America is moved by sea and can take at least two weeks, with transit times on a key corridor, such as San Antonio to Santos, averaging 18 days.

It is hoped that the first phase of the corridor will open during 2020 and have the capacity to handle 10 million tonnes of cargo a year. All cargo types will be transported, including containers, and the stations that will be built as part of the project will be multipurpose in nature.

A further two stages of development are planned but with no specific time frames in place at this time.

The first would boost capacity by 100% to 20 million tonnes, through the construction of a second rail link, and the second would involved the building of a second tunnel, boosting the link’s cargo capacity to 30 million tonnes. 

Thereafter, haulage capacity would be expanded on a gradual basis, principally through improved management of the corridor and investment in new rolling stock.

The corridor is viewed by the governments of the various Mercosur countries, as strategic in helping alleviate congestion on the Cristo Redentor Pass, which can be closed for up to 60 days a year because of bad weather, and bolstering, in particular, Argentina’s and Brazil’s connections with Asia, and Chile’s trade with Europe, Africa and the Middle East/India.

- IFW

It’s survival of the fittest for carriers in 2012

January 8, 2012, 7:09 pm 

Amid fears over the strength of global demand and a potential rates war, and with more big containerships due for delivery, shipping lines’ lay-up strategies will dictate if they make money or not this year, claims one analyst.

According to Drewry’s latest quarterly Container Forecaster, spot rates have improved a little, but this is likely to be a temporary phenomenon, driven by the annual spike before the Chinese New Year holiday. 

Drewry said: "The biggest industry driver now is to place the largest ships in every major trade to ensure that carriers or alliances remain competitive on slot costs." 

The analyst said this had caused a major shift in the network configuration for the Asia-Europe trade, whereby carriers had clubbed together to share costs and ships.

With three major groupings in place, "the remaining small players with sub-8,000teu ships will find it extremely difficult to survive in this intense environment".

The report says: "The global fleet above 8,000teu will grow by 25% in 2012 and this will be a severe challenge for the industry to absorb, given that we foresee decent demand growth only in the emerging markets of Latin America, Indian Subcontinent, Africa and intra-Asia, where sub-8,000 teu ships operate. Overall global demand growth for 2012 is forecasted at 5.4%. 

"The current supply/demand fundamentals on the key east-west trades are not strong enough for carriers to push through any sustained revenue increases, and we already know that some shipper contracts have been signed on the Asia-Europe trade this year for around $1,100 per 40ft all in – levels that are below break-even." 

Neil Dekker, Drewry’s head of container research, said, "We believe that at the current burn rate, carriers’ cash reserves will run out during the second half of 2012. If they do not put a substantial amount of tonnage into lay-up by this time, the consequences could be dire." 

He estimated that idling could reach as much as 8% of the global fleet during the second half – equal to 1.3-1.4 million teu. 

"Carriers will, at some stage in 2012, be forced to idle tonnage, even if the lead players are showing no inclination to do so at the moment," he said.

-IFW

French port freezes harbour dues for third year running

January 8, 2012, 7:11 pm 

The French port of Le Havre has announced it will match its north Europe rival, Rotterdam, in freezing harbour dues for containerships for the third consecutive year.

In a statement, the port authority said the decision was aimed at "facilitating the return of confidence by container shipping lines and helping recapture containerised trades".

The news came after another rival port, Antwerp, announced that it would, for the first time in three years, increase charges by 2% for 2012.

The Antwerp port authority said the increased dues would be used to fund infrastructure developments, including improvements to terminal facilities.

Both Le Havre and Antwerp will offer a 10% discount on dues to shipping lines that operate the most environmentally friendly ships that call at the ports. Vessels will be rated in accordance with their entry in the Environmental Ship Index.

Meanwhile, the German port of Hamburg will increase its harbour dues by 3.5% this year, although ships with capacity of 11,000teu and above will be exempt from the price hike. - IFW

අධිවේගී පාරේ ලංගම
බස්‌ ධාවනය අද ඇරැඹෙයි
අකිත පෙරේරා

දක්‍ෂිණ ලංකා අධිවේගී මාර්ගයේ ලංගම බස්‌ ධාවනය අද සිට (03 වැනිදා) ආරම්භ කෙරේ. ඒ අනුව මහරගම සිට ගාල්ල දක්‌වා මෙම අධි සුඛෝපභෝගී බස්‌ රථ සේවාව ක්‍රියාත්මක වන අතර ඊට අය කෙරෙන ගාස්‌තුව රුපියල් 400 යි. කොට්‌ටාව සිට ගාල්ල දක්‌වා ගාස්‌තුව රුපියල් 380 ක්‌ බව ද ලංගම සභාපති එම්. ඩී. බන්දුසේන මහතා "දිවයින" ට පැවසීය.

ප්‍රථමයෙන් මේ සඳහා සුඛෝපභෝගී බස්‌ රථ දෙකක්‌ යෙදෙවෙයි. එහි රියෑදුරන් සඳහා විශේෂ පුහුණුවක්‌ ලබාදුන් බව ද හෙතෙම කීය.

ආසන 42 කින් සහ රූපවාහිනියකින් ද සමන්විත මෙම බස්‌ රථ තුළ අසුන්ගෙන ආසන පටි භාවිත කිරීම අනිවාර්ය වන අතර මහරගමින් උදේ 6.00, 08.00, 10.00, 12.30, 2.30 සහ සවස 4.45 යන වේලාවන්හිදී ද බස්‌ ගමනාගමනය ආරම්භ කෙරෙනු ඇත.

ගාල්ලෙන්ද එම වේලාවන්ට බස්‌ ගමනාගමනය සිදුකෙරෙන අතර මහරගමට පැමිණෙන මගීන්ට කොළඹ කොටුව බලා පැමිණීමට ද විශේෂ බස්‌ රථ යොදවන බව ද සභාපතිවරයා කීය.

අධිවේගී මාර්ගයේ මගී ප්‍රවාහන සේවා ආරම්භ කිරීමට ප්‍රථමයෙන් ප්‍රවාහන ඇමැති කුමාර වෙල්ගම මහතාගේ ප්‍රධානත්වයෙන් උත්සවයක්‌ ද පැවැත්වීමට නියමිතය.