Business Times

Chinese team visiting in July for Colombo South Harbour construction

By Dilshani Samaraweera

The government is planning to issue a Letter of Intent, by the end of July, to China Merchants Holdings International, the Hong Kong-based, partially Chinese-government owned company, for the Colombo South Harbour terminal construction.

“A Chinese team is due to arrive this week and we hope to issue a Letter of Intent, by the end of July, to give clearance to proceed with the formalities¸ Chairman of the Sri Lanka Ports Authority (SLPA), Dr. Priyath Bandu Wickrama, told the Business Times this week in the sidelines of the AGM of the Sri Lanka Shippers' Council.

The SLPA says the harbour construction work is on track and that the harbour should be operational by end-April 2012. Construction work on the terminal is due to start early next year. “They have to start construction work six months after the Letter of Intent is issued,” said Dr Wickrama.

The Colombo South Harbour terminal construction is a shareholding between the SLPA, China Merchants Holdings International and local blue chip company, Aitken Spence. The terminal is expected to cost around US$ 450 million to build, and will be managed by majority shareholder China Merchants Holdings International.

The Colombo Port itself is expected to reach full capacity by mid next year. To keep servicing the growing demand, until the South Harbour terminal adds more capacity to Colombo, the SLPA says it is investing another US$ 150 million to expand capacity at the existing Colombo Port.

“The Colombo port will reach full capacity by mid-2011. So we are investing US$ 150 million to buy more cranes and container handling equipment, and to convert three berths to handle containers and to expand yard capacity. These measures will improve productivity and will increase yard capacity, so that the gap up to April 2012 will be filled, until the Colombo South Harbour is available,” said Dr Wickrama.
The first phase of the Hambantota Port is also expected to be finished in November this year. However, Hambantota is to be an industrial port and will not be immediately available for commercial container handling. The SLPA says commercial container handling facilities may be introduced later, depending on demand.

South Harbour to cut costs
Local shippers say the Colombo South port will help reduce import and export costs for Sri Lanka. Already the Colombo Port is running at near capacity and the number of vessels visiting Colombo is limited. Shippers say the South Harbour will allow more ships to visit Colombo and will help drive down freight rates through increased competition.

“With the Colombo South Harbour, more capacity will come in. So this will reduce import, export costs by reducing freight rates,” said the Chairman of the Sri Lanka Shippers' Council, Gehan Kuruppu.
Exporters too, say increased port capacity will help reduce export costs.

“This year freight rates increased from around 20% to 50% compared to last year. But if we have more ports, more shipping lines will come to Sri Lanka. This will help reduce the rates,” said Director Operations and Logistics at Tea Tang, Jayanath Perera. Shippers say the shipping lines have increased freight rates by artificially holding down the supply of ship space – to make up for losses during the recession.

“During the economic slowdown exports and trade reduced. So shipping lines and carriers had to reduce their rates. Now, demand for ship space is picking up, as countries are coming out of recession. But the shipping lines held down the ship space. So the rates went up,” said Mr Kuruppu.

Shippers say the rates may continue to increase this year making imports and exports more costly for Sri Lanka, although the war risk insurance premium is no longer applied to Sri Lanka. Exports, such as tea, rubber and apparel, account for the major portion of export volumes out of Sri Lanka.

However, apparel exports are generally on FOB terms and local garment manufacturers get squeezed when freight rates increase at both import and export ends. “The peak export season starts in July, which means the demand for ship space will increase and the shipping lines are lobbying for another freight increase that they are calling a General Rate Increase. So this is a matter of concern,” said Mr Kuruppu.

Shippers are also still calling for the Electronic Data Interchange (EDI) system to enable faster cargo clearing.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
Colombo stocks gone wild
Chinese team visiting in July for Colombo South Harbour construction
Standard Chartered Bank hedging losses carried overseas
Hydraulic experts endorse feasibility of Galle Face commercial city
Encouraging hobbies among Sri Lankans
Census confirmed for 2011
Mixed reaction to the budget
Comment - Missiles over Sri Lanka
Feature - Managing Information Technology and security in a Cha (lle)nging world
Feature - National University System in jeopardy: State indifference towards academics
Link Samahan wins approval from Canadian market In 15th year of business
Anti piracy unit set up in CID
Entries for SLIM Brand Excellence 2010 open July 8
Government’s 2010 budget targets cannot be trusted: Econo
CMA for Sustainable Business amidst climate change
IMF disburses US$407.8 million, extends SBA for another year
Indo – Lanka FTA not up to expectations since a decade
Commercial Bank named Lanka’s best once again
Heritance Kandalama wins Best Five Star Resort for third year at Presidential awards
Order online at chinesedragoncafe.com
Chamber’s CSR awards in November
Financial literacy is about knowing the basics
No action on hedging deals by AG, says Ameresekere
Defects of transitional shelter in post-war resettlement
Unilever helping with rehabilitation in the North
Golden Key depositors demand that authorities expedite repayment
Arpico Supercentre earns top brand honours
Virtusan Madurika Welivita honoured with Academic Excellence Award
Asian Shippers’ Council secretariat moves to Ceylon Chamber
MBSL records a revenue of over Rs.1 billion
Asha Phillip Securities to open new branch, plans to expand
Gerard Victoria, Head of Aviation at Hayleys
Drinking tea could boost food security : UN agency
Working poor and job-oriented growth
SL exports to be US$ 20 billion by 2020
Sri Lanka’s rubber market enters a promising path
Rajitha Kariyawasan appointed to Hayleys Board
LOLC to expand micro finance in North-East
Develop professionally efficient workforce: new THASL president
NDB Bank appoints Chrishanthi and Indrajit as COOs

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution