Wednesday, December 6, 2023

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Shipping agents warn of rising import container build-up due to forex crisis

The long delayed clearance of over 1000 essential commodity containers struck at the Colombo port due to lack of dollars for repayments for food imports are still to  be cleared in a phased manner.  

The Central Bank of Sri Lanka has released US$ 5 million to clear these containers of essential commodities stranded at the Colombo Port.

The Ministry of Trade said a total of US$ 14 million is required to release such stranded containers.

However the dollar issue has not been settled as the remaining amount of funds is yet to be issued by the Central Bank, official sources 

disclosed, adding that failing which the money will be released in  a phased manner. .

The ministers recently submitted a report to the Central Bank containing details of the stranded items of importers of essential items.

It is reported that nearly a thousand containers carrying essential food items including rice, sugar, dhal and potatoes are still held at the Colombo Port due to the shortage of US dollars in the country.

At least 1300 containers of essential food commodities and other items have piled up at the Colombo Port during the past three months mostly due to the inability of obtaining bank documents on letters of credit (LCs) as a result of the dollar payment crisis and also a limited workforce at the port, importers complained.

The raising of concerns by CASA comes whilst Sri Lanka last year saw record $ 20.6 billion in imports and $ 12.4 billion in exports. 

Ships calling at Colombo Port in the first 11 months of 2021 had been declined by 4.4percent  to 3,826.

However total container handlings rose by 4.8% to 6.6 million TEUs. Transhipment saw a 3% growth to 5.3 million TEUs. Handling of domestic boxes rose by 10.5% to 1 million TEUs.

Shipping agents on Sunday 23 warned that import container build-up in the Colombo Port is worsening primarily due to the foreign exchange crisis, and urged authorities to resolve it fast so as to avoid a more serious impact on the economy.

Shipping companies rely on import containers being cleared from the ports de-stuffed and returned back to the containers’ depots, either to be used as export containers or be repositioned to high demand areas.

However, the Ceylon Association of Shipping Agents (CASA) said since Sri Lanka is facing a dollar shortage, importers are not able to pay the necessary dues to clear the import containers from the port. “This means that the static containers are lying at the terminals incurring demurrage day by day which at the end of the day will have to be borne by none other than the consumer,” CASA said.

Pressuring shipping lines for demurrage waivers will have an adverse effect making Sri Lanka unfavourable.

CASA said containers dwelling at the terminal also mean that the supply of empty containers available for exports too are reducing drastically, which results in further hikes in freight rates and even if the exporter is willing to pay that higher freight rate they may not still not be able to secure a container due to limited supply availability.

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