Led by an exemplary leader, SLAVO is geared to draw attention to the pitfalls in the sector

Q: As an expert in the trade, could you outline your experience and the Sri Lanka Association of Vessel Operators’ (SLAVO) relationship with the logistics sector?

A: Having earned an MBA from the prestigious Cardiff Metropolitan University in the UK, I presently hold the office of Chairman of SLAVO.

I have dedicated my efforts to representing foreign ship owners in Sri Lanka, striving to lead by example to resolve industry specific issues and working on behalf of the best interests of shipping principals.

To this end, I capitalise on three decades worth of experience in the shipping and logistics trade – both local and international – to create positive changes.

My efforts throughout this journey have led to me earning memorable accolades – viz. a certificate of appreciation for the dedicated service offered to distressed ship MSC Daniela in 2017; and a certificate of merit to honour the work done in collaboration with Sri Lanka Customs in the digitalisation and promulgation of innovative ideas to enhance local customs procedures during the COVID-19 pandemic to name a few.

SLAVO has been in operation since 1995. Currently, it comprises 10 member companies that represent the interests of foreign principals of major container shipping lines in Colombo.

It is positioned as the only association that represents ship owners and principals. The association’s membership includes MSC, Maersk, OOCL, Evergreen Line, Bengal Tiger Line, X-Press Feeders, Transworld Feeders, Far Shipping, Feedertech and Global Feeder Shipping.

Being a significant body in the trade, SLAVO is actively consulted on matters concerning the sector and holds frequent dialogues with important government agencies.

The association played a major role during the initial lockdown imposed across Sri Lanka due to the pandemic by ensuring the smooth movement of cargo until the country gradually began functioning in keeping with the expectations of the ‘new normal’ landscape.

Meanwhile, SLAVO did not deviate from its commitment to adhering to government directives and following stringent safety measures.

The association’s AGM held last year recognised key sector leaders that represent the COVID-19 task force.

Q: In what ways has the pandemic impacted the sector globally?

A: Disruptions to ports and land-based supply chains caused by COVID-19 forced shipping lines to resort to making drastic decisions.

Certain lines cancelled new building and cruise ship orders, readjusted schedules and exchange ships for demand lanes, withdrew from lower demand lanes and so on during the early stages of the pandemic. The changes introduced by countries and ports can be viewed as continuous adjustments.

We have noticed a few ports in the US and China experiencing sudden congestion, which has had a significant toll on ship scheduling.

Delays in container transportation were caused due to inland-based delivery points being located in inland depots. Similarly, transport companies experienced severe disruptions owing to the pandemic.

Ships were compelled to remain idle due to port congestion and it has been noted that several lines had to opt for blank sailing as a result.

Q: From a policy and regulatory standpoint, what more is required to create a conducive environment for Sri Lanka’s exports?

A: The country needs to foster a favourable and conducive environment if we are to welcome the vessels that arrive in Colombo with transhipment cargo, and accept more local export boxes.

Steps need to be taken to offer attractive and competitive rates, and ensure a favourable cost structure that entices principals to consider providing ship space and equipment to our nation.

Accordingly, we have met with the relevant authorities continuously to discuss the true nature of our reality.

The country seems to have fallen behind on the cost front, mainly due to terminal handling charges (THC) incurred by shipping lines. This acts as a major drawback as it affects our bargaining power for space and empty containers that are reallocated to Colombo.

Owing to container imbalances, Sri Lanka needs more 40 foot highway contract (HC) boxes for exports. The astounding shortage in these boxes prevents us from maximising our exports.

The principal making the decision to allocate space performs a cost analysis, and determines whether the freight rates charged, price to acquire the same equipment from other nations and cost to reposition containers to a particular country aligns with its best interests.

It is disheartening to learn that Sri Lanka has to spend nearly 75 percent more on repositioning costs compared to its brethren in the region. In fact, a cost of US$ 500 is involved when repositioning and loading a 40 foot container to a shipping line.

The urgency and complexity of this predicament dictates that the topic needs to be tabled for discussion among the parties with the power to make a difference.

We are continuously voicing our opinions in the hope that they will lead to the introduction of positive changes. Furthermore, efforts are being made to acquire space for all the country’s exports.

The optimal solution would be to enhance Sri Lanka’s allure by offering attractive rates while curtailing potential expenses that have to be incurred by shipping lines.

INTERVIEWEE DETAILS
Shamal Perera
Chairman
COMPANY DETAILS
Telephone:0767 649333
Email:slavo.secretariat@gmail.com