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Sri Lanka’s older container terminals lose out amid Indian trade collapse; China firm gains

ECONOMYNEXT – Sri Lanka’s older container terminals have seen their business plunging in 2015 as a newly build Chinese facility showed gains, amid overall anaemic growth in Colombo, officials said, as India’s domestic credit and external trade contracted.

Indian export and import trade, which Colombo depends on has collapsed this year amid a credit slowdown in the country.

Parakrama Dissanayake head of Aitken Spence Shipping said the oldest two terminals owned by state-run Sri Lanka Ports Authority has seen their volumes plummet 12 percent up to August and seen an 18 percent plunge in the final month.

The Jaya and Unity container terminals (JCT/UCT) are the oldest terminals in Colombo which are not deep enough to accommodate large ships.

South Asia Gateway Terminals (SAGT), a newer facility belonging to the public listed John Keells Holdings, has seen a 16 percent decline, with an 11 percent drop in August itself.

"The winner has been CICT (Colombo International Container Terminal) with a world class facility and a phenomenal increase there," Dissanayake told shipping forum in Colombo.

Dissanayake said the older terminals were losing business partly because they could not accommodate larger ships.

CICT, owned by China Merchant Holdings International has clocked up 990,000 twenty foot equivalent units (TEUs).

CICT officials said Thursday that it had passed the million container mark this month.

Upali De Zoysa, Director Operations at Sri Lanka Ports Authority said his firm was building a new terminal (East Terminal) with as throughput of 800,000 boxes so that it can retain business from larger ships.

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Dissanayake said in the next 10 years, JCT/UCT faced the prospect of being obsolete and there was a policy problem for state planners.

In 2014 Colombo handled 3.2 million containers up to August, up 13.1 percent from a year earlier, but up to August 2015 volumes were up 6 percent to 3.4 million TEUs driven by gains at the Chinese terminal.

Colombo’s older terminals are heavily dependent on Indian business, with about 75 percent of transhipment traffic coming out the country.

But India has seen its external trade collapse amid a credit contraction, capital outflows as a credit-trade cycle ended.

Exports out of India fell 20.6 percent from a year earlier to 21.1 billion US dollars in August 2015. Imports fell 9.9 percent to 33.7 billion US dollars. In the April to June quarter, credit fell 2.5 percent, according to Reserve Bank of India data.

It was not clear whether the growth at CICT was driven by non-India business.

In 2015 Colombo handled 4.9 million containers. This year Colombo is expecting to handle only 5.1 million containers.

Dissanayake said Sri Lanka’s capacity was already ahead of demand.

Transhipment business from India was stagnant or dwindling amid direct calls, and Colombo’s capacity was already 8 million TEUs a year with 10,000 plus TEU vessels by passing the port. (Colombo/Sept25/2015 – updated with Indian credit and external trade data)

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