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Sunday, October 23, 2016

Shippers Avoid Sri Lanka Because Of High Cost

August 15, 2001

Sri Lanka's port crisis deepened as insurers raised their war risk surcharges even further, prompting top shipping lines to sharply reduce services to the Colombo port. The crisis was triggered by a rebel attack on the country's only international airport on July 24, which prompted Lloyds of London to label the entire island a war-risk zone.

"The crisis has worsened. We have now been told that some shipping lines have to pay double what was earlier asked. As much as $480,000 per visit for the newer ships," said Parakrama Dissanayake of the Ceylon Association of Ships Agents. The local Daily Mirror paper said P&O Nedlloyd, Hyundai, Senator and Hapag Lloyd lines were asked to pay more than double the previously announced surcharge of $150,000 per call. Local officials of Evergreen Marine, Hanjin Shipping (117930.KS) and American President Lines (APL), confirmed that many of their ships were bypassing Colombo.

"We normally have around 28 calls per month. We are reducing that to four per month," said a local representative of Evergreen. "The war-risk premium is just too high," he said.

Evergreen had some of the largest vessels, carrying 4,600 20-foot equivalent unit (TEU) containers, calling at Colombo. Hanjin said one of its larger ships had already bypassed Colombo but added it was still undecided as to what level of services to maintain. The line has eight ships calling at Colombo every month. APL Lanka said at least two of its four ships would not visit Colombo until the surcharge was lifted.

Before the surcharge, Colombo port had around 300 ships of all sizes calling in monthly. Officials said the rapid decline in shipping services was a huge crisis for the trade-dependent economy.

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