Forex crunch in Sri Lanka hits Indian shippers; export cargo lies uncleared at Colombo port

T.E. Raja Simhan | | Updated on: Feb 15, 2022
Vantage point Colombo port is the preferred hub for transshipment

Vantage point Colombo port is the preferred hub for transshipment

Rotation of boxes between India and Sri Lanka to be affected

Large volumes of export cargo sent to Sri Lanka from Thoothukudi port is lying uncleared at Colombo port due to a forex crunch in the Island country. Nearly 60 per cent of Sri Lanka’s domestic requirements are sent from southern ports, especially Thoothukudi.

A sharp depreciation of the Sri Lankan rupee against the dollar has led to the forex crunch. Rising inflation and an increase in fuel prices has aggravated the situation. Bankers are unable to issue Letters of Credit to local shippers to take possession of the cargo. Every month, around 1,500 containers are sent from Thoothukudi port to the neighbouring Icountry, sources said.

At present, around 2,000 containers sent from Thoothukudi are lying uncleared at Colombo port, said P Jeyanth Thomas, Vice-President, Tuticorin Ship Agents’ Association. The situation will worsen the shortage of containers and affect fthe rotation of boxes between India and Sri Lanka w Congestion is also building up at Colombo port due to the backlog and will, in turn, lead to a delay in movement of transshipment cargo, he said.

A recent trade notice by the Chairman of Sri Lanka Ports’ Authority said that upon the advice of the President, the Minister of Ports and Shipping has directed Sri Lanka Ports’ Authority to review eligibility for waiver of penal charges as a special concession to importers, towards cargo landed at SLPA owned terminals (JCT & ECT) and pending clearance up to January, 1, .2022.

The eligibility for this penal charge waiver is only for cargo / containers cleared after January 31, the notice said.

Much of the cargo sent from India’s southern ports to Sri Lanka is for its own consumption. However, due to the forex issue, bankers are unable to issue Letters of Credit to clear the cargo. This has led to congestion at the Colombo terminals. Also, this has disrupted the flow of containers between Indian ports and Colombo ports, said Edwin Samuel. Founder & CEO. Pearl Shipping Agencies.

J David Raja, Senior Vice-President, St John, said the forex issue in Sri Lanka has led to a crisis at VOC port cargo handling . Three container terminals in Sri Lanka - SLPA-JCT, SAGT and CICT - are unwilling to take cargo and feeder ships that carry cargo of Non-Vessel Operating Common Carriers. The situation is going to bworsen in the days to come, he added.

Colombo port, a transshipment port, is vital for Indian trade as most of the cargo to the US and Europe are routed through the Island country, he said.

Published on February 15, 2022
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