Regional and global supply chains continued to be hampered although improvements were observed towards the end of 2020, according to the CEO of Shippers’ Academy Colombo Rohan Masakorala.
“Even in developed countries such as the UK, New Zealand, Australia and Singapore, hubs experienced the issue of a number of workers not attending work due to COVID-19 or lockdowns, leading to port productivity declining,” he commented.
In the local context, the Port of Colombo experienced congestion as a number of workers tested COVID-19 positive or were compelled to self-isolate. However, Masakorala explained that while this situation persisted for several weeks, the port has more or less returned to normal operations with a plan in place for the pandemic.
Meanwhile, global trade picked up following the initial lockdown with greater volumes being transported from Asia to Europe and the US while imports from those regions reduced.
“Therefore, there was an imbalance in equipment and we don’t have sufficient amounts particularly in Sri Lanka,” Masakorala observed, noting that the restriction of imports also means that fewer containers are available for exporters.
This has led to higher demand for containers and increased pressure on shippers seeking equipment to export products from Sri Lanka.
He added: “This problem is expected to remain for a number of months because of the imbalance in global trade. In fact, a top global shipper recommended that manufacturers keep inventory for longer periods as the supply chain disruption will continue for quite some time.”
Responding to the question of which areas require assistance from the government as far as the ports are concerned, Masakorala stated that given the global nature of the business, there is a need to provide the best healthcare to the workers and system, to ensure the country’s ports operate around the clock and avoid further disruptions.
However, he believes that the most significant issue the country faces as it looks to position itself as a hub – particularly with the Port of Colombo – is the capacity to handle larger ships. As such, the delays in developing the East Container Terminal will lead to shipping lines seeking alternatives.
“If we cannot display our capacity to these businesses at the appropriate time, they’ll conclude that Colombo will lack the necessary facilities in the coming years and keep it out of the loop,” Masakorala cautioned, explaining that poor connectivity will threaten Sri Lanka’s hub prospects.
He asserted that “the Indian subcontinent has about six major transshipment ports competing for global and regional cargo so we are competing with the rest of the world. This is why we must be professional and offer a world-class service with predictability.”
In Masakorala’s assessment, the opportunity cost of the delays experienced over the years would have been the recovery of the total investment while Sri Lanka’s transshipment could have increased by between 10 and 15 percent if the terminal had been completed about four years ago.
“There are opportunity costs in volumes, and financial and economic terms, to the country,” he explained.
To ensure that the country becomes a hub, Masakorala stressed the need to establish its transshipment credibility now: “We’re losing credibility because our infrastructure is not being developed on time.”
Meanwhile, for Sri Lanka to develop beyond merely being a transit point hub, legal changes are needed as well – this is in addition to enhancing its logistics capabilities as well: “We must open up the country for investment in the maritime sector by shipping lines and make them partners.”
In his opinion, this year will prove to be more challenging than 2020 as every nation will be using technology to compete and improve productivity: “Sri Lanka has to put in 200 percent more effort if we are to compete; or else, we will lose out to the rest of the world.”