Sri Lanka sees chance in cheap ships

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 May 2009

Sri Lanka could make use of the global slump in shipping to rebuild its national merchant fleet as ships without work are now going cheap, the island's navy chief Wasantha Karannagoda has said. The end of the 25-year-old ethnic war gives the country an opportunity to revive its merchant navy, he said.
Having a national fleet could reduce reliance on foreign shipping, he said in an interview on the ITN state television station.
"Today, the world is facing a crisis and hundreds of ships are laid up because they have no business," Karannagoda said.
The global downturn in trade and shipping has forced owners to lay up ships that do not have enough work and some new ships are heading straight from yards to lay-up.
"Trade has slumped. Now is a good time to buy ships cheap," Karannagoda said. "So the country can make use of it and buy ships cheap for future use, but of course funds are needed."
Karannagoda said the national fleet of 17 ships had dwindled after the economy was liberalised in 1977 and the national carrier, Ceylon Shipping Corporation, faced competition.
"After 1977 our merchant shipping fleet declined. We became dependent on foreign ships. Now we have only two ships."
The Sri Lankan government is trying to encourage ship owning in its aim of turning the island into a maritime centre and in its last budget offered incentives and removed obstacles to local owners.
Analysts say it is important for any locally based shipping lines to be commercially viable entities, which are profitable on their own merits and efficiency, like any other business.
High freight rates to protect badly managed local shipping lines could undermine the efficiency of the entire economy and burden the poor.
Sri Lanka at one time had controlled freight rates, putting the country in the peculiar position of being unable to fully benefit from perhaps its greatest geographical advantage - that of straddling one of the busiest shipping lanes in the world.
Higher than globally competitive freight rates could hurt the entire export industry threatening the livelihoods of hundreds of thousands of Sri Lankan workers.
The government is also trying to promote the island's harbours as locations for ship lay-up after the navy recently gave security clearance.

Source: LBO