Ceylon Shipping Corporation, the national carrier of Sri Lanka is commemorating fifty years of yeomen service on June 06, 2021. Being in the limelight for half a century is no easy feat but the prestigious entity continues to sail through with grandeur since its inception on June 06, 1971.
The historical day marked a turning point in the shipping industry of the island, blazing a trail in the contemporary shipping industry of Sri Lanka, when the country’s legislatures gave the nod to establish Ceylon Shipping Corporation as a fully government owned commercial enterprise. The infant National Carrier under the brand name of CSC grew from strength to strength and earned the credibility as a dependable carrier from Europe to Fareast and North of India to Australia .CSC helped many non-traditional export produces to enter global markets and establish footholds when the freight was a prohibitive factor and sailing opportunities were minimal at the time.
With a Vision, ‘To develop a dependable and effective National Fleet of Ships for the country,’and a Mission, ‘To cater to the sea transportation needs of the export, import and local coastal trades of Sri Lanka that needs assistance from the National Carrier,’ CSC has buoyed through challenges and continues stealthily in its quest.
Due to centuries of colonization, the voice of the islanders were repressed and even after gaining freedom in 1948, the main industries were being governed by the colonial rulers. Yet the revolutionary ethos that prevailed subsequently resulted in the late Prime Minister, S.W.R.D. Bandaranayake authorizing the nationalization of most primary industries and business ventures since 1956. This included the vesting of power to the locals in the sphere of ports and shipping under Mr. P. B. G. Kalugalle, Minister of Shipping, Aviation and Tourism. During that period the ship agency services calling at Sri Lanka ports were handled by a handful of entities who were primarily governed by foreign parties. This functionality was challenged by the local entrepreneurs who converged under the banner of the National Shipping Association, making representations to the government.
A significant milestone in the annals of our maritime history was the purchase of the first ship Lanka Rani, The first CSC owned vessel, a bulker in the year 1971. Thereafter, numerous conventional vessels were added to the fleet of the National Carrier- Lanka Sagarika, Lanka Keerthi, Lanka Ratne, Lanka Kalyani, Lanka Devi, Lanka Kanthi, Lanka Shanthi, Lanka Siri, Lanka Seedevi and the tanker, Tammanna to name a few.
These measures progressed into establishing an official premise for the Ceylon Shipping Corporation(incorporated in 1971). The initial office at No. 6, Sir Baron Jayatilleke Mawatha, Colombo 01 was declared open on January 01, 1975. The first Chairman was Mr. P. B. Karandawela. During the same year, the Ceylon Shipping Lines Ltd., was incorporated into CSC.
History in the Making
CSC in collaboration with the Colombo Port was instrumental in introducing containerization to South Asia in the year 1980. This was a landmark achievement for the Corporation, the industry and the island nation which had made great strides within a short duration. Laying further claim to its fame were the prestigious awards and accolades which have been bestowed to CSC throughout the years from Lloyds of London and Port of London Authority as the Star Performer for three consecutive years from 1993-1995 and 1997, in recognition of the excellent service provided in the South Asia – Europe trade route.
Moreover, the commencement of the containerized service resulted in the acquisition and expansion of the fleet of container ships; Lanka Asitha, Lanka Aruna, Lanka Ajitha, LankaAthula, Lanka Srimani, Lanka Srimathi, Lanka Siri, Lanka Muditha, Lanka Mahapola and more. These ships sailed through the mighty oceans proudly brandishing the Sri Lankan flag worldwide.
In its journey, CSC has been guided by visionaries such as the late Minister, LaithAthulathmudali during his tenure as the Minister of Ports & Shipping. Further, CSC has served as a major Maritime University to many quintessential professionals in the industry, both locally and internationally, rendering a yeomen service to the upliftment of the industry. It is not an exaggeration if someone introduces CSC as the Alma Mater of current industry experts.
It has also been pivotal in the export and import trade by providing vital assistance to the local customers by offering promotional ocean freight rates which have a competitive advantage in the global market in addition to providing cutting-edge solutions and strategies for the sustainability and growth of the industry.
Despite various setback in terms of civil strife and intense competition from larger foreign shipping companies, CSCs contribution towards the economy and the progress of the country is significant, which makes it a key governing body in the shipping fraternity at large.
Having gained traction in the global league, CSC continues to be steered forth with resilience and fortitude by the current administration who are presently exploring new frontiers in the vast ocean of endless possibilities and carving a niche in the horizon that is beneficial for the country as a whole.
CSC owned vessels
Ceylon Shipping Corporation owns two Ultra max type bulk vessels namely; ‘Mv. Ceylon Breeze’ and ‘Mv. Ceylon Princess’ with the Dead Weight capacity of 63,000 MT of each which were built in Avic Shipyard, Wehai, China and deliverd on 30th January 2016 and 23rd June 2016 respectively.
The two vessels owned by CSC are deployed for the transportation of coal from port of loadings to the anchorage of Norochcholae which carry around 700 – 720,000 of 30% of coal requirement per annum. This operation is carried out from mid September each year to April in the following year due to the South West monsoon which occurs during the rest of the period where the vessels are utilized in the international charter market. During the last five years the vessels were employed in an optimum way with 98% to 100 % utilization.
Trading and Training Concept
The two ships have been designed and equipped with an additional deck each for the accommodation of 26 Sri Lankan marine cadet officers per vessel and 52 cadets for both vessels at any given time. This is in conjunction with the national requirement of serving the maritime educational sector by producing experienced and qualified Marine Cadets for the country’s need as well as securing a considerable inflow of FOREX earning to the country in future. The superior quality of training provided to the cadets guarantees excellence in their career aspirations, with recruits rising in ranks as Ships’ Captains and Chief Engineers in international vessels among other opportunities.
Current Status of CSC Business
- Major Activities of CSC
· Ship Owning, Management and operations
- Carriage of Coal for Lakvijaya Power Station which involves shipments by bulk carriers to off shore anchorage and lightering operation to the Jetty of the Plant
- Non Vessel Operating Common Carrier (NVOCC) Service
- Total Logistics solution, Customs Clearing and Forwarding (Door delivery and pick up services of any type of import and export cargo along with value added services)
- Ship Chartering
- Ship Agency Functions
- Ship Brokering
- Sea Training provided to Sri Lankan Merchant Shipping Cadets (Government Sector & Private Sector Institutes)
Transportation of Coal to Lakvijaya Power Plant at Puttlam
With the expansion of business activities, Ceylon Shipping Corporation has been playing a major role in coal transportation for the smooth functioning of Lakvijaya Power Plant in Norochcholae while saving a significant amount of foreign exchange. In order to facilitate this operation, CSC has entered into a contract with Lanka Coal Company (Pvt) Ltd (LCC) on behalf of CEB for the carriage of coal mainly from South Africa, Indonesia or Russia to Norochcholae on FOB (Free on Board) basis terms under phase I, II and III by matching the freight quoted by supplier on CIF (Cost, Insurance & Freight) terms. The total requirement of coal to generate 900 MW is 2.25 million MT per annum. In order to cater for the sea transportation of coal, CSC has been partnering with a third party operator/ ship owner to carry the balance quantity of coal. The vessels carrying coal can reach only upto the anchorage of the port of Puttlam situated about 4.2 km offshore.
Lightering– From Anchorage to the jetty of the power plant, coal is carried by Self – Propelled Barges (SPBs) for lightering operation. Presently there are 06 barges deployed for lightering through a third party operator. The rate of lightering from SPBs are around 10,000MT of coal per day.
Active engagement in the Container Trade
CSC engages in NVOCC business (Non Vessel Operating of Common Carrier) and freight forwarding operations which is a way of sending cargo through other shipping lines by hiring space on their ships. This is a kind of shipping forwarder’s function due to non-availability of owned container vessels at present. This is one of the main profit centers in CSC.
CSC offers world wide NVOCC services through CSC’s long years of experience in agency networking globally. This venture mainly handles cargo imported by the Government Institutions such as SPC, CEB, Sri Lanka Railway, CPC etc. and export consignments of inclusive of those belonging to Sri Lankan Diplomatic staff posted overseas. In the past, CSC operated a Liner service inclusive of 10 to 12 CSC owned or chartered container vessels.
Total Logistics Solutions
CSC provides Logistical support to NVOCC (Non Vessel Operating Common Carrier) / Freight forwarding operations in handling of customs clearance of cargo and undertakes separate government and private sector cargo clearance, specifically handling the export cargo freight forwarding with door deliver service for Sri Lankan diplomats.
Plans for the development of the National Carrier
Being an Island, Sri Lanka has not utilized the coastal waters to maximize the transportation links like Australia, Japan, Philippines and UK. Coastal Shipping would be the most environment friendly and least disruptive method of cargo movement that CSC could explore.
The Coastal Shipping service connects various parts of the island through the water, which as a result will have a strong socio-economic impact around the island, especially outside Colombo.
The proposed coastal service will provide job opportunities in related areas rather not limited solely to the western province.This coastal shipping service would enable to stimulate the economy in the entire country, and thus help to create a more even and rapid socio-economic growth.
Vessel size: 3500 GRT
Route: Colombo –Galle- Trincomalee- KKS
Passeger and cargo capacilty – 200 pax + 200 Freight Tons
Round trip – around 10 days
Issues to be addressed:
- Vessel to be a Sri Lankan flagged vessel (to reduce the port dues)
- Draught – Draught at KKS to be increased
- Cargo handling facility – KKS to be functioned
- Passenger movement facility- dedicated passenger terminal to be operated
- Favorable Government policies to be introduced –Regulation/Tax benefits
Rail / road connectivity to be developed
- Deploy vessels for Crude oil transportation with a joint venture partner on PPP basis with a tripartite arrangement with CPC
Purchasing one Tanker around 163,000DWT that is dedicated to the transportation of Crude oil to the country will enable the vessel to be operated at a fixed cost per annum. This will save the country a substantial amount of foreign exchange which is currently being paid to foreign companies as freight charges, demurrage cost and bunker escalation costs on Crude oil transportation to the country.
As per the records of Ceylon Petroleum Corporation (CPC), it is presently required to ship around 90,000 – 135,000 +/- 5% Metric tons of Crude oil every 15 days or every three weeks respectively from the Persian Gulf to Colombo. The project is based on the captive market opportunity of CPC. They currently import 02 million MTs of Crude oil per annum which is expected to be doubled since CPC’s refinery capacity is proposed to be increased from current 50,000 barrels per day to 100,000 Bbls per day.
- Cater for sea transportation of the fertilizer imports in the country
Sri Lanka’s state Fertilizer firms, Lanka Fertilizer Company Ltd. and Colombo Commercial Fertilizers Ltd import around 400,000MT per annum of fertilizer to the country. The annual freight paid out of the country is USD 8 – 10 million. It was observed when bids are invited by the two companies for the procurement of fertilizer on CIF (Cost Insurance & Freight) basis that the bidders have been in the habit of manipulating freight charges by adding the freight component to the FOB cost. Therefore correct freight charges are not shown in the quoted price which has to be matched by CSC. Those given rates are very unrealistic when compared with the normal market freight rates.Through the above process, the valuable foreign exchange that will drain out in terms of freight can be halted to a greater extent if the sea carriage will be on FOB basis and arranged through CSC. Otherwise it will be paid out to the foreign supplier on CIF terms.
In order to overcome such situations, it is suggested to call the quotations for the procurement of fertilizer only on FOB basis and once the supplier will be selected, the relevant freight charges should be obtained at the second stage from the selected supplier which could be offered to CSC to match the freight charges.
- Purchase 02 second-hand vessels or bareboat charter vessels to employ for the carriage of coal – together with CSC owned vessels, Mv. Ceylon Breeze & Mv. Ceylon Princess
A feasibility study for purchasing two additional dry bulk vessels on second hand basis or on Bareboat charter basis to CSC fleet is being carried out in order to increase the total vessels required for sea transportation of coal to Norochcholae power station, thereby saving the total freight charges within the country.
With the expansion of Lakvijaya Power station for another 300MW, these additional ships could easily be employed for a period of 06 months and during the rest of the period it is expected to be chartered to the international market during South West monsoon period.
- Promote Sri Lanka Flag Registry
With the consent of the Director General Merchant Shipping (DGMS), Ceylon Shipping Corporation intends to promote the Sri Lanka Flag as Flag of Opportunity for the Ship owners worldwide, with the view to increasing the earnings in terms of foreign exchange for the country. CSC wishes to act as the Exclusive marketing arm with a suitable partner to be selected on competitive basis and appoint capable foreign agents to promote the Sri Lanka flag registry in the globe.
- Operate a feeder service between Sri Lanka & Bangladesh/ South Indian Ports
The process is underway to recommence the feeder operation between Sri Lanka and ports of South Indian Region which was operated by CSC during the 80’s & 90’s. CSC is searching for new partners/ investors to recommence this feeder service. A Memorandum of Understanding (MOU) has already been signed by the two countries to harness joint business opportunities. There is a proposal from Bangladesh Shipping Corporation (BSC) to operate a joint Container Feeder Service between the two countries.
In Bangladesh, the main export commodities are ready-made garments, jute products, food items, frozen foods and medicines. There is a considerable volume of Bangladesh export and import cargo to Europe and Mediterranean countries which are carried via Singapore. It is forecasted that the import and export trade in Bangladesh would be increased by 15- 20 % annually.
The transit time from Bangladesh to Europe via Singapore is around 25 days whilst via Colombo is around 20 days. There is an opportunity to diversify Europe bound Bangladesh imports and exports which is presently transshipped via Singapore. The Main Line Operators (MLOs) ship via Colombo would reap the benefit of time and cost savings and the port of Colombo would be benefitted with a newly generated cargo volume.
- Operate passenger cum cargo vessels (ROPAX) between Colombo – Tuticorin – Cochin- Male
CSC intends for the resumption of the passenger ferry service between Colombo and Tuticorin which was operated in 2011. This service will be extended with another Indian port and Male providing sea transportation of passengers and cargo. The objectives of the services are;
- To develop linkage in passenger movement by sea between Sri Lanka and India and enhance people to people connectivity in the neighboring countries.
- To develop socio – economic benefits of the people of the above countries.
- To operate a sustainable passenger ferry service with the private sector participation.
- To create separate market segment for the development of Tourism.
- With the development of infrastructure facilities at the Colombo passenger terminal which would enhance the cruise tourism in the country.
Based on the service features and facilities of this proposed ferry service, and strategy of the ferry operation, passengers can be encouraged to use the service by offering competitive rates and attractive baggage allowances compared to these offered by the airlines. In addition there would be more opportunities to earn in areas such as entertainment, catering and duty-free products. Further, this service could be utilized to offer leisure and entertainment and special packages to organize official and private functions.
- Building a Boat for the carriage of passengers and cargo at Norochcholae
A special Boat service for conveyance from the Jetty of the Lakvijaya Power Station and / or Navy Detachment at Norochcholai to the vessels carrying Coal anchored at the port of Puttalam, Sri Lanka is being operated from 2014. CSC, being the agent for coal operation will be attending the vessel on-board for agency activities with respective government officials while vessels are at anchorage. Further cargo (all provisions) is being transported by the same boat simultaneously for the requirement of the vessels.
The following main functions are being carried out by the use of this boat service;
- To attend to the arrival / departure (Agency) formalities for the vessel
- Supplying of Provisions / spare parts
- Organizing of crew change
- Facilitating of the Surveyor to survey the vessel
Since CSC has tied up an agreement with Lanka Coal Company / CEB to act as an agent for the coal transportation vessels and providing services from 2010 to date. It is noted that CSC is provided with an opportunity to operate a boat service facility to cater to this requirement in a safe and profitable manner. The idea is to own and operate a boat service annually during the non-monsoon period. Several discussions were held with senior officials of CSC on the above requirement.
Presently CSC is spending Rs. 11,000 to 12,000 per trip, totaling around Rs. 3.7 million per annum for the cost of the boat services. However, the construction cost would be around Rs. 4.7 million and Return on Investment (ROI) will be in one and half years.
During the South West Monsoon the boat could be utilized for the following revenue earning modes.
- deploying the boat for whale-watching
- deploying Battalangundo tour
- Build and Operate Multi-Country Consolidation (MCC)/ Unaccompanied Baggage (UPB)Warehouse
In diversifying business strategies, CSC intends to exploit new business opportunities. Ground works are being carried out to set up an Unaccompanied Baggage Clearance and Multi-Country Consolidated warehouse.
It is expected to build a State – of – the Art Warehouse and Logistics city in close proximity to the port of Colombo with a centralized office comprising of related authorities to fulfill the requirement of the industry whilst contributing towards the ‘Single Window’ concept. This proposal would be under the Private Public Partnership (PPP) with the contribution from the stakeholders of the trade. The proposed warehouse will be equipped with the state-of-the-art infrastructure, modern equipment, advanced technology and know- how for ensuring the fastest handling and delivery of cargo to overcome the prevailing impediments. It is expected to attract more MCC cargo traffic to port of Colombo for other competing regional logistics hubs.
An investment of USD 20 million is projected for this venture. Presently the discussions are underway with Urban Development Authority (UDA) to identify suitable land for this project.
- Operating a Floating Bunker Storage
Currently, in Sri Lanka Bunkering to the ships is mainly provided based on the port of Colombo which is limited to a quantity of 30,000MT per month when compared with the sales of a true Maritime hub in the region, Singapore which is over 3.5 million MT per month. Development of the bunkering market has been crippled due to limitations in onshore tank capacity of only 35,140 MT.
Inevitably, the onshore tank capacity expansion has limitations on both lands and capital investment and it is also time consuming. An alternate model is to open up the opportunities to operate Floating Bunker Storages as is the case in most international bunkering ports, such as Singapore.
It would be expected to set up a joint venture with relevant foreign parties for the operation and management of offshore floating storage for marine fuels in Colombo and Trincomalee as CSC has applied the Bunker License from CPC. With this operation, the bunker suppliers in the industry would benefit from a lower break-even marine fuel cost per ton with healthy competition among them. Therefore the lower cost will translate into lower bunker prices offered in Sri Lanka comparatively with the Singapore market. At present Colombo bunker price (Low Sulphur Fuel oil) is USD 35 -40/ pr MT is higher than the Singapore bunker price.
- Establish an office building in Fort and Staff Quarters in Puttlam
Since CSC has no land/building, it is expected to build a suitable office premise in Colombo in close proximity to SLPA/Customs and Puttlam as well to facilitate and create easy accessibility for cargo operations.
- Construct office premises for CSC
The process is underway to construct CSC owned office premises at Colombo 15. This has been a dream for CSC management and staff for a long period.
- Warehouse in Hambantota
The acquisition of a warehouse is pivotal in order to develop logistics activities. As such CSC expects to lease/rent suitable land in Hambanthota to facilitate logistic activities.
In addition to the above new business projects, CSC is exploring the business opportunities in the following sectors as well.
14 . Cater for LNG transportation for 600 MW LNG power plant which is to be built in the near future as per the 2021 Budget Proposal.
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