More pluses in shifting vehicle transshipment to Colombo Port
View(s):Plans are afoot to shift the vehicle transshipment operations from Hambantota to the Colombo Port following an assurance given by Minister of Ports and Shipping Mahinda Samarasinghe to motor traders recently.
Deviating from the previous regime’s arbitrary action to shift vehicle offloading to Hambantota in 2012, this new plan should be implemented by the government after in-depth consultations with motor traders associations and all other stakeholders in accordance with the pledge given by Minister Samarasinghe.
There are more positives than negatives in shifting the vehicle transshipment to Colombo Port.
Colombo Port has new facilities such as a deepwater terminal that can accommodate the newest range of 18,000 TEU container ships. According to an Asian Development Bank report higher efficiency and faster delivery times will attract larger vessels and higher volumes of trade.
Colombo is fast emerging as the region’s port of choice because most of India’s own ports lack the depth or the infrastructure to handle big vessels, making Hambantota port the unlikely winner from rising India trade.
Previously, car carriers used to call at Colombo, South Asia’s container transshipment hub.
Today, however, Colombo handles only new Indian vehicles meant for the domestic market on a direct-delivery basis.
Indian transshipment vehicles and cargo from other origins including new and reconditioned Japanese vehicles are being shipped via Hambantota.
The plan to shift vehicle transshipment to Colombo is a practical move that will save transportation costs and clearance time as it takes four days in Hambantota. But this could be done in two days at Colombo Port.
The former Rajapaksa regime took measures to shift the vehicle off loading to Hambantota from the Colombo port stating that it was aimed at easing the congestion in the Colombo Harbour. The other reason highlighted by the then authorities was the delays which in turn led to higher freight rates by the shipping lines and consequently increased the final selling price of the vehicles. The congestion issue had been put forward by the former government as an excuse to shift the transshipment business to Hambantota which resulted in massive costs to vehicle importers. Also when transporting vehicles from Hambantota, these vehicles sometimes got damaged in accidents and other collisions on its way to Colombo. This could be minimised under the new move. The Sri Lanka Ports Authority (SLPA) is making investments to improve vehicle transshipment operations. It will increase the present paved area in Colombo Port, enough to park more imported vehicles. It should also provide more warehousing for parts and machinery, more cranes, and a Mafi truck. Colombo’s automotive future should be revitalised by increasing facilities.
The SLPA should offer storage space, attractive tariffs and incentives to motor companies to promote the Colombo Port’s vehicle transshipment operations.
This new initiative should offer the best solution to ease the long berthing delays experienced by Ro-Ro (Roll-on, Roll-off) vessels at the Port of Colombo.
In Colombo the average waiting time of nearly 10 days to offer berthing for these vessels should also be reduced to two days.
Besides the congestion in Colombo due to increasing volumes, dedicated facilities for Ro-Ro operations were often interrupted. This matter should also be tackled effectively to achieve the desired objective.
The recent move of the government to slash the ad-valorem excise duty valuation method on motorcycles, mini trucks and single cabs will benefit small entrepreneurs and the rural youth engaged in self-employment.
In addition the government has raised the Loan to Value (LTV) ratio for small trucks enabling the small entrepreneurs to by mini trucks using leasing facilities.
The duty on mini trucks and single cabs has been reduced by Rs. 300,000 under this initiative.
This was a very welcome move and would be a major impetus to the SME sector that spends a lot of money for transportation of their agri products, etc.
The SME sector was struggling due to high transport costs and now they can think of owning a vehicle of their own.
However import levies of Rs. 700,000 per vehicle is still very high as these small vehicles are mainly purchased by self-employed youths with very limited income and they cannot afford the higher initial payment and monthly installment payments.
It is realistic to curb vehicle imports by increasing taxes because of foreign exchange reserves.
But vehicle imports have slightly surged to 242,212 units during the first seven months this year from 241,877 during the same period last year. Car imports have dropped by 30 per cent and three wheelers by 60 per cent.
The authorities should reconsider the tax on electric vehicles which was raised from 5 to 50 per cent and raise the LTV to 70 per cent.
(The writer is a former President of the Ceylon Motor Traders Association)