Challenging times ahead for shipping industry
Sri Lanka’s shipping industry is currently facing an unprecedented demand and it is expected to become more challenging in the next few months.
Demand has never been stronger in the shipping industry and the ports have seen a surge in demand and Colombo is one of the few exceptions that has no delay whereas ports in the US have reported about 6-10 days delay, South Asia Gateway Terminals CEO Romesh David said at the webinar organised by the Council for Business with Britain on the topic of “Understanding the Current Shipping Challenges, Inbound and Outbound” on September 10.
Due to the unusual demand and supply the lines brought back the business as people were willing to pay, he noted.
Shipping lines also started to make large profits since there was a major change in the demand that has never been stronger, it was pointed out.
Due to the changing demands there has been a change in the freight rates that have shot up from around $1400 to $14,000, Mr. David explained adding that this has changed the situation for the exporters and importers who had previously enjoyed a comfortable position with cheap prices.
He also pointed out that due to delays in other ports and not reaching the Colombo port on time has resulted in congestion building up at the yard adding that “so as a port we are congested.”
AP Moeller Maersk Country Sales Manager (Sri Lanka) Randima Krishnaratne highlighted that there was supply demand mismatch with the demand growing by 18.7 per cent and this situation was compounded by the issues that were prevalent like the blockage of the Suez Canal crisis, port closure in China that caters to the electronics market.
She also pointed out that the coming months will be “harder times” for the exporters. Ms. Krishnaratne also said that out of the total uplift of cargo last year at 96 million kg, SriLankan Airlines had carried 32 million kg and the rest were by foreign carriers. She pointed out that there is a “huge gap”.
Interestingly, she called for a diversification of Sri Lanka’s book of exports with more exports into destinations like Africa without concentrating mainly on Europe and by looking at the (new) place “we can stand out and make a difference”.
Sri Lanka Freight and Logistic Association Past Chairman Diren Hallock said that while the question of COVID-19 has been pointed out as a key issue facing the industry however, this has been converted to an opportunity by some as well. He noted that in this context the ones who pay will survive if not they will perish.
SriLankan Airlines saw a total uplift from January to June this year, he said noting that out of the 65 million kg moving out from here 23 million kg were handled by the national carrier.
Mr. Hallock also said that there is a need for a regulator to ensure that exporters can go where they want and he pointed out that exporters cannot be told where they should export to.
SriLankan Airlines Head of Cargo Chamara Ranasinghe said with only 24 aircraft they were struggling when the airports started shutting down and then on March 24 Sri Lanka also closed its airport.
“We couldn’t imagine what we could and should do with our passenger planes,” he said pointing out that during that time there were many examples in the world and industry where the airlines used the belly capacity of passenger space for cargo.
This eventually was the only way of earning revenue like a ventilator that came for the aviation sector, he said adding that SriLankan operated 120 charters.
CMA CGM Lines Group Director Ikram Ghazali said that there is a need to work together and get out of this blame game, adding that when freight rates were low in 2010 and 2011 no one said anything and noted that in about two to three years there will be an additional capacity pumped in.