‘SLOW STEAMING’ STATE-RUN TERMINALS COULD DENY THE COLOMBO PORT’S TRUE POTENTIAL

The Port of Colombo recorded its all-time highest container throughput in 2021, handling 7.25 million twenty-foot containers (TEUs), and together with a strong performance in early 2022, it was recognized as the most efficient port in South Asia, ranking 22nd among 370 ports in the global Container Port Performance Index in June 2022.

Located in the centre of major international shipping routes that connect Asia to the rest of the world, and because of its greater efficiency, Sri Lanka is rapidly growing as a desirable transhipment hub where goods are unloaded from one ship into another to ultimately reach their final destination. Eighty-five per cent of the Colombo port’s business falls under this category, benefitting local industries that export products.

Although the government owns Sri Lankan ports through the state-owned Sri Lanka Ports Authority (SLPA), the South Asia Gateway Terminal (SAGT) and Colombo International Container Terminal (CICT) are privately operated while the Jaya Container Terminal (JCT) is wholly state-operated.

JCT struggles to utilize its capacity on par with its privately-operated counterparts and is bloated with more than double the number of employees in the other terminals, the result of those in power short-sightedly offering employment to political allies in the state-operated terminal over the past decades. Ironically, these port workers are currently among the frontline state-sector employee unions protesting ongoing economic reforms.

The Colombo East Terminal, aimed to support some of the largest shipping vessels in the world akin to the CICT is being developed and will also operate under the SLPA and risks falling into the same trap.

Having an efficient and effective port system is critical for Sri Lanka to capitalize on the opportunities that will arise as South Asia undergoes rapid economic development. The west and east container terminals add valuable capacity to the Colombo port which required expansion for years, handicapped by the SLPA’s lethargic action. Meanwhile, India’s Sagarmala development strategy rolled out in 2015, aims to develop its maritime sector and improve efficiency. By October 2022, India had completed over 200 port-related projects under the programme.

Although Sri Lanka has thus far remained competitive because of the Colombo port’s greater efficiency due to the private sector, if the SLPA remains stuck in its ways, it risks falling behind despite its existing competitive advantage.