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Saturday December 10th, 2022

X-Press Pearl – Sri Lanka’s shipping agents group explains background on dangerous cargo

ECONOMYNEXT – Ceylon Association of Shipping Agents, which represents Sri Lanka agents of shipping lines agents have explained some of the background regarding the carriage of dangerous cargo and shipping procedures in the wake of the X-Press Pearl maritime disaster.

Subject to the correct declaration being made – which is the responsibility of the exporter has to be stowed in a prescribed manner the Chief Officer of a ship has to ensure that they are properly stowed and separated from other dangerous goods.

Goods are stowed according International Maritime Organization’s rules of for the stowage and carriage of dangerous cargo (IMDG). In order to ensure the safety of the ship and crew it is in the interest of the shipping company to ensure that harardous material are stowed safely.

There are also a lot of unanswered questions at this time.

There has been no formal statement from Sri Lanka authorities that all cargo had in fact been carried in full compliance of the rules or that it had not been done.

At this time it is also not clear why the ship did not return to the loading port to offload a leaking acid container when it Port Hamad refused to offload the acid container or why priority berthing was not requested in Colombo.

The vessel’s Captain had told Sri Lanka authorities that he was acting under company instructions according to reports.

It is not fully established that the acid container was responsible for the fire which occurred in No 02 hold of the ship. Sri Lanka Port official said a survey will have to be done of the wreck, which however has since sunk.

The ship was also carrying over 800 tonnes of sodium hydroxide, a corrosive alkali which can react with acid, releasing heat and can also release heat when moist, among other dangerous goods, including fertilizer. All of which were declared.

Reproduced here is the statement from CASA, which perhaps has been the most influential body in shaping Sri Lanka’s shipping policies as they now exist.

MV. Xpress Pearl – a wakeup call to the maritime industry

In the wake of the MV. Xpress pearl disaster, much attention has been drawn to the shipping agent and the role played by the agent in handling Dangerous Cargo (DG Cargo) and also incidents related to damages and handling of such instances.

Role of the Agent

Every ship that has called Sri Lanka has had a Shipping Agent who is considered the long arm of the Principal who coordinates and arranges all services connected to a vessel’s call in Sri Lanka to the entire satisfaction of the Principal, their Customers and the service providers to the ship in full compliance of all laws and regulations of the Government of Sri Lanka.

As per the law in Sri Lanka, Shipping Agents are regulated by the Director General of Merchant Shipping ( DGMS ) – Ministry of Ports and Shipping.

Any company operating as a shipping agent should obtain a license from the Director General of Merchant Shipping (DGMS) under the Licensing of Shipping Agents Act No.10 of 1972. This license has to be renewed annually.

Obtaining a shipping agents license involves stringent requirements enforced by the DGMS and operational compliances with Sri Lanka Customs and Sri Lanka Ports Authority.

All dangerous cargo loaded and unloaded from vessels are declared to the Sri Lanka Ports Authority as per the DG cargo procedure of each shipping line. Strict compliances are religiously met by the Shipping Lines and their agents as required by the International Maritime Dangerous Goods (IMDG ) Code.

Relevant personnel in Principals’ offices, Agents’ offices, on board ships and in Ports of Sri Lanka and the world over are trained and updated in these compliances and practices to ensure overall safety at every level of transportation.

The procedures adopted by the Agents and the Shipping Lines when accepting Hazardous Cargo requires that when a booking inquiry is received from the shipper (exporter), full details of the Hazardous cargo including the Material Safety Data Sheet (MSDS), a document that contains information on the potential hazards (health, fire, reactivity and environmental) and how to work safely with the chemical product is received from the shipper.

This information is dispatched to the Hazardous Cargo Desk of the Shipping Line for approval. If the vessel is operated by the line accepting the Hazardous cargo, then the Hazardous Cargo Desk will accept or reject the booking.

If the vessel operator is another line the Hazardous Cargo request is submitted to the DG desk of the vessel operator. Based on their acceptance the approval will be communicated to the load port agent and cargo accepted.

The Load Port agents will notify the Authorities at the Load Port as well as the Master of the vessel to ensure proper acceptance and stowage of the cargo firstly at the Load Port and secondly onboard the vessel.

Hazardous cargo is stowed onboard the vessel at a pre-assigned stowage location. Once the cargo is loaded on board, the information of all hazardous cargo is transmitted to the ports of call of the vessels, the transshipment port as well as the discharge ports so that the authorities are kept informed of hazardous cargo onboard the vessel.

When vessels call at the Port of Colombo, a hazardous cargo declaration is submitted to the Safety Section of the Sri Lanka Ports Authority listing out all the hazardous cargo that is being discharged, transshipped or retained onboard. For certain categories of cargo Ministry of Defense approval too needs to be obtained.

The Safety sector of the SLPA will accept such declarations, scrutinize same and permit the vessel to enter the Port of Colombo to discharge any Hazardous cargo if it is destined for Colombo or be transshipped at Colombo or for the hazardous cargo to remain onboard if it is intransit.

If a Hazardous cargo declaration is not provided, the vessel is not permitted to enter the port.

All this is coordinated by the shipping agent, based on the information / declarations he has received from the Port of Loading, Principals or the Master.

Incident

The recent incident of MV. Xpress Pearl is but an extremely rare and unfortunate case which has had an adverse impact on the environment, the Port of Colombo, livelihood of the fishing community and the affected coastal belt while dentingour image in shipping circles.

MV.Xpress Pearl was on a scheduled port call to Colombo during which this unfortunate fire erupted. It is in stakeholders interestnot to allow a ship to be destroyed and cause damage to the environment as such action would have adverse effects on the lives of the fishing community,hospitality industry and all Sri Lankans in general with long term and far reaching consequences.

Dousing the fire and ensuring safety of the crew was therefore the main objective of all authorities concerned.It is, therefore, important not to jump to conclusions, condemn and insinuate fault or lapses on any ones part until all sides have been listened to.

Handling leaking containers, damaged DG containers and vessels having fires onboard is nothing new in the Port of Colombo. There have been numerous instances where such issues have been handled by the Sri Lanka Ports Authority and the Container Terminals in close cooperation with the agents.

One of the most recent cases of fire on board a vessel which was handled successfully was the MSC Daniella a 14000 TEU vessel where Sri Lanka received commendation for handling the vessel.

Sri Lanka as a Maritime Hub

Over 90% of global trade is carried by ships and many container ships carry DG cargo in compliance with the IMDG code as stated above. Thousands of tons of Dangerous and Hazardous cargo are carried by ships the world over.

The largest of ships in the world call Colombo with as much as 20,000 TEUs on board the larger vessels. Several hundreds would contain Dangerous and Hazardous cargo.Sri Lanka has handled over 250,000 vessels during the period 2000 – 2020 and has been ranked as the world’s No.1 container growth port among the top 30 container ports in 2018 by Alphaliner.

Any maritime hub has to have the capability of handling DG cargo and even reworking such containers when required. Port of Colombo has a positive reputation as a port which can handle such damaged DG containers and have received commendations in the past.

If Sri Lanka aspires to be a maritime hub and capitalize on its strategic location advantage we should offer these services to all shipping lines calling Colombo. Our Southern coastal belt sees over half of the world’s crude oil tankers sail by, yet we are still not tasked with meeting severe catastrophes.

Need of the hour

There’s an immediate need to improve the emergency response handling in case of a vessel in such casesof vessels in distress. Sri Lanka needs to invest in more resources and international experts to be on call for such emergencies.

CASA representatives, inter alia, stakeholders have worked with the Ports and Shipping Ministry in the past in developing a comprehensive maritime policy for Sri Lanka. Some of the way forward action plans covered Ports and related infrastructure, development of maritime related services, ships, ship owning, ship and crew management, shipping and NVOCC agency, coastal shipping, development of logistics and intermodal infrastructure, harmonizing of regulatory framework, maritime safety, security, marine pollution prevention, maritime training, promotion of small and medium scale enterprises in maritime and logistics.

We believe that this exercise which was the dedicated and committed effort of all relevant stakeholders must be urgently reviewed and enacted together with fast tracking ratifying of international conventions related to maritime which come under the Director General of Merchant Shipping.

We observe opportunists with little or no knowledge and experience of shipping are endeavoring to place the blame on the shipping agents for this debacle and are calling for changes in agency ownership structure which has totally no relevance.Everyone will have 20/20 vision in hindsight and all are experts after a catastrophe.

CASA

The Ceylon Association of Shipping Agents, formerly known as the Ceylon Association of Ships’ Agents, Ceylon Association of Steamer Agents, and the Ceylon Shipping Committee, in that order, was established in 1944.

Membership now stands at 139 Company Members and 3 Associate Members.

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Sri Lanka opposition MP sees racist agenda behind behind pro-China demonstration

TNA MP Shanakiya Rasamanickam – Image credit: Facebook

ECONOMYNEXT – A protest held outside the Chinese embassy in Colombo against opposition legislator Shanakiyan Rasamanickam was likely the work of a paid group with little knowledge of Sri Lanka’s crisis and pushing someone else’s racist agenda, the MP said.

Rasamanickam told EconomyNext on Saturday December 10 that the protestors were peddling a familiar narrative of racism.

“These people are clearly on a racist agenda. We know how this agenda plays out and we know who is behind it from before, so it’s not anything new. People can connect the dots and figure out who might be behind this protest,” he said.

The hurriedly put together demonstration seemed to be against Rasamanickam’s controversial warnings of anti-China protests in Sri Lanka over Beijing’s purported reluctance to restructure the crisis-hit island nation’s debt.

A small group of protestors including a number of Buddhist monks had gathered outside the embassy premises on Friday December 09 condemning Rasamanickam’s statement in parliament that people will take to the streets against China in a “go home, China” wave of protests similar to the “go home, Gota” protests that unseated Sri Lanka’s powerful former president Gotabaya Rajapaksa.

“I was actually very happy to see a protest happening against me in Colombo. This is the first time there was a protest held against me,” said Rasamanickam.

I”f you look at the group that were protesting, they are quite unaware of the current economic situation in the island,” he added.

One banner displayed by the pro-China protestors contained the words “let us strongly condemn the ‘Go home China’ statement by separatist Rasamanickam” in Sinhala, though the organisers had been careful to omit the word ‘separatist’ in the English translation of the slogan.

It is unclear at present who was behind the protest, but a placard carried by one of the protestors read “is this going from anti-Gota to anti-China”, indicating the possible involvement of pro-Rajapaksa elements.

“It looked like a paid  group of people who came with no knowledge of the country’s situation and was completely under the agenda of somebody else,” said the MP.

The Batticaloa district lawmaker claimed that some people had offered to organise a counter-protest against the pro-China demonstrators but he declined the offer.

“I refused it because the citizens aren’t silly. They are aware of their surroundings and what is going on, so we need not protest in that way,” he said.

A commotion also ensued at the demonstration when a woman started recording it on her mobile phone, prompting some of the protestors to demand that she leave. Words were exchanged, with the visibly agitated woman yelling at the protestors that they were conspiring to sell Sri Lanka to China.

What triggered the protest was an explosive remark by MP Rasamanickam on December 02 that if China were a true friend of Sri Lanka’s, it would agree to either write off the island nation’s 7.4 billion dollar debt or at least help restructure it.

Nearly a fifth of Sri Lanka’s public external debt is held by China, according to one calculation.

“If China, who has nearly 20,000 billion dollars, is truly Sri Lanka’s friend… offering 9 million litres of diesel or half a million kilos of rice isn’t real help,” said Rasamanickam, speaking in Sinhala.

“I say to China and the Chinese embassy that, as 22 million Sri Lankans irrespective of ethnic or religious differences got together to say ‘Go home, Gota’, don’t push us to a place where we will be saying ‘China, go home’,” he said.

Whatever the agenda behind Friday’s protestors, they are not alone in their opposition to Rasamanickam’s strong words against China. Main opposition Samagi Jana Balawegaya (SJB) MP Harsha de Silva was strongly critical of the statement, insisting that Sri Lanka cooperate with all countries.

Rasamanickam told EconomyNext that his words were misrepresented.

“What I said was ex President Gotabaya Rajapaksa didn’t listen to the voices of the people and people ended up saying ‘Gota Go Home’ and if the Chinese fail to address the issues and act in the interest of the Sri Lankan community, naturally people will start opposing them also. If that happens, I simply said that I will support them because for us our country and our people are the priority,” he said, adding that his speech had raised awareness among the public of the situation.

The MP has been raising his voice in parliament and elsewhere in recent days over what he claims is a hesitance on the part of China to assist in Sri Lanka’s debt restructuring efforts. The 2.9 billion dollar extended fund facility (EFF) that the International Monetary Fund (IMF) has offered to extend to the island nation is contingent upon the successful restructure of this outstanding in addition some stringent reforms that experts say are long overdue.

Colombo has been vague at best on the status of ongoing restructure talks with Sri Lanka’s creditors, and opposition lawmakers and others have expressed concern over what seems to be a worrying delay. Rasamanickam and others have claimed that China, Sri Lanka’s largest bilateral creditor, is the reason for the apparent standstill.

Meanwhile, IMF Chief Kristalina Georgieva has called on China to speed up restructuring of debt in Sri Lanka and Zambia following a meeting with the leaders of the country.

“We had a very fruitful exchange, both on the G20 Common Framework and on some specific cases,” she said in a statement after the meeting.

“We need to build on the momentum of the agreement on Chad’s debt treatment and accelerate and finalize the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks,” she said. (Colombo/Dec10/2022)

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IMF chief calls on China to speed up Sri Lanka, Zambia debt overhaul

ECONOMYYNEXT- International Monetary Fund Chief Kristalina Georgieva has called on China to speed up restructuring of debt in Sri Lanka and Zambia following a meeting with the leaders of the country.

“We had a very fruitful exchange, both on the G20 Common Framework and on some specific cases,” she said in a statement after the meeting.

“We need to build on the momentum of the agreement on Chad’s debt treatment and accelerate and finalize the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks.”

Sri Lanka is discussions with the Export Import Bank of China as the lead lender to the island, State Minister Shehan Semasinghe told parliament.

China has informed Sri Lanka that they will also hold bilateral discussions with the IMF and World Bank he said.

China has been asking questions from Sri Lanka and lenders were trying to assess the impact on credits to other countries as well as the domestic economy, he said.

China is a top lender to Sri Lanka along with Japan, the Asian Development Bank and Japan.

Some of China’s infrastructure loans have also been questioned for lack of proper feasibility, though a coal plant is generally acknowledged to be best investment the country has made since the 1980s and is enough to cover many since.

But China gave several so-called ‘cover up loans’ to Sri Lanka which was not linked to infrastructure or economic reforms when the country ran into forex shortages under ‘flexible inflation targeting/output gap targeting’ compounding borrowings from sovereign bond investors.

Sri Lanka calls such monetary instability linked borrowings ‘bridging finance’.

The World Bank and Asian Development Bank or Japan does not give such ‘bridging finance’ or budget support loans without reforms to expand economic activities.

Sri Lanka central government net debt (after deducting foreign reserves) which was 17 billion US dollars after almost 65 years of foreign borrowings shot up to 32 billion US dollars over 7 years of extreme monetary instability. Meanwhile foreign reserves became negative.

Resorting foreign borrowings to meet foreign repayments comes from a Mercantilist fallacy known as the ‘transfer problem’, analysts have said.

Related

Sri Lanka debt crisis trapped in spurious Keynesian ‘transfer problem’ and MMT: Bellwether

Policy makers believe that a current account surplus is magically required to make foreign repayments and not higher interest rates to curtail domestic investments and consumption which make resources available to meet such payments which will in turn reduce the imports and any current account deficit. (Colombo/Dec10/2022)

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Sri Lanka has excess rice amid malnutrition: President

ECONOMYNEXT – Sri Lanka is to harvest a good rice harvest in the upcoming main (Maha) cultivation season but paddy stocks from two previous seasons are still with farmers and collectors, President Ranil Wickremesinghe said.

“I see now that we will get a good harvest in the Maha season,” President Ranil Wickremesinghe told parliament.

“That is also a problem, because we have some leftover rice stocks from the recent Yala (minor) season and the previous Maha season.”

“Now there can be situation of excess rice, we have to protect the farmers. On the other had we will have food to reduce malnutrition.”

Sri Lanka’s rice farmers do not grow and internationally traded grade of rice and bumper harvests do not lead to export booms but calls for trade restrictions on the hungry and helpless to ‘protect’ their incomes.

Rough rice (paddy) prices have fallen to around 80 rupees a kilogram, from over 120 rupees at the height of the crisis earlier in the year when large volumes of money was injected to the banking system to sterilize interventions and pay state workers.

Food Price Crisis

Though supplies are coming back to normal, because soft-pegging macro-economists destroyed the rupee from 200 to 360 to the US dollar by printing money for two years to keep interest rates down, prices are double before from the liquidity injections or ‘stimulus’ started.

The malnutrition is coming from monetary instability involving the collapse of the anchor-conflicting ‘flexible exchange rate and not a problem in the real economy as excess food supplies show.

Related Impoverished Sri Lankans are selling assets, eating less: WFP

Sri Lanka’s chicken farmers are also looking for export opportunities.

Related Sri Lanka chicken farmers eye exports as domestic prices drop

Sri Lanka is now in the worst the worst currency crisis triggered it the history of its intermediate regime (flexible exchange rate) central bank.

With salaries not keeping pace, incomes many sectors, mostly salaried workers including daily wage earners are too low to afford food whether or not they are plentiful, leading to malnutrition especially of the children of poor families.

The phenomenon has a been a recurring problem in the country after the soft-pegged central bank was set up 72 years ago.

Before 1980, when depreciation became fashionable in Washington policy making circles (now called a flexible exchange rate and BBC policy at that time), import controls were the main threat to food supplies, not soaring prices and lagging wages.

Food Trade Controls

In the 2022 currency crisis soft-pegging macro-economist in a mistaken strategy then banned ‘open account imports’ threatening food supplies ranging from lentils to onions and sugar to wheat that usually come from South Asia and Dubai, driving up prices.

But Wickremesinghe then opened account imports, preventing a real food crisis from taking place, allowing money flowing through traditional gross settlement systems (Undiyal/Hawala) to be easily prioritized for food.

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Sri Lanka can trigger food shortages as in medicines with new trade controls

Sri Lanka food importers seek exemption from open account trade ban

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Food imports in Sri Lanka are only around 100 to 150 million dollars a month which is about third of monthly worker remittances and about 10 percent of total exports.

However the central bank under Governor Nandalal Weerasinghe took the required action to liberalize rates allowing credit to slow and stabilize the external sector.

The government also raised energy prices to keep in line with flexible exchange rate collapse (also a recurring phenomenon) and raised taxes to reduce domestic credit (also recurring action).

President Wickremesinghe and his advisors focused their efforts on getting loans from foreign lenders to buy fertilizer for farmers after he took over as Prime Minister and later President.

Fertilizer supplies are important in a currency crisis not just to produce food as normal but the construction sector usually has to be smashed to stop balance of payments deficits and to stop the rupee from falling further.

When rural workers engaged in construction return home to farming areas availability of fertilizer will help them keep in employment.

Open Market Injections

Construction and other sectors undergo an artificial boom when a soft-pegging central bank suppresses rates with its open market operations and sells downs reserves when the currency peg comes under pressure.

Selling reserves and printing money through open market operations to stop rates going up – an action called ‘sterilized intervention’ – effectively injects what classical economists called ‘fictitious capital’ into banks and artificially pushing up credit and imports further by effectively re-financing private sector activities with central bank credit.

The new money to sterilize interventions over-extending a credit cycle and encourages more imports.

In the current crisis Sri Lanka’s Consumer Affairs Authority, by imposing price controls, disrupted sectors like poultry sector and created black markets.

President Wickremesinghe has so far not taken any actions to abolish the CAA or its price controlling powers which goes against his ‘social market economy’ strategy. (Colombo/Dec09/2022)

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