The Colombo Dockyard PLC (CDL), in a bid to combat the industry recession, has changed its focus to its ship repair arm, Mangala Yapa, Managing Director CDL said.
"The entire ship repair of CDL has gone through some changes. Now we are looking for a different set of vessels in this sector such as low volume repairs and smaller vessels, etc," he told the Business Times. He added that increasing the numbers of ships and importing on CDL's turnaround time and flexibility in handling these ships will also be given high priority.
"This is also a good opportunity to look for different markets. We can tap sophisticated owners and fleet managers to attract them," he explained. In this regard, he said that the Far East, Japan and Europe are earmarked and that attracting them largely depends on putting more emphasis on the health environment and safety. He noted that the shipping industry isn't doing well but is expected to turn around by mid next year.
The highlight of last year for CDL was signing a contract with Bernard Schulte Ship Management as one of their registered suppliers. "Recently AP Muller dry-docked in Colombo after many decades. We're trying to see whether we can convert this into a partnership," he said.
He added that it's a serious concern however that this negativity will continue globally and hence have a longer term impact on CDL.
Experts believe the Indian shipping industry too will contract in the foreseeable future, presenting greater challenges for the company to sustain business levels in the immediate. He explained that CDL was dependant on the India tonnage, but the Shipping Corporation of India scrapped most of their medium sized tonnage. "Bigger vessels have replaced them and these are too big for us to repair," he explained.
"These movements now make it imperative for our company to enhance productivity at all levels, improve efficiencies and maintain consistency, while differentiating ourselves to create both tangible and intangible value to our products and services."
The CDL ship repair saw a marginal 4% growth last year, a converse trend to global and regional ship repair paradigms which experienced negative growth. Recovering from the setbacks experienced in 2010, the positive trend continued until October 2011 after which the situation unprecedentedly was aggravated with the onset of the Eurozone crisis, Mr. Yapa said. "Growing our ship repair business in this severely contracted market while also dealing with stringent competition from China, Vietnam and the Philippines remained extremely challenging," he added.
He said that this was further exacerbated with an appreciating Sri Lankan Rupee and rising local costs. CDL has ship building orders till early 2014. "It's a very tight and heavy workload. 70% of our annual business is from shipbuilding," he added.
Managing both sides required amazing balancing of the scales, with the demand requesting greater discounts to be more competitive in price and supply infusing pressure on appreciating currency and rising costs, he added. "Foreign currency vulnerability was also observed in currencies we deal in including the US dollar, Euro, Singapore dollar and Japanese Yen adding further pressure on our business," he said. |
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