Analysis on the Economic Aspects of

Maritime Transport Connectivity

between
India and Sri Lanka
Mahinda S. Bandara,
STRUCTURE OF THE
PRESENTATION
Introduction
Current Situation in Transport
The Need for transport connectivity
Possibilities of different Physical
Transport links
Economic Impact of Transport
Connectivity
The Impact on Trade and Tourism
Externality Impact on existing
Maritime services sector
Introduction
Ultimate objective of economic activity and
transport is
to provide a better service to the society,
while simultaneously ensuring a fair
return on capital as well as a fair return
on labor to the stakeholders.
THE CHALLENGE!!
To maximize return?
What is important is not only the Transport
Alone but
the Transport- Linkage
or
the Transport Connectivity
Transport Connectivity:
Hinterland Transport
Inter country/Region/Continental
What is understood by now?
The performance of transport and
logistics operations across borders has a
very strong and significant correlation
with trade volumes between countries
What is lack in the region?
Efficient Multimodal Transport Operation
The interrelation of individual transport
modes and their logistics environment
results in economic benefits to parties
involved.
What is required?
Use Multimodal Transport Connectivity
to enhance Regional cooperation and
integration based on economic
complementarities with a view to help
maximizing the welfare of the region
Transport Connectivity
required;
South Asian Hub for Multimodal
Transportation
What is required for
the Success of a Hub?
Transport Connectivity
What and Where Hub should
be?
Need to research this out and all should
work within a comprehensive frame
work
Current Situation in Sea Transport
connectivity in between India and
Sri Lanka
Sri Lanka being an island nation has
limited regional corridors within SAARC.
It has only air and maritime links with
other countries in the SAARC region
Port Traffic Volume Export of Port of
Colombo-TEU unit per annum
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
CHITTAGONG
MONGL A
MUMBAI
KOL KOTA
CHENNAI
COCHIN
GOA (MARMAGOA)
HAL DIA
KANDL A
MANGAL ORE
MUNDRA
NHAVA S HEVA
TUTICORIN
VIS AKHAPATNAM
PIPAVAV
PARADIP
MAL E
KARACHI
PORT QUAS IM
Export TEU Traffic of Port
Colombo to India (2000-2009)
Colombo - Tuticorin 29%
Colombo - the port of Nava Shiva 20%
Colombo - Chennai 14%
Colombo - Cochin 7%
Colombo - Other ports in the region
insignificant %
Port Traffic Volume Import of Port of
Colombo TEU unit per annum
0
10000
20000
30000
40000
50000
60000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*
CHITTAGONG COL OMBO
MONGL A COL OMBO
MUMBAI COL OMBO
KOL KOTA COL OMBO
CHENNAI COL OMBO
COCHIN COL OMBO
GOA (MARMAGOA) COL OMBO
HAL DIA COL OMBO
KANDL A COL OMBO
MANGAL ORE COL OMBO
MUNDRA COL OMBO
NHAVA S HEVA COL OMBO
TUTICORIN COL OMBO
VIS AKHAPATNAM COL OMBO
PIPAVAV COL OMBO
MAL E COL OMBO
KARACHI COL OMBO
MUHAMED BIN QAS IM COL OMBO
Import TEU traffic on
Average. 2000-2009
The port of Nava Shiva - Colombo 39%
The port of Chennai - Colombo 16%
The port Tuticorin Colombo 12%
What concluded?
Only Three Ports presently provides
proper maritime connectivity with CMB
Nhava Sheva, Tuticorin, Channai
Contributions of Other Indian Ports are
insignificant to the connectivity with
Colombo port
How we can improve the regional
transport connectivity?
In Question?
Only four/three Indian ports are
significant!! Dealing with Port Colombo
Solution For other ports of India
Efforts are needed to look at the maximum
use of Maritime Connectivity with Colombo
port
Or
Search for other possibilities
Year
&
Destination
Exports % Imports %
Total
Trade %
Balance
of Trade
2002
All SAARC 253.18 100 935.98 100 1189.16 100 -682.8
India 168.86 66.7 834.7 89.2 1003.56 84.4 -665.8
Pakistan 28.81 11.3 65.89 7 94.7 8 -37.1
Other 55.51 22 35.39 3.8 90.9 7.6 20.3
2008
All SAARC 560.82 100 3057.07 100 3617.89 100 -2,496.2
India 418.08 74.6 2838.01 92.8 3256.09 90 2,419.9
Pakistan 71.37 12.7 191.96 6.3 263.33 7.3 -120.6
Other 71.37 12.7 27.1 0.9 98.47 2.7 44.3
Sri Lankas trade with SAARC (2002/2008) (in USD mn)
Two approaches to the Problem
1. Bridging two countries with appropriate
infrastructure, i.e. Rail corridor, high way that
can complement the Asian Highway
2. Trade improvement disregarding physical
connectivity i.e. trade facilitation through
efficient port and shipping services, easing
custom procedures, relaxing impediments
labor mobility and participation in Multi
Country Consolidation (MCC).
Bridging
The prevailing infrastructure not a major
impediment for promoting Sri Lankas
trade with India, Bangladesh, the Maldives
and Pakistan
Lack of trade relations with Afghanistan,
Bhutan and Nepal is mainly due to lack of
proper connectivity and transit facilities
Trade Improvement
World Bank Rank Sri Lanka
- No 1 among SAARC
- No 65 among 183 countries
The lack of focus on trade facilitation in
the SAARC region
Ranking of SAARC Countries on Trading
Across Boards - 2010
Country
Rank
Document
s to export
(number)
Time to
Export
(days)
Cost to
Export
USD per
container
Document
s to
import
(number)
Time to
import
(days)
Cost to
import
(USD per
container)
Pakistan 2 (78) 9 22 611 8 18 680
Maldives
5
(126)
8 21 1,348 9 20 1,348
Sri Lanka 1 (65) 8 21 715 6 20 745
Bangladesh 4 (107) 6 25 970 8 29 1,375
Nepal 7 (161) 9 41 1,764 10 35 1,825
Bhutan 6 (153) 8 38 1,220 11 38 2,140
India 3 (94) 8 17 945 9 20 960
Afghanistan 8 (183) 12 74 3,350 11 77 3,000
Source: World Bank
Trade Facilitation
Better port and shipping services in
between partners involved in trading
Transparent Custom procedures of
member countries of SAARC
Efficient Port and Hinterland connectivity
Participation in the Multi Country
Consolidation (MCC).
Better port and shipping
services
Present nature of trading between India and
Sri Lanka not supporting the improvement
of transport connectivity
- Under the ISFTA, a tariff quota for tea
was allowed, until recently, exports were
permitted to pass through only the ports of
Kolkata and Cochin (Nearest is Tuticorin)
Transparent Custom procedures
of member countries of SAARC
Do not have a transparent procedures and
systems
Publication of customs procedures, laws
and the tariff details and the penalties
provisions are not easily accessible
The practices are not in accordance with
the written systems and procedures
Efficient Port and Hinterland
connectivity
Handling Cargo inside the Port
Clearing Cargo?
Port - Hinterland Transport linkage?
Longer Dwelling Time ??
The clearance of a container from the port
after unloading takes around four(4) days
and adds an additional cost of USD 400
until it reaches the consignees warehouse
(Clearing and Forwarding Agents Association )
Any export consignment from India to Sri
Lanka may take a day or two to reach the
Sri Lankan shores, but clearance from port
take more time
Lack of awareness in the
standard requirements
No publications are available on the
requirements of standards
- Technical Barriers to Trade (TBT)
- Sanitary and Phytosanitary (SPS)
Harmonization, Rationalization
and Simplification, of standards
and making available documents
related to all standards in a
transparent manner are an
integral part of trade facilitation.
Participation in the Multi Country
Consolidation (MCC).
Participation in the Multi Country
Consolidation (MCC).
MCC
The process of consolidating shipments to
several destinations, which originated from
a different country or vice versa
Enhancing transport connectivity in terms
of trading by Consolidating
Benefits
- Short Distance Deliveries
- Lower cost small ships/less distance
- Lower time cost
Factors affecting to the MCC
operation
Value added logistics
services
Effectiveness of
MCC operation
Performances of
Logistics Providers
Geographical Location
Proximity to Feeder
Ports
Efficient Feeder
Service
Trouble-free Custom
clearance
Port Development
activities
Availability of main
liner services
Government Support
1. Introduction
2. The Need for common Aim and
Objectives
3. Current Situation in Transport
connectivity in between India and Sri
Lanka
4. The Need for transport connectivity
between India and Sri Lanka
4.The Need for transport
connectivity between India
and Sri Lanka
Why?
High transport cost can be
detrimental to sustainable trade
Ranking of SAARC Countries on Trading
Across Boards - 2010
Country
Rank
Document
s to export
(number)
Time to
Export
(days)
Cost to
Export
USD per
container
Document
s to
import
(number)
Time to
import
(days)
Cost to
import
(USD per
container)
Pakistan 2 (78) 9 22 611 8 18 680
Maldives
5
(126)
8 21 1,348 9 20 1,348
Sri Lanka 1 (65) 8 21 715 6 20 745
Bangladesh 4 (107) 6 25 970 8 29 1,375
Nepal 7 (161) 9 41 1,764 10 35 1,825
Bhutan 6 (153) 8 38 1,220 11 38 2,140
India 3 (94) 8 17 945 9 20 960
Afghanistan 8 (183) 12 74 3,350 11 77 3,000
Source: World Bank
India Sri Lanka Trade
Do not support for Transport
Connectivity
But Reflects low connectivity in terms of
trading with other SARRC members
Year
&
Destination
Exports % Imports %
Total
Trade %
Balance
of Trade
2002
All SAARC 253.18 100 935.98 100 1189.16 100 -682.8
India 168.86 66.7 834.7 89.2 1003.56 84.4 -665.8
Pakistan 28.81 11.3 65.89 7 94.7 8 -37.1
Other 55.51 22 35.39 3.8 90.9 7.6 20.3
2008
All SAARC 560.82 100 3057.07 100 3617.89 100 -2,496.2
India 418.08 74.6 2838.01 92.8 3256.09 90 - 2,419.9
Pakistan 71.37 12.7 191.96 6.3 263.33 7.3 -120.6
Other 71.37 12.7 27.1 0.9 98.47 2.7 44.3
Sri Lankas trade with SAARC (2002/2008) (in USD mn)
Sri Lankas Trade with South
Asia (in USD mn)
0
500
1000
1500
2000
2500
3000
3500
1990 1995 2000 2005 2008 2009
Exports
Imports
Complementing ASIAN Highway
SRMTS emphasis on complementary
approach to transport in South Asia
BIMSTEC is looking at Transport
connectivity to EAST and WEST Asia
General cargo facilitation
between India and Sri Lanka has
not been given due
consideration
The Indo-Sri Lanka Free Trade
Agreement - growth in exports/imports of
General Cargo
Required facilities to cater this market
Forecast of Transshipment of Container
Traffic to the Indian Sub Continent
Source: SRMTS, 2006
1. Introduction
2. The Need for common Aim and
Objectives
3. Current Situation in Transport
connectivity in between India and Sri
Lanka
4. The Need for transport connectivity
between India and Sri Lanka
5. Possibilities of different Physical
Transport links between India & Sri
Lanka.
Possibilities of different
Physical Transport links
between India & Sri Lanka.
Historically India and Sri Lanka were well
connected through a ferry service
Carried carrying around 120, 000
passengers in 1984
Two Proposals
1. Ferry services between
(a) Colombo and Tuticorin- 260 Km
(b) Colombo and Cochin - 574 Km
2. Road/Rail corridor between
Talaimannar to Rameshwaran
Proposed Connectivity Improvements
To Cochin
Ferry Service Required
Need for renewal of such an agreement in
the interests of passenger travel
Need for appropriate infrastructure to be
established
Technical scheduling
Establish safety and security
Determine the type of operation and
proper documentation procedures
RAIL/ROAD Corridor
Possibility of a land bridge between Sri
Lanka and India
Road and railway networks in Sri Lanka
to be connected to the Asian Highway
and the Trans Asian Railways
This being one of the prerequisite for the
South Asian Region Integration
Proposed Connectivity Improvements
To Coch n
Hambantota Port
ANOTHER Possibility
Chennai Port of KKS/Point Pedro
Sri Lanka began its part at Point Pedro
Improve existing facilities
Passenger Landing
Envisaged Improvements
Port Complex & staff facilities
Deepening Alongside Berth by 8m
Multi Country
Consolidation(MCC)
Short Run - A way of Improving maritime
transport connectivity
Long run Facilitate Multimodal
Transport Connectivity
Network Analysis For MCC
0sing T0RA optimization softwaie
Testing the Port of Colombo Hub Port
Technically proved with distance between
each ports
Colombo demonstrated the Lowest Mean
Distance
Average Distance to Feeder
ports from Hub ports
Port of Colombo
0 1000 2000 3000
Colombo
Singapore
Aden
Dubai
Mean Distance to any
port
1116.18 Nm
1116.18 Nm
2280.75Nm
1875.75Nm
6. Economic Impact of Transport
Connectivity
6.1 The Impact on Trade and Tourism
6.2 Externality Impact on existing
Maritime services sector
Economic Impact of
Transport Connectivity
Would be expected
Series of structural changes in the
transport and the logistics sector of both
economies
Progressive impact in the export and
import sector in both countries??
6. Economic Impact of Transport
Connectivity
6.1 The Impact on Trade and Tourism
The Impact on Trade and
Tourism
Sri Lankas Trade with India (2002-2008)
(in US $ mn)
- 2,419.9 90 3256.09 92.8 2838.01 74.6 418.08 2008
Year Exports %* Imports % Total
Trade
% Balance
of
Trade
2002 168.86 66.7 834.7 89.2 1003.56 84.4 -665.8
2003 241.14 70 1076.17 91.5 1317.31 86.7 -835.0
2004 385.46 77.1 1357.88 90.9 1743.34 87.5 -972.5
2005 559.21 86.7 1440.27 90.8 1999.48 89.6 -881.1
2006 494.06 81.6 1822.07 91 2316.13 88.8 -1328.0
2007 516.4 79.9 2784.99 93.1 3301.39 90.8 -2,268.6
2009 322 73.1 1820 88.8 2142 85.8 -1498
*% = Of The Total SAARC Trade
Sri Lankas Trade with India (2002-2008)
(in US $ mn)
0
1000
2000
3000
4000
5000
6000
7000
2002 2003 2004 2005 2006 2007 2008 2009
Total Trade
Imports
E x ports
Bilateral BOT- Sri Lankas Trade
with India (in USD mn)
-
-
-
-
-
-
Balan e Trade
Impact on Tourism/Air Travel
Proposed ferry services can be
detrimental to
Colombo : Cochin
Colombo : Tiruchchirapalli
Colombo: Chennai
The impact depends on the Generalized
cost of travel of each modes
- a fair price
- travel time
- reliable service
- efficient service
- safe service
Passenger Traffic on Indo-Sri
Lanka Ferry Service (up to 1984)
Origin Destination Passengers per annum
1978 1980 1982 1984 1985
Sri Lanka
Talaimannar
India
Rameshwaran
57,000 79,405 66,580 56,458
Not
operat
ed
India
Rameshwaran
Sri Lanka
Talaimannar
3,480 17,340 28,885 63,539
Not
operat
ed
Source : Sri Lanka Railway
Tourist Arrivals from India to
Sri Lanka (2000-2009)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
No of Tourist
AIR PASSENGER FLOWS (DEPARTURES
FROM BIA)
Destin.
Airport
No of Departing Passengers per year
2000 2001 2002 2003 2004
Delhi 25,611 21,160 27,933 33,269 39,751
Chennai 171,000 159,833 170,886 174,478 224,056
Mumbai 16,055 14,530 20,638 26,382 35,933
Trivandrum
56,279 50,376 45,830 47,277 56,409
Tiruchchirapalli 23,782 21,807 28,543 35,106 44,357
Bangalore 8,865 23,752 46,739
Buddagaya 1,346 3,104
Cochin 10,912 26,524
Passenger Movement from BIA
to Southern India Airports
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Colombo
Chennai
Colombo
Cochin
Colombo
Trivandrum
Colombo
Tiruchchirap
alli
AIR PASSENGER FLOWS
(ARRIVALS IN BIA)
Origin Airport 2000 2001 2002 2003 2004
hi 25,785 23,064 28,031 35,101 41,669
Chennai 160,790 158,425 168,488 180,091 234,266
Bombay 15,404 14,276 20,627 27,093 39,494
Trivandrum 39,921 50,676 47,819 45,541 51,265
Tiruchchirapalli 22,381 19,262 27,010 33,468 40,068
Bangalore - - 8,943 23,555 45,623
Buddagaya - - - 334 1,659
Cochin - - - 9,796 22,691
Calicut - - - - 10,125
Hyderabad - - - - 13,506
Karachi 23,525 15,680 n/a 7,859 18,694
ale 111,139 99,947 76,659 106,189 128,461
Passenger Movement from
Southern India Airports to BIA
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Trivandrum
Colombo
Cochin
Colombo
Chennai
Colombo
Tiruchchirap
alli
Colombo
Air Passenger Traffic 2006 to 2009
2006-07 2007-08 2008-09
Pax to Ind
Pax from
Ind
Pax to
Ind
Pax from
Ind
Pax to
Ind
Pax from
Ind
Colombo -
Chennai 255,395 266,237 281,642 308,303 308,070 321,698
Colombo -
Cochin 62,019 58,751 51,805 48,928 24,297 20,109
Colombo -
Trivandrum 72,141 77,951 67,895 74,262 42,904 40,237
Expected Demand For Ferry
Service??
It is definitely a segment of
the existing air passengers in
routes IS 102, IS105 and IS108
Airlines heavily concentrated
on these routes may loss some
of its revenues
Can give rise to competition!
Especially in capturing the
leisure market
6. Economic Impact of Transport
Connectivity
6.1 The Impact on Trade and Tourism
6.2 Externality Impact on existing
Maritime services sector
Externality Impact on
existing Maritime sector
Port of Colombo
Reaching its full capacity 3.5 Million TEUs
Transshipment accounts for more than
70%
But the transshipments share of total
ISC cargo declined from 52% to 45%
(1998-2009) - indicating a loss of market
share by Colombo
Over all
Port of Colombo is doing better in 2009
- the Colombo transshipments volume had
a growth rate of 10.3%
- the increase in domestic volume was
10.7%.
Direct Surface Link Vs MCC
Port of Colombo will establish its position
as the regional hub port as per present
statistics/and with the distance factor
SAARC will realize lower cost in maritime
transportation
But Direct surface link would have
impact !
If Direct Link is cost effective,
efficient;
It should be expected a structural
change in the maritime services between
South India and Sri Lanka
Direct exports cargo from
Tuticorin/Chennai to Colombo may be
very sensitive
Average Freight Rate- Colombo to Ports in
Southern Coast of India
Destination Average Sea freight
per 20ft FCL US$
Average Sea freight
per40 ft FCL US$
Chennai 150 325
Cochin 150 350
Haldia 450 750
Kandla 350 550
Kolkata 300 450
Mongla - -
Mumbai 300 500
Port Qasim 475 950
Tuticorin 90 200
Vishkapatnam 400 600
Nava Sheva 300 500
Sustainability of Direct Link
Hinterland connectivity of the proposed
rail/road network!
Expected level of traffic volume Vs
Present Rail/Road capacities!
Traffic management!
Forward market requirements!
Effectiveness of fright transshipment
facilities!
Efficiency of Clearing Freight/People!
Institutional capacity
Efficiency/Productivity!
Conclusion
The performance of transport and logistics
operations across borders and the
interrelation of individual transport modes
and their logistics environment have a very
strong and significant correlation with
trade relations between countries
Methodologically improved transport
connectivity based on economic
complementarities between India and Sri
Lanka can promote regional cooperation
and integration that in turn helps
maximizing the welfare of the SARRC
region
Existing maritime sector performances
derives the fundamental rationale for
transport connectivity between India and
Sri Lanka
Two approaches for transport connectivity
- bridging two countries with appropriate
infrastructure, i.e. Rail corridor, high way
that can complement the Asian Highway
- by trade improvement disregarding
physical connectivity i.e. trade facilitation
through efficient port and shipping
services, easing custom procedures,
relaxing impediments labor mobility and
participation in Multi Country Consolidation
(MCC).
Port of Colombo can place as the hub port
in the process of MCC and participation in
the MCC process can reduce the cost of
maritime operation for both countries
THANK YOU