Colombo Port fights pandemic; freight rates skyrocket
Two of the Colombo Port’s terminals are back to full working capacity while the third one shows some improvement amidst the COVID-19 pandemic but shipping industry and exporters and importers are concerned about vessels bypassing and a spike in freight rates.
“The congestion was there for the last two to three days – this will gradually improve – we have two terminals almost back to normal JCT (Jaya Container Terminal) and the SAGT (South Asia Gateway Terminal) at 100 per cent but CICT (Colombo International Container Terminal) is gradually coming up, it was 60 per cent and will be 100 per cent in a few days,” Sri Lanka Ports Authority (SLPA) Chairman Gen. Daya Ratnayaka told the Business Times on Friday.
The government on Tuesday night issued a gazette declaring the SLPA as an ‘Essential Service’ which resulted in workers reporting to work.
Vessels are re-routing because those who were first to come to Colombo have re-routed via India and Bangladesh and for some shipping lines “we have requested them not to come directly,” he said.
However, he assured this situation will become normal “within the next few weeks.”
Moreover, the Colombo Port’s three terminals with its separate operations rooms have been integrated creating a task force for the control of the coronavirus and another for shipping lines, Gen. Ratnayaka noted.
The main objective of this integration of the operations rooms was to ensure they could carry out port planning and sorting out various issues as they arise, it was noted.
SAGT CEO Romesh David told the Business Times on Thursday that two workers had been detected as positive COVID-19 cases, resulting in some workers going into quarantine. However, he noted that they were able to cover the shortfall at the terminal and was able to carry out the work uninterrupted.
CICT General Manager of Marketing and Commercial Catriona Jayasundera said on Friday that the company has taken all measures and they have done more than required to ensure the health safety of the workers.
By Sunday the terminal was back at work and on Monday the yard was fully operational and of the 14 cranes six were running as of Thursday night and subsequently 8 are operational, she said, adding that they are expected to be fully operational by Saturday evening.
Ceylon Association of Ships’ Agents Chairman Iqram Cuttilan said that in spite of a 90 per cent workforce, they continue to face challenges.
He asserted that they were having challenges at the CICT container terminals where some COVID-19 cases were detected resulting in a stoppage of work for about two days and as of Thursday night out of the 14 cranes there were only six cranes in operation.
“They were expected to go to eight cranes but the labour is reluctant to come since they fear they will get affected by the COVID-19,” he noted.
Due to these issues ships cannot be loaded and discharged resulting in delays to vessels, he explained adding that normally at CICT they will work with 3 or 4 cranes but now there are only about two cranes for each vessel that results in delays in loading because of which the yard gets congested and also the feeder or smaller vessels which move cargo between Colombo and India take a longer period of about 5-6 days to berth alone.
This has inconvenienced both importers and exporters, the CASA Chairman stated adding that the biggest issue is that the shipping lines do not want to wait since it’s a cost for them “so they will decide that they may not call Colombo” as they are left with two options to berth at a cost or discharge at another port. This will cause importers an extra cost as they have to bring back the cargo on another ship.
Moreover, with the surge in exports from the Far East to Europe with China’s manufacturing quantities drastically increasing, ships are getting filled up in the Far East; and since Colombo is the last port before heading to Europe they will not want to allocate space and will try to fill up space from the Far East and proceed to Europe and the East Coast.
This has resulted in higher freight rates as ships “look at the contribution margin from the port and if they get a higher contribution from China they will get a higher rate.” As a result with space tight on all services they will reduce services or sailings per week, Mr. Cutttilan explained.
Freight rates have gone up by as much as 50 per cent in some areas and even by 100 per cent in others, he noted.
Tea exporter and Colombo Tea Traders Association Chairman Jayantha Karunaratne stated that because of a lack of space and lack of availability of vessels to Colombo freight rates have increased tremendously in some cases by about 100 per cent.
He noted that though they (authorities) say they are working to correct it, until this morning (Friday) the situation was unchanged.
Pradeep Dias, general manager at a leading firm in Colombo, noted that as an essential service “we are yet to see if the situation will change since we learn that a large number of people are affected as a result the efficiency levels is a big question”, he said.
Even at the Customs exporters noted that they had observed a very relaxed attitude at the port towards the health regulations even prior to the Gampaha cluster.
Mr. Dias noted, at the start they found that certain lorries, drivers and Customs could not turn up and when authorities started to take precautions they found the staff attending to those matters and processing a few people at a time.
Convenor of the National Trade Union Wasantha Samarasinghe told the Business Times that declaring the port as an ‘essential service’ was to forcefully bring down workers to the port but they need to increase the PCR testing and provide transport to workers whether they travel from home or any other place.
There is a problem in the administration of the port operations and unlike during the first lockdown this time they did not follow the health regulations strictly.
“We say that the workers are ready to work but definitely the security of the workers need to be adhered to and health regulations must be followed,” Mr. Samarasinghe noted.
Other exporters also said their export containers had been held up at the port.