Will plantations grow this year?

By NDBS Stockbrokers

Tea accounts for 2.2% of our GDP

Sri Lanka did manage to improve its tea crop to 280mn kgs in '98, from the 270mn kgs achieved last year, with the global production for '98 being yet another record unmatched earlier (2,810 mn kgs in '98 & 2,757mn. kgs in '97 - FAO Statistics). Tea production seems to be on a steady rise, but unfortunately the sources for its disposal appear to be fast shrinking.

The entire credit for last year's performance must be bestowed on the low-grown tea producer dominated by the private sector, a sector that has strengthened the country's tea production base. It has been the excess crop harvested in these areas that has helped to attain these high levels of production, and expected to continue to do so in the future as well.

The liquoring varieties had failed to contribute in any way towards increase in crop for '98. High growns did not achieve the '97 levels and recorded a crop loss of 5%. Production from medium grown sorts too had failed to obtain the desired results and dropped by 9%.

The decline in the crop was primarily due to the drought experienced in the Western sectors of the country during the 1Q '98. It is the low- grown sector that remained the main prop by increasing production by 10% from last year's levels, accounting for 53% of total production (against 49% recorded in 1997).

Prices

Colombo has remained rather a volatile market for tea and had staged wildly variable prices at times. The last time the bubble burst in 1984 tea was sold at US$ 3.01 per kg (see graph of tea prices in US$). It is very unlikely that these prices could be reached at a future point of time. Although Sri Lankan prices are not directly pegged to the US$, they will benefit from any rupee devaluation (12% in '98) as 90% of the country's tea production is exported.

Despite a sudden crash in tea prices commencing from about the 2Q '98 the total average of all tea sold in '98 is 12% above the prices fetched in '97. In 1998, high-grown prices suffered the most with startling drop of 22%. medium varieties down by 25%, and low-growns suffered a drop of approx. 17% which occurred between August and December '98 after the Russian crisis.

Note that high-growns fell starting in March, which actually reflected global demand and supply conditions particularly an increase in production in Kenya.

Tea averages for January 1999 showed a decline of 17% in relation to January 1998 prices. Liquoring teas such as high and medium growns have each declined by 20% and the low growns by 14% on last January levels.

Prices in Colombo continue to tumble, reaching a new low on March 2 '98 (latest available auction prices). What is most disturbing is that although volumes amounting to approx. 6 mn kgs were offered for sale during the months of January and February, only approx. 78% was sold from the auctions. The balance being withdrawn for want of suitable bids. Most of this was low-grown tea and under these circumstances the averages registered at these auctions may not reflect the true position in the industry.

Also concerns are mounting on the ongoing large sales which are to occur frequently in the future, and even though Colombo has handled large sales earlier, with favourable results, this time the trade seems to have over-reacted by having too many such sales within short periods of time. The final outcome has proved contrary to expectations.

While we have shown the above prices in Rupee terms (since RPC costs are Rupee denominated), prices in dollar terms actually show greater adverse movements, and present levels are around 18.6% and 37.8% below the '97 and '98 levels respectively. The recent steep falls in January and February are mainly weather related as a few flush months have contributed towards a large volume of low quality tea.

If the weather improves, namely the rainfall level subsides and the plantation areas experience some dry winds, quality along with prices can be expected to improve, though still stay well below '98 levels.

World prices

Since 1977 there appears to be a distinct 6 - 7 year cycle for tea prices The peak for the apparent cycle 1991/1997 was experienced in 1997-98. While there seems little correlation between price and production we believe the cycles are primarily demand related. Prices rose steeply in 1997 and can be mainly attributed to the advent of Kenya as a strong producer, which in turn actually created an increase in demand.

Over the years Indian tea prices have been considerably higher than both world and Sri Lankan averages since India exports only the very high quality teas such as Darjeeling's and Assam teas, and domestically consumes the lower end of the market. From 1995 onwards, with the entry of CIS in a big way, Sri Lankan prices shot up surpassing both Indian and world average prices.

This situation reversed during the second half of '98 with the absence of CIS at our auctions. Even though India is likely to be a net importer in the future it is likely that high quality teas still will be exported and lower sorts imported for domestic consumption.

Indian competition

The new free trade agreement signed in December with plans to grant concessions such as zero duty imports to Sri Lankan tea exporters would prove to be direct threat to the Indian industry due to the relatively low tax rates in Sri Lanka which may encourage the Indian companies to buy from Sri Lanka while ignoring the country's own producers. But the opening up of its import policy for re-export and domestic consumption should provide a positive marketing window for Sri Lankan teas.

With the existing Rupee Rouble agreement between India and Russia, India has an added advantage over our teas and we still may be able to retain CIS as a main buyer indirectly in the event Sri Lanka is excluded from the negative list, even though India will benefit from value addition element if the Indo-Sri Lanka Trade Pact materializes.

At the moment there is an ongoing debate as to the inclusion of tea and rubber into either countries' negative list. By and large it is likely that more time will be needed for both parties to come to an amicable agreement, which at the moment is under heavy scrutiny by both governments.

Tea exports for the year 1998 reached a highest ever, 271.2mn. kgs. improving on the previous highest figure of 268.5mn kgs recorded in 1997. The quantity gains is a nominal 1%, but the average FOB value per kilo has increased 17%, ie. from Rs. 158.38 in 1997 to Rs. 185.34 in 1998. This has resulted in total export earnings in 1998 increasing to Rs. 50bn from Rs. 42bn in 1997. Most interesting is the Dollar earnings of 779mn against 663mn in 1997.

The prime destination was the CIS, which absorbed 43.9mn kgs. accounting for 16% of all exports in '98. This is lower than the 54.8mn kgs shipped to the CIS in 1997. A matter of concern is the declining trend of value added exports which, in 1996 accounted for 46.8% .of total tea exports, but by 1997 dropped to 44.7% and to 41.1% in 1998.

CIS...trouble with the Rouble

With the passing of the 1999 Budget in Russia in February this year critics say inflation will double or more with the Rouble already dropping below the planned 21.5 per Dollar. The IMF meanwhile is looking at Russia's economic reforms and development over last year to carry out talks on a programme of credits for 1999.

It is estimated that 95% of teas to Russia is in the form of value added products of which 70% is directly from India. Russian buyers have restored their buying at the auctions but it has been mainly the lower end teas of the market

Iraq..negotiations are under way

Under the Oil-for-Food programme Sri Lanka is allocated a 2.5mn kg supply (At Rs. 85/- per kg.) which is mainly off grade teas, and delivery expected to be scheduled in May this year. Given the relatively low quantities offered under this tender it is expected that Iraq will soon open a fresh tender in April. Also it is understood that Vietnam has received a much larger order than Sri Lanka totalling 5mn kgs and India approx. a million kgs.

Given the political situation in Iraq vis-a-vis conforming to UN resolutions, the country is still a long way from importing the average 20mn kgs pa. from Sri Lanka, as it did during the years '88 to '91 from Pakistan; another large buyer is said to be the largest importer in West Asia, taking about 40% of the region's consumption. Sri Lanka's tea exports to Pakistan was 10% in 1988 and this figure dropped to 1.5% in 1997 due to expiry of the preferential duty rates accorded to Sri Lanka tea which made Pakistan to return to Kenya whose teas are much cheaper.

With the currency devaluation (40% against the Dollar) in Iran in February there is a possibility that future buying from the Colombo auctions might be reduced. Egypt, also another large importer of tea, will be increasing its buying from Kenya due to a preferential trade and tariff agreement signed between East African nations. This will reduce the import duties of the supplying nation to approx. 5%, whereas countries like ours get charged 20% - 30%.

As depicted above the selected plantation companies had recorded profits for the 4Q '98, but all RPCs did not achieve the profits recorded in 4Q '97 which was a very good quarter due to spiraling tea prices. The worst affected RPC's are Kotagala, Kelani Valley, Hapugastenna, Udapussellawa, Madulsima and Balangoda who recorded losses in 4Q '98 but will remain profitable for the financial year due to high margins achieved by these companies in the beginning of 1998 when the tea prices were at its peak.

Most RPCs recording negative profits are those saddled with a substantial amount of bought leaf compared to RPCs which have minimum bought-leaf operations (e.g. Maskeliya). Tea Small holder Factories Limited, a 100% bought leaf operation in the low-grown sector recorded a marginal Rs. 11mn NPAT for the 4Q '98 as against Rs. 25mn achieved in 4Q '97.

With these factories having to purchase the green leaf on a formula stipulated by the government (i.e. 68% of the previous weeks auction NSA) the company's margins have eroded with the sliding of the low- grown tea prices. The upward trend in prices contribute towards impressive profits while declining prices adversely affect company profitability.

Estate level profitability

The table at right shows the expected estate level profitability of the RPCs for the month of January 1998.

The calculations are based on elevational NSA, and production levels for each RPC, the published COPs. It must be noted that these are estate level profits, before interest and management fees and that the higher the revenue, the higher the management fee.

Future outlook

As vast changes are taking place in the world's major economies and Sri Lanka in return will get caught up in an entanglement of international repercussions, observations by sector specialists indicate that the tea industry is undergoing a turbulent period. This is detrimental for plantation companies who are now used to the high margins from tea and to add to their current problems the rubber sector which is in a worst dilemma, will result in overall margins achieved by the RPCs to be marginal or negative.

A brief look at rubber

Rubber prices dropped to a low ebb with prices declining from Rs.75 to Rs. 43 last year, adversely affecting the liquidity position in the RPCs who now are said to be looking at measures to curtail long term expenditure for short term survival in the industry.

Due to the prevailing low prices fetched for rubber, which will have serious effects on the long term viability of the natural rubber industry in Sri Lanka, appeals are currently being made to the Plantation Ministry for some relief to safeguard the industry in the form of moratoriums on lease rentals, GST exemption from major inputs and investment relief on capital expenditure incurred on replanting.

The future for rubber prices still remains bleak as demand for natural rubber (particularly from Asia) is still poor, with no signs of an immediate turnaround.

Tea

RPCs could still salvage themselves from the effects of poor prices provided labour costs remain constant, productivity increases by attaining better yields and replanting higher grades of tea. Also it is observed that most plantation companies have utilised the ADB line of credit facilities for replanting, infilling and factory upgrading.

Also RPC's have an added disadvantage of not being able to claim GST charged on inputs, which has increased to cost of production of tea by approx. Rs.2/kg. With local labour costs being the highest in the world, it is unfortunate that inspite of steady increase in wages efficiency has dropped. A price wage formula settlement would have been the best under these conditions.

Concerns

Managing Agent's fee which is an operating cost based on turnover and operating profits reduces the attributable profit further (approx. 20%-30% of PBT). We believe the fee itself shows to what extent the Managing Agent is willing to reinvest in the company to enhance the value of the shareholder's wealth and survive in the long term. We feel investors should look at plantations that are owned and managed by quality managers and take out minimal fees.

Sri Lanka is not directly competing with Kenya since our teas command a premium price therefore quality is a vital factor. Recently there have been instances due to weather and inefficiencies in the production process where the quality has taken a beating which cannot command a premium price.

Also if Sri Lanka is to satisfy large quantity buyers in the long term, we need to replant and infill more in order to consistently satisfy quantities while greater adherence will have to be made to quality in the production process.

Weather

Also weather patterns have changed considerably during the past decade, and a proper assessment of the actual situation becomes difficult. The tea world had faced situations of over production earlier on several occasions, and there have been instances where production had to be physically curtailed to bring about stability in the prices. An agricultural product such as tea is subservient to the vagaries of nature, as predicted by the FAO; an over production situation makes the immediate future for tea look rather murky.

The spurt in tea prices, in particular, has made Sri Lanka rely more heavily on commodity exports, leading it once more down a path that export-oriented industrialisation had sought to move away from. However the difference this time, hopefully, is the value added element. Also, improved marketing efforts, increased productivity and quality enhancement will play an important role in helping our country to diversify its exports successfully.

We feel that tea prices which reached the top of the cycle at the start of last year will stabilise again around mid July to about Rs. 120 per kg. With the falling demand and competitive pressure on tea and rubber prices causing earnings of listed RPC to fall, we see only limited upside in share prices over the short term. We maintain a neutral position in the plantation sector, but there are good buying opportunities on a selected basis.

RPC Revenue (Rs.) Est. Cop 98 Total

Bogawantalawa Plantations Ltd.   111,109,699    112.24   106,444,465    4,656,234

Balangoda Plantations Ltd.           104,970,653    107.77  100,785,477      4,185,176

Maskeliya Plantations Ltd.            103.445.870     94.86     77,706,328    25,739,542

Agarapathna Plantations Ltd.           88.059,205   100.80    76,195,022    11,864,183

Watawala Plantations Ltd.               88,836,409    100.38   71,298,571    15,537,838

Malwatta Valley Plantations Ltd.      86,104,782      90.83   67,852,401    18,252,380

Hapugastenna Plantations Ltd.         76,083,432     102.75   69,848,794     6,234,638

Kelani Plantations Ltd.                     70,603,620     107.06   60,827,843     9,755,774

Mathurata Plantations Ltd.                65,798,919    103.18   57,224,763     8,574,156

Namunukula Plantations Ltd.            63,397,366     115.32    63,205,509      191,856,

Kotagala Plantations Ltd.                  62,116,853    110.57    57,180,872    4,935,981

Kahawatta Plantations Ltd.                60,962,581    137.39    79,266,474  -18,303,893

Elpitiya Plantations Ltd.                     58,442,279     109.41    58,934,395     -192,116

Pussellawa Plantations Ltd.                52,054,755    107.80     42,271,614    9,783,141

Madulsima Plantations Ltd.                47,469,177      93.61     36,510,053  10,959,124

Horana Plantations Ltd.                     47,310,938    110.00      40,197,410    7,113,528

Talawakelle Plantations Ltd.                85,407,440   119.00      82,188,225    3,218,615

Udapussellawa Plantations Ltd.            44,566,032   101.16     37,534,338    7,031,693

Kegalle Plantations Ltd.                       29,035,923     93.67      22,615,525    6,420,399

Agalawatta Plantations Ltd.                 20,557,817    121.00     19,427,639    1,130,178

Elkaduwa Plantations Ltd.                     6,157,519    138.20        8,404,876 -2,247,358

Miller Award for Watawala

Prof. John Miller will be visiting Sri Lanka from March 28 to April 1. He is a past President of the Confederation of Asian and Pacific Accountants, Prof. Swinburne University of Technology and the Director, School of Management Swinburne University, Melbourne, Australia.

Prof. Miller has an unusual depth of experience having been a practising Chartered Accountant and Chairman of a diverse range of companies - a CEO in accounting, in the Public Sector and in Academia. He has extensive international experience in UK, Canada and the Asia Pacific Region.

During his visit Prof. Miller will present the "Prof. John Miller AO Award" which is a special award made to special people on special occasions for outstanding services to the Accounting profession in the South Asian Region and for the accounting profession in one's country. Prof. Miller will make his first award in the South Asian Region to Lakshman R. Watawala, a past President of The Institute of Chartered Accounts of Sri Lanka and a past President of the South Asian Federation of Accountants and Founder President Association of Accounting Technicians of Sri Lanka. This presentation will be made on March 30 at the ICASL.

Prof. Miller will also conduct a seminar on March 29 on Masters Programs in Business Administration, International Business, Management, Organisation Dynamics and Enterprise Innovation. He will also speak on PhD's and professional doctorates in Business Administration.

Dow Jones & Co newswires for Reuter customers

London - Reuters and Dow Jones & Company have signed an agreement which will dramatically increase the availability of Dow Jones Newswires to Reuters customers in the financial markets world-wide.The contract allows Reuters customers in most markets to subscribe to Dow Jones Newswires as an optional service. This means that financial markets professionals will, for the first time, be able to subscribe to the full Reuters and Dow Jones news services integrated on a single screen. Before this new agreement, a selection of Dow Jones news was available to Reuters customers in North America only.

Peter Job, Reuter's chief executive, said: "This agreement creates a great convergence in the world of financial markets news. We believe our customers will relish the ability to view the Dow Jones and Reuters services seamlessly integrated. We are very pleased to be able to work closely with Dow Jones."

Business briefs...

Lauda Air voted "Best Airline"

Winner of the "Reisen" magazine readers' poll and the "British Customer Survey"Lauda Air emerged the overall winner in this year's readers' poll organised by the Austrian Travel Magazine, "Reisen". Lauda Air took first place in the best airline category, as well as achieving top marks for food and beverages, service and value for money. Lauda Air is also the most-booked airline, decided "Reisen" readers in the survey, which was evaluated by the market research institute OGM.

And that's not all - in the latest customer survey carried out by the British Australia Specialist Austravel, Lauda Air ranked first for standard of seat comfort and quality of in-flight catering and took second place in the overall ratings for world's best Airline.Lauda Air in Colombo is represented by Jetwing Air (Pvt.) Ltd., an associate member of the Jetwing family and will operate one weekly flight from Colombo to Malpensar, Italy during the Summer '99 season.

Dubai shopping festival

Emirates Holidays, the largest wholesale tour operator in the Gulf and Middle East, has released attractively priced programmes to the Dubai Shopping Festival from March 18th-April 14th for residents in Sri Lanka.Its key advantage is the guarantee of hotel accommodation during a month when more than two million visitors are expected in Dubai and hotel rooms are hard to secure.Emirates Holidays clients are also entitled to use Emirates' special visa entry processing service. Emirates Holiday's DSF programmes, are now available through travel agents in Sri Lanka or from the Emirates office in Colombo.

Delta rewards top agents

Delta Air Lines had a successful Agents Awards Night at the California Grill, Galadari Hotel on March 6, which was well attended by the leading travel agents in Colombo. Recognition for these awards was based on revenue performance for the year January to December 1998. Mr. Helmut Maassen, Regional Manager, South Asia gave away the awards to the agents.

The top five agents who received awards were American Express Travel Related Services, Gabo Travels (Pvt) Ltd., George Steuarts Travel International Ltd., Mackinnon Travels Ltd. and Thomas Cook Overseas Ltd. The next five agents were BOC Travels (Pvt) Ltd., Ceyline Travels (Pvt) Ltd., Hemas Travels (Pte.) Ltd., Superlink Travels (Pvt) Ltd., and VMS Travels (Pvt) Ltd.

Mr. S. Skandakumar, Managing Director of George Steuart & Co, Ltd., the General Sales Agent for Delta Air Lines in Colombo drew the lucky winner of an air ticket. Ms. Shamala Cooray of Gabo Travels (Pvt) Ltd., won a confirmed return ticket Bombay-New York-Bombay.

'Home Plus' to go islandwide

'Home Plus' the popular housing loan scheme launched by The Finace Company (TFC) in September last year is to be offered islandwide from March 1999. The scheme which covered the cost of land, building construction as well as the cost of furnishings and appliances, was test marketed in Colombo over the past six months.

The 'Home Plus' housing loan package, provides house builders with 110 per cent of the Bill of Quantity (BOQ) value to ensure unhindered progress during construction while leaving a surplus to provide for furnishing on completion.

Ran Mal wins another award

Ran Mal Holiday Resort (Pvt) Ltd. Managing Director Ranjith Perera and other directors will be in New Delhi in April to collect the much coveted "International Gold Star Award" from the India International Friendship Society. The award will be presented by a senior Indian Minister. This is not the first instance Ran Mal has won an award. In 1988 they were awarded the "Good Kitchen America Award" at a ceremony held at the Sheraton Hotel in New York. In 1995 and '96 Ran Mal won Enterpreneur of the Year awards in the Western Province Services Section.

Exhibition
Chamber 160 Trade Exhibition

The Ceylon Chamber of Commerce, the senior Chamber in Sri Lanka offers four day opportunity from March 25 to 28 to establish local and international business links through the 'Chamber 160' Trade Exhibition says a company release.

The inauguration of the 'Chamber 160' Trade Exhibition on March 25 will see the dawn of the historical landmark - the commencement of the 160th year of the Ceylon Chamber of Commerce.

Nearly 100 leading companies in SL, India and China will display a range of products/services from the traditional Tea, Rubber, Coconut, Spices to products such as Ceramic, Porcelain, Electronic, Electrical & Engineering Products, Consumer Products, Printing and Packaging Material, Stationery, Wall/Floor Tiles, Machinery, computer & computer related services and other services.

Celltel's New CEO

Celltel Lanka Limited has announced the appointment of Michel Schluter as the company's new Chief Executive Officer with effect from March1.

Mr. Schluter, who has worked for two years at the Luxembourg Head Office of Millicom International Cellular (MIC) Celltel's major shareholder, was in Sri Lanka in 1994/95 as Celltel's Chief Financial Officer. He holds an Economics degree from the Louvain University in his native Belgium and an MBA from the University of Chicago.

Before his appointment to Celltel, Mr. Schluter was a management consultant at Pricewaterhouse Coopers in Belgium, where he rose to the position of Director. Mr. Schluter commenced his career at the multinational Procter & Gamble in Belgium.

HNB at Asha Central

An extension office was opened recently at Asha Central Hospitals Ltd. Colombo 7. Among the gathering of the medical fraternity was Dr. Neville Fernando, Chairman cum Managing Director, Asha Central Hospitals Ltd. who opened the extension office.

Dr. Fernando said that he was glad that HNB a leading private bank in the country was able to make it's presence felt in the hospital to serve customers who partronize the hospital, the residents living in and around the hospital as well as the staff of Asha Central Hospitals.

He also emphasized the cordial relationship the bank has had with Asha Central Hospitals and gave a word of advice by saying that the savings habit should be inculcated to the staff and others for their future development.

Chief guest Rienzie T. Wijetilleke, Managing Director of the bank said he was happy that this was the third extension office among the extension offices opened in hospitals the previous two being at nawaloka and Sri Jayawardenapura hospitals. He added that the bank has installed the 50th Cashline machine for the benefit of the residents, visitors and staff of the hospital and the customers who are residing in far out places like Polonnaruwa, Badulla, Moneragala etc. who could access the ATM for their convenience of withdrawals.

He also mentioned that the Chairman cum Managing Director Dr. Fernando, a doyen in the medical profession had a versatile knowledge in the field of business since he has been able to develop in a short time the Asha Central Hospitals to its present status by taking over the management of the hospital.

E-friends from NDB: to save environment

An animated cartoon trailer on the Discovery Channel, currently running on Rupavahini, shows a child watching a business mogul planting a factory that promptly starts generating money.... and smoke. Not content with one, he plants more factories around the planet. The result is a huge bed of profit, which however serves the sole purpose of breaking his fall as he is choked unconscious by the equally huge cloud of smoke.

The National Development Bank (NDB) has rewritten this little parable with the possibility of a happier ending.

The need to run an eco-friendly business is no longer an individual choice and it is certainly more logical to implement environmentally friendly practices in the office and factory before it is too late. Often it also translates into very real profits.

Apart from the dramatic reduction in waste and overheads that eco-friendly processes achieve, international quality standard certification bodies increasingly require stringent environmental control in the workplace before the company can be awarded conformity certification.

Committed to promoting environmentally sustainable development, the NDB negotiated a further sum of Yen 2.73 billion (approximately US$22 million) from the OECF to establish an "Environmentally Friendly Solutions Fund" (e-friends) to continue the lending for pollution control/abatement projects and offering businesses long term loans up to Rs 20 million.

E-friends is available directly from the NDB and its branch offices, as well as from all offices and branches of DFCC, Hatton National Bank, Commercial Bank, Sampath Bank and Seylan Bank.

A boon to doctors

About a year ago Seylan Bank launched the Piyasa Velenda Nivasa loan scheme, the brain-child of Chairman Deshamanya Lalith Kotelawala the progress of which achieved within this short space of time has been encouraging. Inspired by this success the Bank is proposing to extend the services to other areas as well. Because it would be beneficial not only to the recipients but also to the general public.

The basic concept of this project is the same as that of the Piyasa Velenda Nivasa Scheme.The only difference between this scheme and the Piyasa Velenda Nivasa loan scheme is that this is directed solely at the medical profession.This scheme will provide facilities to the doctors to have their residence and the dispensary or the medical clinic under the same roof and benefit from the attending advantages of the Piyasa Velenda Nivasa scheme. What is still more important is that facilities would be made available to build and equip the dispensary or the medical clinic at a lower rate of interest. There is no doubt that the general public, in particular the rural folk would be benefited under this scheme. Dispensaries would be opened in rural areas and in emergencies, the villagers would be able to seek medical assistance even in the nights.

Shippin'

Inmex Expo 1999

India's major shipping companies, which own everything from container vessels to tankers to offshore supply vessels, have formed the INMEX secretariat with the support of the Indian government.

It's main objective is to bring the world's best companies catering to maritime industry under one roof, so that technologists are given an opportunity to interact and exchange views and thereby expand the nation's technology base.

India's first international maritime exhibition is organised by the INMEX and chief executive officer of the secretariat Yogesh Sirinivasam was recently in Colombo and held talks with government officials and local industrialists catering to maritime industry. Malba Group of Companies has been appointed by INMEX secretariat to reperesent them in Sri Lanka.

ECU - LINE opens in Paraguay

From all main ports in Eurpoe, ECU-LINE offers direct fortnightly services to Asuncion, Paraguay based on Hamburg Sud with a transit time of 30 days.

Also ECU-LINE's North American network is sending weekly boxes to Asuncion via Mami.

ECU-LINE has opened its own office in Paraguay.

Guide to Shipping Service confidential

In order to assure full confidentiality in information exchange, we provide specialized USER ID for accessing booking Request, B/L Waybill reference and copy printing features. In the meantime, we offer B/L Waybill referencing and printing service for shipments originated only from Japan at this inital stage.

Ferry named Gotland

Gotland, a new LR-class high speed monohull ferry, designed for use in environmentally sensitive Baltic waters, was officially named in a ceremony at L'Orient recently.

When in service, the 112 metre Corsaire 11500 ferry, sailing under the Swedish flag, will carry up to 700 passengers and 140 cars between the south east coast of Sweden and the island of Gotland.

The Gotland, built by Alstom Leroux Naval for Rederi AB Gotland and classed in accordance with LR's Rules and Regulations for the Clasification of Special Service Craft, has been constructed with a high tensile steel hull and aluminium alloy superstructure. (Lloyd's Register).

Interactive customer service

"K" Line has introduced newly expanded customer service menu via Homepage, including rate inquiry, booking request, B/L Waybill reference and copy printing, for our customers using international container transportation service.

This gives our customers more speedy and reliable customer service through the use of internet as an interactive access tool, which is rapidly expanding as a new infrastructure. "K" Line also plans to develop cargo tracking and Internet waybill system features to enhance the relationship with our valued customers.

Hanjin opens new terminal in Taiwan

Hanjin Shipping, a worldwide provider of total logistics service, opened its new "Hanjin Shipping Kaohsiung Container Terminal" in Kaohsiung,

Taiwan. Currently ranked 3rd in world's container ports in terms of total throughput, the Kaohsiung Container Terminal will serve as a centre of development of economy and trade in the 21st century.

His KCT will not only be a major and pivotal port of container transportation for Taiwan, but also a gateway to East and South Mainland China.

The Kaohsiung Container Terminal is the result of direct investment of tens of millions of dollars in the last two and a half years. As a part of this, the terminal is equipped with the latest facilities and with a sound logistics foundation to accommodate customers with complete terminal services.

The terminal utilizes ten straddle carriers to accommodate the designed handling capacity of 430,000 TEU per year. Furthermore, three post- panamax gantry cranes are alongside a berth measuring 320m and a depth of 15m.

The terminal's one-time stacking capacity equates to 11,354 TEU (Dry: 10,682, Reefer: 672 TEU) and equipped with 348 reefer receptacles (440V) to properly manage ever increasing refrigerated container volume.

Furnished with a six-lane gate entrance, a computerized operation system has been installed to automate gate activity, equipment movement, for efficient terminal operations.

Located within the terminal, the CFS, measuring 5,7928 is equipped to handle approximately 1,000, 000 R/T/ ( 40,000 TEU) per year, by which we believe the service quality of LCL cargoes is more efficient than ever before. Moreover, as the KCT is well-equipped with its own M&R shop, it will be able to maintain optimal conditions of containers, including reefers, and ensure that our customers' cargoes reach their destinations sefely.

Hanjin Shipping Kaohsiung Container Terminal is a gateway to East and South Mainland China, P.R.C,. to Ningbo, Fuzhou, Ziamen, etc. Geographically, the terminal is ideally located to enable faster and more efficient service when calling at ports in Northeast China, thus saving both transit time and transshipment costs.

Clash over aid for UK shipping

Leaders of Britain's maritime unions clashed with a Conservative MP and former shipbroker at a meeting of the House of Commons transport subcommittee recently.

Brian Orrell, general secretary of officers' union Numast, and Jimmy Knapp, his counterpart at ratings' union RMT, were addressing the body as part of its current inquiry into the future of UK shipping.

Mr. Orrell stressed that British shipping was in a critical condition, and if action was not taken now, it would collapse entirely. Fiscal measures were the key to revival, he argues .

Both union leaders addressed the age profile of the merchant navy, with 53% of UK seafarers in the 40-65 age bracket, compared with just 43% of the UK work force as whole.James Gray (Con, Wiltshire North), a former shipbroker, asked what difference would make to the country were there to be no British ratings whatsoever.

Mr. Orrell replied that while there was no shortage of ratings in the world labour supply market, some were not of a high standard.

Some foreign ratings did not know the first principles of navigation, did not know how to tie knots and could not speak English, Mr. Orrell charged.

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