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Shipping Line attempts to
jeopardize Colombo’s Container Hub Status

Inter-Terminal Trucking (ITT) between the state-owned Jaya Container Terminal of Sri Lanka Ports Authority (SLPA) and the privately-owned South Asia Gateway Terminals (SAGT) came to a grinding halt (sudden death), with their longstanding ITT contractor, Sea Consortium Lanka (Pvt) Ltd, abruptly pulling out of its operations on the 31st of May, 2010. Sea Consortium Lanka (Pvt) Ltd, who is a partner of Sea Consortium Pte. Ltd, Singapore, also operates a common feeder carrier in the South East Asia.

Industry sources say that this sudden and unscrupulous stoppage of work is a breach of contractual obligations on the part of Sea Consortium Lanka (Pvt) Ltd, and is more or less akin to holding the nation to ransom. One Shipping Industry veteran termed this act as willful sabotage and a cunningly-planned, devious attempt to tarnish Colombo’s good image and snatch its hub status and shift it to Singapore.

When we contacted SLPA officials we were informed that as SLPA and its sister terminal SAGT are both engaged in a competitive business, they all wanted to avoid delays which could occur, if the selection of a haulier were to be done by SLPA alone as it has to follow government procedures. Hence, the SAGT was given the option to select a haulier and thus an agreement was signed in 1999 with SLPA’s concurrence by SAGT with Sea Consortium Lanka (Pvt) Ltd, for trucking of containers between SAGT and JCT. According to them, the first term was over in 2005 and the contract was further extended for another five years until May 31st 2010 amidst so much of criticism by the Association of Container Transporters for not providing all the other major hauliers to take part in the business.

In order to ensure accountability, good governance, transparency and fair competition in the process of selecting a haulier for the next term, both SLPA and SAGT decided to float a tender procedure where everyone in the industry can participate rather than permitting the continuation of the current monopolistic procedure. Accordingly, whilst the tender document was being prepared, the contract with Sea Consortium Lanka (Pvt) Ltd was further extended by one month from 1st June 2010 to 30th June 2010 with the same terms and conditions of the existing contract in order to make available more time for tender preparation. But the ITT contractor had not wanted the authorities to call for fresh tenders but had greedily anticipated a further extension of five years.

It was at this juncture that Sea Consortium Lanka (Pvt) Ltd, took a unilateral decision to halt its operations citing an allegedly unsettled payment due to the company from the terminals as the reason for stoppage. But, it was said by an SLPA official, when contacted for comments that this was totally untrue and it was their ostensible reason and a cover-up on the pretext of which the haulier was attempting to disrupt the operations of the port. According to SLPA officials, all the payments due to them have been duly settled.

Due to the stoppage of ITT operations by the contractor, a large number of containers which were to be transported across the terminals got piled up and the new stopgap ITT operator who was given the job on a temporary basis found it difficult to cope up with this uphill task given to him at very short notice.

However, Ceylon Association of Ship Agents (CASA) members have reported to us that things are now getting under control and about 900 TEUs are being trucked across terminals daily.

Shipping community at large have raised their concerns as to why such an action of sabotage was taken by this haulier cum feeder operator at this moment of time when many mega ports in the Indian sub continent like Valapadam in Cochin, Krishanpatnam in the east coast of India and many other large ports are emerging to compete with Sri Lanka’s Colombo South Port and the Port of Hambantota that are on the cards and for which the SLPA has already spent millions of dollars. According to them, this stoppage action could be considered as a move to jeopardize the economy of Sri Lanka which is enjoying its peace dividend after a bloody thirty-year war.

A representative of a shipping line even went to the extent of saying that this common feeder operator, whose main interest is in Singapore, should be blacklisted and removed from the region as it could surely be a threat to Sri Lanka’s Container Transportation Business.

- A concerned shipper

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