The dynamics of global ports and port management have changed in many ways since the beginning of the century. The Sri Lanka Ports Authority was constituted under the provisions of the Sri Lanka Ports Authority Act, No. 51 of 1979 (subsequently amended by Act No. 7 of 1984 and Act No. 35 of 1984) on the 1st of August 1979, effecting the merger of the Colombo Port Commission Department and the two existing statutory corporations.
This resulted in a unified organization with a streamlined structure to create an organization that would over look overall port activities of Sri Lanka as the economy was opened.
The visionary leadership was given by of late Minister Lalith Athulathmudali under the leadership of late President J.R. Jayewardene who took up the challenge to open the economy of Sri Lanka in 1977. Sri Lanka was the first country to do so in South Asia among many challenges 40 years ago.
The Minister of Shipping at that time was fast enough to recognize and to develop the shipping sector that would be an essential tool for a competitive open economy, which would also support exports and FDI to a strategically located island in the Indian Ocean. The Colombo port being the first container port in South Asia and a leading transshipment port in the world today has its success story well rooted behind these two courageous men who saw the need for transformation forty years ago in difficult circumstances. Since then, the framework for advancement has been lethargic, add-hoc except for partial liberalizing of the shipping sector in the early90s and opening for PPPs in terminals in the new century.
However, the country has failed to become a major maritime hub, but remains as a transshipment Centre due to the location factor. The speed of legal and business model reforms has been very slow and the Sri Lanka Ports Authority, compared to its global competitors has gone behind in many ways and years as a business entity.
World of shipping has changed
The last forty years has seen a huge transformation in the shipping industry as world trade has increased many folds accounting to USD 50 trillion by 2016, out of which exports constitutes USD 20 trillion. The container shipping industry has been the fastest in transformation from being 250 TEU vessels passing the 20,000 TEU vessel size and has remodeled the ports’ industry with new opportunities and challenges.
The often spoken about Port of Singapore Authority (PSA) and DP World Group of Dubai which emerged much later than SLPA along with other major port operators have moved forward leaps and bounds ahead in terms of modelling themselves as global port operators. Unfortunately, the SLPA was never transformed to be a global port operator although it had the skills, knowledge and the ability to do so. Instead it became a party that had to share its own business in a very minority stake in the operations of containers terminals in Sri Lanka and the current model it operates is further diminishing its competitiveness.
Singapore port handles 33 million TEUs annually with its terminal operating partners in Singapore. However, PSA has invested in many global ports and handles over 39 million TEUs through its expertise in other global ports and terminals. Similar is the story with other major port operators. Many would not know, that even Philippines, through international container terminal services incorporated has over 27 destinations managing global container traffic to capture offshore business.
SLPA has missed the bus and is struggling now to compete even though as early as year 2000, former Finance Minister Ronnie De Mel, when he was the shipping minister took the decision to corporatize JCT with the industry advise to make it a viable terminal operator. This was done for name sake in 2003 without any teeth to move forward, and was never pursued as a proper business model by governments that followed.
Now that Sri Lanka has three major port development projects, namely Colombo Hambantota and Trincomallee, the Sri Lanka Ports Authority must be re-designed and re-engineered to the benefit of the country where already partial landlord model has been established due to circumstances the sector has fallen into. The SLPA cannot be a regulator, operator and the landlord at the same time. That will only further delay the maritime aspirations of this country. Sri Lanka doesn’t have to re-invent the wheel, but our East Asian neighbour, Singapore has already created a conducive model which we can follow and adopted to facilitate the maritime economy of Sri Lanka. Nobody needs to have ego to follow a good model like the Maritime Port Authority of Singapore as we need major set of reforms legally and structurally both for the Merchant Shipping Division and the Sri Lanka Ports Authority to take this country to the next level of shipping, ports and logistics.
The focus is needed from Prime Minister as the Minister in charge of Policy and Economic Affairs and a dedicated support from Minister of Ports and Shipping and The President’s newly formed National Economic Council to make a commitment to do the challenging changes. It is no better time as the Sri Lanka Ports Authority has embarked on a national maritime and a logistics policy for the country. Country requires to be put on a new footing to achieve the growth and investment targets recently announced 2025 vision of the government.
(The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, and immediate past secretary general of the Asian Shippers’ Council.)
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