Ad hoc port security measures hurting business

Logistics service providers say ad hoc security measures at the Port of Colombo have endangered US$ 5 million worth of business.

“We will lose US$ 5 million worth of income per year, overnight, because we had to suddenly stop Multi-Country Consolidation (MCC) services. We were told last month that MCC cannot be done due to security reasons,” said Chairman of the Sri Lanka Freight Forwarders Association, Niral Kadawatharatchie, speaking at a logistics workshop on Wednesday.

Multi-Country Consolidation (MCC) services in Sri Lanka involve the redistribution of international cargo, to and from, the Indian subcontinent.

“One container has cargo going to different countries. So MCC is about separating the cargo according to country and re-shipping it. We have been providing MCC services to cargo coming to the Indian subcontinent and to cargo moving out from the Indian subcontinent,” explained Kadawatharatchie. Containers were taken out of the port into warehouses close by, under customs supervision, to provide MCC services. However, Sri Lanka’s MCC services came to a halt last month. “There was a sudden Customs ruling saying MCC was stopped by a Treasury directive. We were told this was due to security concerns,” said Kadawatharatchie.

Since the security directive was introduced suddenly, incoming containers are stuck inside the port and foreign customers are waiting for Sri Lanka to deliver the goods. Service providers say Sri Lanka will lose the total MCC business to another country soon unless they are allowed to resume services immediately. “Previously this service for the Indian sub-continent, was provided by Dubai and Singapore. We marketed ourselves and started pulling in some of the business to Colombo. But unless we can start work soon all this will be lost. Our business will go to Dubai and Singapore,” said Kadawatharatchie.

The losses are seen as greater than the immediate loss of income, as it would also impact Sri Lanka’s credibility as a regional hub. Offering MCC services contributes towards retaining the Port of Colombo as a distribution hub for the region.

The sudden disruption of services will result in a bad reputation and make the country less attractive as a location for a hub, say logistics providers. The industry is calling on the government for an immediate response.

“Of course, national security must be maintained. But if there is a security issue, we must address the security issue, not just stop business and hurt the economy,” said Kadawatharatchie.

Less than 10 companies in Sri Lanka are authorised to provide MCC services and a major share of the income from MCC services go to the Sri Lanka Ports Authority.