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.
DFCC Bank facilitates the continued growth of Sri Lankan SMEs amidst the COVID-19 pandemic
The unprecedented surfacing of the COVID-19 pandemic has left a lasting scar on the global population and economy. With no precise warning on the horizon, businesses everywhere were thrown into the deep end, and survival seemed uncertain during the peak of the pandemic. In Sri Lanka, a nation where SMEs form the integral backbone of the economy, the ill effects have been taking a heavy toll on businesses both fiscally and mentally.
However, we as Sri Lankans are resilient at our core, and with the integral support of frontline workers, officials, and essential services such as our banking partners, we set forth on a journey to assess, adapt and survive. One such story about perseverance through a valuable relationship comes from K.S.K. Menan of Star Food Store (Pvt) Ltd, and his trusted banking partner, DFCC Bank.
Emerging from humble beginnings, Menan’s story is one that inspires patriotism, and reaffirms the importance of giving back to your motherland. As a self-made entrepreneur, Menan was successfully engaged with the departmental store industry in the United Kingdom, when one day, he decided to leave everything there and come back to his home, Sri Lanka. He was on a mission to give back to the country that had given him so much, and that led to the birth of ‘Star Food Store’ in Kokkuvil, a supermarket equipped with all the necessary household essentials. DFCC Bank had been by his side throughout the entire journey until the opening of his outlet, and even more when the COVID-19 pandemic struck.
“When Imoved back to Sri Lanka in 2016, the very first account I opened was with DFCC Bank, and with their support, I was able to open the first‘Star Food Store’ in November 2019. However, when COVID-19 struck, everything came to halt. When restrictions were relaxed, I faced multiple problems with bringing things back to how they were. DFCC Bank stepped in and gave me overdraft facilities, helped clear my cheques, and provided additional funds at a low interest rate”.
Today, Menan has been able to open a second Star Food Store outlet at Achchuveli in August 2020, and a third at Idaikkadu in February 2021. He states that expansion is the last thing most businesses consider during this turbulent time, however, the X factor that has allowed him to do this is his banking partner.
“The confidence an entrepreneur gains with the right banking partner is immeasurable, and I have been able to find that with DFCC Bank. They have always gone out of the way to ensure my venture’s continuity, from sending someone from the branch immediately if there is an issue with the card machine during business hours, or even understanding that loose change is important for a supermarket and sending bags of coins from the Colombo branch for business use. I now have plans of constructing a state-of-the-art shopping complex in Jaffna, and look forward to working with DFCC on this project”.
Covid-19 third wave fears dampen stock market
By Hiran H.Senewiratne
The CSE witnessed a steep decline following worries over the possible outbreak of a Covid 19 third wave in the country and the continuation of selling pressure for certain stocks in the market, stock market analysts said.
CSE investors worried over 52 new cases being detected in two retail stores at Pamunuwa and at a state bank in Colombo at the end of the April holidays. Sri Lanka’s Health Ministry warned of a possible surge in COVID-19 cases in the coming weeks, market analysts said.
Consequently, the All Share Price Index declined by 2.9 percent and S and P SL20 dropped by three percent. Major companies sought after by investors negatively contributed to both indices during the day. According to market analysts, these companies were: LOLC (27 negative points), Expolanka (19 negative points), Vallibel One (12 negative points), Hayleys (11 negative points) and JKH (10 negative points).
All Share Price Index went down by 198.39 points and S and P SL20 down by 93.89 points. Turnover stood at Rs. 3.7 billion with a single crossing. The crossing was reported in Ceylon Cold Stores (CIS), which crossed 60000 shares to the tune of Rs. 35.4 million, its shares traded at Rs. 594.
In the retail market, five companies that mainly contributed to the turnover were: Browns Investments Rs. 717.6 million (114 million shares traded), Expolanka Rs. 480 million (9.8 million shares traded), Hayleys Rs. 392 million (five million shares traded), Dipped Products Rs. 389 million (6.9 million shares traded) and LOLC Rs. 193 million (587,000 shares traded). During the day 197 million share volumes changed hands in 31305 transactions.
Sri Lanka rupee quoted firmer around 192/194 levels to the US dollar in the spot market on Tuesday, while bond yields slightly eased, dealers said. Sri Lanka rupee last closed at 194/198 levels to the US dollar in the spot market on Monday. The Central Banks Telegraph Transfer rates stand at 187.93/191.97 levels below the spot rates on Monday.
Sri Lanka’s rupee has come under pressure amid money printing and low-interest rates, despite the worst import controls since the 1970s, observers said.
SAT launches F5 portfolio to deliver secure digital experiences
(At left) : Edgar Dias, Regional Vice President of Channels and Partnerships, Asia Pacific, F5. (At right) : Sanjaya Padmaperuma, CEO of SAT.
South Asian Technologies (Pvt) Ltd, announces its appointment to be a distributor for F5 within Sri Lanka and Maldives to deliver secure digital experience to enterprises.
The cutting-edge technology is a portal for delivering applications and data with greater agility, security, availability, performance, and scalability.
F5’s portfolio of automation, security, performance, and insight capabilities empowers customers to create, secure, and operate adaptive applications that reduce costs, improve operations, and better protect users.
“With the increasing necessity for digitalisation in the workspace, now more than ever, organisations need proven solutions to help secure their businesses. Adding F5 to our existing portfolio gives South Asian Technologies, a more omniscient opportunity to equip our partners and customers with best-in-class application security and delivery solutions. As F5 enables adaptive applications, the SAT team is ecstatic at the prospect of securing our clientele with robust security offerings that have a proven history with Fortune 500 companies across the globe,” said Sanjaya Padmaperuma, CEO of SAT.
Every company today is in the digital experience business. In the wake of COVID-19, customer expectations are higher than ever, as the experiences garnered are the primary way that people interact and transact with just about every organisation at present.
F5 helps organisations deliver and secure the premium digital facilities that customers demand by enabling adaptive applications which, like living organisms, will naturally adapt based on their environment – growing, shrinking, defending, and healing themselves.
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