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CASA sheds light on unprecedented shortage in containers and rising freight rates

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The following are some selected excerpts from an interview done by CASA (Ceylon Association of Ships’ Agents) to enlighten the industry, on why container shortages are being faced globally and in Sri Lanka and possible alternatives available for the Sri Lankan Exporters & Importers.

 Since the middle of 2020 and the outbreak of COVID-19, the global shortage of shipping containers has become a hot topic. Before the pandemic, experts anticipated a positive growth rate in the container industry through 2024. Yet the current crisis has caused the entire supply chain to function at a snail’s pace or in some instances to come to a relative stand still.

Containers that were mainly shipped from China (Far East) destined to the US and Europe were held up as all twenty four elements pertaining to the cycle of shipping from the depot to the shipper, port to the ship and more were severely affected due to labour shortage, inefficiency at terminals functioning without full force, ships being delayed at ports as the average turn-around time of 80 days exceeded 120 days – causing an unprecedented disruption to the industry.

In the Port of Colombo we handle a throughput of 80% of transshipment cargo out of an estimated total throughput of 6.8 million TEUs with the balance being imports and exports. In Sri Lanka we were able to balance out the requirement of containers for export with the imports despite there being a disparity in terms of the container requirements for exports which is predominantly in 40’s while imports are predominantly 20’s. With the import restrictions imposed by the Government, there was a dip in the imports coming into the country resulting in a shortage of containers mainly 40’ which are required for exports. To meet the 40’ container requirement for exports, the alternative was to reposition empty 40’ containers which is a costly exercise. Shipping lines were not willing to spend extra money to reposition containers. In view of this, most exporters faced a shortage of equipment for their export requirement during the last six months in Sri Lanka.

The freight rates have drastically increased in the long haul; for instance, the Shanghai Rotterdam Index which is mainly the route from Asia to Europe increased by 311% within the last 6-9 months (April to December) in comparison to 2019 -2020. Since the shippers were willing to pay, priority was given to the long haul sectors.

The only way of getting space and equipment for Sri Lankan exporters was to pay higher freight rates in line with what was being charged from the Far east.

Present freight rates shows a significant spike up to three or four fold levels or over 300% levels. Carriers should take in to consideration freight surge ex Sri Lanka too to pave the way for additional vessel space allocations instead of the comparison made with other origins.

It is obvious that other manufacturing load ports are pitched higher than Sri Lanka due to Country’s GDP, own geopolitical structures to name a few.

There are a few key points which were suggested at a Ministry meeting held recently regarding various issues pertaining to the current crisis. One such matter was the excess of 20 foot containers as SL exporters converting to 20 footers incurs an additional  cost but if the shipping lines can provide an alternative in terms of cost,  we can make use of the stagnant lot which would be mutually beneficial for all stakeholders. 

It is a widely known fact that the most popular equipment used by modern day sea transportation is the 4OHQ. There are selected types of commodities which attracts 20DC equipment hence substituting 20DC does not always appear pragmatic.



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Business

Oil prices rise as Saudi Arabia pledges output cuts – Opec+

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(picture BBC)

Oil-producing countries have agreed to continued cuts in production in a bid to shore up flagging prices.

Saudi Arabia said it would make cuts of a million barrels per day (bpd) in July and Opec+ said targets would drop by a further 1.4 million bpd from 2024.

Opec+ accounts for around 40% of the world’s crude oil and its decisions can have a major impact on oil prices.

In Asia trade on Monday, Brent crude oil rose by as much as 2.4% before settling at around $77 a barrel.

The seven hour-long meeting on Sunday of the oil-rich nations, led by Russia, came against a backdrop of falling energy prices.

Total production cuts, which Opec+ has undertaken since October 2022, reached 3.66 million bpd, according to Russian Deputy Prime Minister Alexander Novak.

Opec+, a formulation which refers to the Organization of Petroleum Exporting Countries and its allies, had already agreed to cut production by two million bpd, about 2% of global demand.

(BBC)

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Manpower services agency wins accolades for its contribution to foreign employment sector

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Siraj Cafoor, Managing Director of Siraj Manpower Services receives the award

Its MD says. ‘go abroad only if you can work hard’

Siraj Manpower Services, one of Sri Lanka’s leading foreign employment agencies, was honoured with the Three-Star Award at the ‘Golden Awards’ 2023, organised by the Sri Lanka Bureau of Foreign Employment (SLBFE). This award ceremony was organised to honour foreign employment agencies that have made a significant contribution to the development of the foreign employment sector, which is a major source of foreign exchange for Sri Lanka. Siraj Cafoor, Managing Director of Siraj Manpower Services, was presented with the award at the award ceremony which was held at the BMICH in Colombo under the patronage of Minister of Foreign Employment and Labour Manusha Nanayakkara.

Having been established in 2002, Siraj Manpower Services (www.sirajmanpower.lk) has earned a reputation in the field of foreign employment by winning the trust of customers for more than 20 years. It has been offering job opportunities in the Middle East countries such as Kuwait, Qatar, Dubai and Saudi Arabia, and Malaysia as housekeepers, drivers, sanitation workers, labourers and also jobs related to the apparel industry. All these workers are entitled to approved salary scales certified by the SLBFE.

“We always stand for the safety of workers who go abroad through our organisation. We work to solve the problems that arise in relation to the contracts that the workers have entered into. I must mention something special to those who go abroad for employment. That is, you should keep in mind that you go abroad only to work. Go abroad only if you can work hard. You have to remember that you are going abroad to earn some more money and achieve the advancement of your family.” said Siraj Cafoor.

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Direct flights between Istanbul and Katunayake to commence from August

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A special discussion between Turkish Ambassador – Demet Sekercioglu and Minister of Ports, Shipping and Aviation – Nimal Siripala de Silva took place last week at the ministry office. The aim of the discussion was to seek authorization to commence direct flights from the Turkish Capital Istanbul to Katunayake, Sri Lanka. The Chief of Turkish Airlines’ South Asia Office Fathi Bozkurt was also present during the discussion.

Currently, Turkish Airlines connects with Sri Lanka through a route that includes a stopover in the Maldives, resulting in an additional travel time of one and a half hours. The delay caused by this routing is not favored by travelers, as emphasized by the Ambassador.

The Chief of Turkish Airlines requested for time and space to be allocated in order to initiate direct flights between Istanbul and Katunaike, thus providing convenience for Turkish tourists and travelers who prefer visit Sri Lanka.

The Minister announced that the request would be forwarded to the Director General of the Civil Aviation Authority of Sri Lanka and the Airport and Aviation Services (Sri Lanka) (Private) Limited. The aim is to establish direct flights between Istanbul and Katunayake starting from August this year.

Turkish Airlines, a renowned airline with a fleet of over 100 aircraft, offers flights connecting Europe’s Vancouver and New York. The Chief of Turkish Airlines said that the new service would not only benefit European travelers but also encourage them to travel to Sri Lanka.

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