Chief Engineer Southern Port Development of the SLPA Janaka Kurukulasuriya did admit that Colombo port could be hit due to the development of ports in India. But added it was not a major worry.
Capacity at Port of Colombo is nearly 4.5 m TEC and once the completion of the full expansion project it will be 14 m TEU.
Our growth rate at present is 10%. We are closely monitoring all the development that takes place in India.
It is true that we are little bit late, but not too late. Our schedule is to commence the operation of first terminal in the first quarter of 2012.
By Wilson Gnanadass
Fresh questions are being raised as to whether Colombo harbour which has been acclaimed as one of the best transshipment hubs in the world, could continue to stake that claim with the advent of another major port in Kerala, India.
If Sri Lanka`s pride has been the port of Colombo, for its efficient and effective operation as a transshipment hub, doubts have now been cast. Soon the Colombo harbour may lose its splendor due to the emergence of other ports in the region.
It is not known how much and to what extent the Sri Lanka Ports Authority (SLPA) has taken this threat seriously. However, the SLPA, it is learnt has opted to face the challenge.
The Colombo harbour, considered to be a well equipped transshipment port, has highly specialised infrastructure facilities for handling different types of freight, and acts as a switching point for cargo carried by deep sea vessels operating on trans-continental trade routes.
The SLPA has been successful in recording significant revenue from the transshipment business and according to the latest information has handled its highest ever monthly throughput of 185,099 Twenty Foot Equivalent Units (TEUs) last August, against its previous highest monthly throughput of 173, 583 TEUs recorded in last July. According to the SLPA it is a positive change of 11,516 TEUs.
Parallel to these standards, the port of Colombo has also been able to exceed its previous highest ever monthly throughput of 326,124 TEUs recorded in July 2008, up to 340,240 TEUs last August marking the latest highest ever monthly throughput record.
No doubt, these figures are direct indications of growth and stability of a port that has gained international recognition right throughout an achievement, every Sri Lankan can be proud of.
Be that as it may, every business venture has to end at one point after reaching its saturation point, if no long term plan to expand the same venture is taken up with foresight and vision.
Going by the figures produced by the SLPA the Colombo port has handled 2,455,293 TEUs in 2005 and 3, 079, 086 TEUs in 2006 and 3,381,342 TEUs in 2007.
The capacity of both terminals (Jaya Container Terminal and the South Asian Gateway Terminal) is only 4.1 Million TEUs.
Similarly, India`s growth (which is Sri Lanka`s main catchment area) is around 15 % to 20% per annum. This would mean that by the end of 2008, if an all out effort to attract the Lankan share of the Indian volumes to be transshipped over Colombo is made, then the port of Colombo will be close to its optimum capacity.
Realising this, the SLPA has already put its act together, planning on developing another terminal.
According to SLPA sources the work is functioning smoothly and operations at the new terminal are expected to commence in the first quarter of 2012.
The SLPA cannot be blind to the hidden threat posed by the fast emerging Vizhinjam port in Kerala, which is set to directly compete with the Colombo port also by the year 2012.
Wide publicity has already been given to the Vizhinjam port in the Indian newspapers and the websites.
Vizhinjam, a sleepy fishing village on the western Kerala coast of India, will soon become an important cog in the country`s transshipment business.
The Vizhinjam port project which failed to obtain approval for nearly two decades, has finally been given sanction by the central government of India, according to Indian State Ports Minister M. Vijayakumar.
The port according to the available information in different websites, will fulfill the need of providing transshipment on the Indian coast, as at present there is no existing Container Transshipment Terminal in India to cater to this need.
Annual container traffic close to four million TEUs is currently originating or destined to India through sea route with CAGR (Compound Annual Growth Rate) of 14% during the last decade.
About Vizhinjam port
Vizhinjam is an all - weather port and the international shipping line is just 10 nautical mile off its coast.
The Vizhinjam Port is clearly positioning itself to become Colombo`s direct competitor.
The Port`s official website says that, Vizhinjam has more advantages compared to the Colombo port, and if developed can harbour even Panamax class and futuristic vessels. It also satisfies the physical and hydrographical parameters of modern seaports.
The Port`s unique selling point is a natural depth of 24 meters which the Indian government claims is by far the best compared to other ports in the world - even those of New York, Southampton, Singapore, Dubai, Colombo, Hong Kong whose depth is only 15 meters.
The proposed Vizhinjam port, which is being marketed as a Green-field project, away from urban/city limit was originally just a fishing village and had to be developed completely from scratch.
The only claim to shipping, this village which lies 15 kms from Thiruvananthapuram and two kms South of Kovalam has, is its historic origins as the capital of Ayvel Kings of the 8th and 9th century.
The new Port, according to the available information from different websites has all the ingredients to turn out as an efficient, modern and highly productive one, and India is inviting international players with experience in developing the world`s high capacity modern ports, to submit their proposals.
The Port is also expected to attract a large share of the container transshipment traffic which is now being diverted to Colombo, Singapore and Dubai. It can also ensure the much needed economic development of India as well as open up immense job opportunities.
The proposed deepwater international container transshipment terminal at Vizhinjam is expected to bring down the total costs of movement of containers to and from foreign destinations, according to the Container Shipment Economics Study.
At present, India`s port capacity (12 major Indian ports) is a meagre 4.61 million TEUs/annum compared with China`s capacity of 50 million TEUs, almost 11 times that of India`s.
Vizhinjam Port alone will have the capacity of 4.10 million TEUs/annum. This matter has to be looked at in the light of India not giving up on developing the Sethusamurdram project. The study, carried out by IL&FS Infrastructure Development Corporation and Hauer Associates, has also found that the Sethusamudram project will promote inter-coastal movements of Indian cargo, enhancing the potential of Vizhinjam as a transshipment hub.
Indian gateway ports
On the other hand, the present Indian gateway ports do not attract a sufficient number of mainline vessels due to inadequate facilities and the distance from international shipping routes.
As of now, about 61 per cent of Indian export/import containers are transshipped through the nearby foreign ports of Colombo, Singapore and Salalah (Oman.)
This results in an additional burden of upto $200 per TEU of cargo interests with freight paid by Indian exporters being 11.4 per cent of the c.i.f (cost, insurance, freight) value of goods as against the world average of 6.1 per cent.
With Vizhimjam port draft being 24 ft it will be able to attract the post Panamax container ships.
With a capacity of four million TEUs per annum, the Vizhinjam port will have the same capacity of the Colombo Port and with a draft far exceeding Colombo`s harbour depth, the chances of Colombo harbour becoming less attractive to mainliners, is a definite possibility.
For the Colombo Port this may well mean the end of an era. The monopoly Colombo now enjoys over sea routes in this part of the world might become a thing of the past, come 2012.
Sri Lanka has held sway over this industry for centuries now, because of her strategic location and ideal conditions of Colombo harbour.
The relatively new transshipment business came easily to Sri Lanka due to Indian ports not having the depth and capacity to handle the big ships.
Therefore it has been convenient for India to ship containers on smaller vessels from her southern ports to Colombo, where it is mixed and matched to various destinations in the world.
This makes sense so long as the Colombo Port has capacity to handle the expanding transshipment business (which was about 15 per cent year on year). But here lies the catch the Port of Colombo is coming to the end of its capacity quite soon. Sometime next year Colombo harbour might hit a dead end when the port reaches saturation point.
Notwithstanding the location of Vizhinjam in the Deep South, cargo interests in the southern, northern and western regions may find it more viable to use the port as a gateway/transshipment terminal instead of Colombo, Singapore or Salalah. This means the hinterland of the port may extend to the western and northern parts of the country.
Once the new port has been constructed, Indian exporters will not have to travel to Dubai or Singapore for transshipment of cargo. It is expected to save Rs 1000 crores in expenditure.
According to IIM Students in Bangalore, with India`s current capacity for handling cargo is nearing saturation, a new port is a necessity, and Vizhinjam can fill that void extremely well.
The students in an article to the Economic Times, India have said that US $ 150 is levied in Colombo for transshipment and US $ 130 in Dubai and Singapore for the same.
They have theref...