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Ted Muttiah, Chief Commercial Officer, South Asia Gateway Terminal
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Ask Ted Muttiah, the Chief Commercial Officer of the South Asia Gateway Terminal what his ambition is, he won’t take too long to reply that his yearning is for all of Colombo\’s terminals to do well. For all his moxie, he is well in line to harbor such a charitable thought because SAGT was ranked first last year as the most efficient terminal in South Asia. In an interview with Maritime Gateway, Ted explains on his plans for SAGT, what it takes to be a successful transshipment terminal and how to engage shipping lines.
Q What are the significant advantages that Sri Lanka has over Singapore as a transshipment hub?
A. I think the first obvious one is that the Port of Colombo has three options for shipping lines to call- three terminal operators who have a unique value proposition. Both Singapore and Dubai have only one operator – PSA and DP World. The other advantage is the geographic locality. We need to build on these advantages and add more value to the customer by increasing our productivity, speed to market and act according to the needs of the shippers and shipping lines.
Q Is Sri Lanka cheaper than Singapore in many ways?
The real answer to this can be given only by the shipping lines. Certainly, end-to-end we are cheaper as this is the indication we get from our customers. But in terms of why they don\’t change the network, I can\’t answer that right now. We have been told that we are more cost competitive and that is a more apt description.
Q You\’ve been ranked # 1 in terminal productivity. Is this what makes you so successful?
Our focus has been on the fundamentals. The strategy to have productivity as our final outcome was formulated at a high level we have ensured it is executed at the front end as well. For example, the incentive for a crane driver to perform consistently shift after shift for six months is what leads to efficiency. We ensure every employee understands what productivity means, sets it as a goal and embraces it too. We also provide the necessary support to make this aspiration come true. Simply telling the crane driver about the number of moves we want to achieve in an hour without providing him adequate training would make us only being short sighted. We make the culture of high performance an everyday feature.
Q What is the greatest incentive you would offer to a line to call your port or terminal?
I think fundamentally it is to do with economies of scale and volume. More volume brings down the operating costs. However, when you talk to a shipping line, if you look at just the transactional cost of stevedoring, the bigger picture is lost. We need to present the shipping line with the end to end costs from when the ship comes to port to the time the ship leaves the port rather than looking at just the transactional costs of loading and unloading cargo. So if I can unload a ship in half the time another terminal takes, I\’m already presenting a cost saving to the shipping line. That is to say, by being efficient, I\’ve presented a cost saving to the shipping line.
How much volume would it take for a shipping line to take this decision of moving to Colombo from say Singapore or any other port?
Today I think we cover all the major shipping lines. What volume does it take? We have customers with half a million teu to as low as 5,000 teu. But what\’s important is the customer and how they see the opportunities and options. We can\’t adopt a one-size-fits-all approach for every line. Because for some shipping lines, Port Colombo might be a primary hub and for others, a secondary hub. So I think it\’s important to understand what the customer wants first and work on a solution based on that expectation.
Q What are you doing to increase your hinterland?
There is an across the board incentive included now for customers from Myanmar including other South Asian countries as well. We had some incentives for east coast of India too. We are looking at other opportunities of working with individual shipping lines because let\’s not forget that it\’s the shipping lines that influence the network change. We position ourselves as being complementary to India\’s growth agenda and not as competition. Our strength is transshipment. So, if you look at the FTAs and various trade pacts between India and the other ASEAN block of nations, Sri Lanka and Colombo as a port has a role to play. Therefore, if there\’s a certain amount of volume being transshipped from India\’s ports every day, it will not only help India\’s ports breathe better, but also allow a steady amount of cargo to our terminals.
Q The SLPA has tried to reach out to Bangladesh and Myanmar asking them to move their cargo through Colombo than through Singapore. Is South Asia your widest hinterland?
I think it\’s just logical for this region to function as our hinterland. We\’re not trying to widen it per say, but it\’s what makes sense. So for Myanmar\’s cargo destined to Europe, it is operationally viable for them to send their cargo to Colombo but may be for their cargo going to China, Singapore may be a better option. So, we will not expand the catchment area much, but increase the opportunities within the catchment area. So, even if there are 100 containers that go in to Singapore from this region, I want to tap into that and see why a customer wants to go there instead of coming here. Speed is not the sole determining factor that urges customers to make a choice. There are customers who say slow steaming is better because they would rather not have the cargo sitting in the warehouse and use the sea as their warehouse. So, in this case, to help the customer, I could offer the customer the option to delay in transit.
Q What kind of partnership are you looking to forge with Indian ports?
We see an opportunity to tie up with some of the ports. We are planning to partner with Indian ports on the east coast and see how much of cargo can be shipped to Colombo, just as there is an agreement between airlines. As a commercial venture, we would like to go and talk to the various terminal operators on the east coast of India where from less than 30 per cent of the cargo comes to Colombo. We\’d like to see how our cost structure can be made attractive for a shipper and a shipping line to bring cargo to both ports.
Q What would it take for an Indian port to be a transshipment hub?
When it comes to setting the strategy for India, you need to see where you\’re going wrong and work in backwards, trying to set things right. As I see it in India, the problem is not with the ports per se, but outside the gates.
But let\’s look at it this way. Does India want to be a transshipment hub? Who is their market? Given the country\’s population and the amount of cargo it generates, it should aspire to be a gateway. For being a transshipment hub, you need to have a network of shipping lines calling you and see how you can make that happen. For this, you need to bring in economies of scale for all stakeholders.
For instance, if a shipping line passes by from the main east west shipping channel and calls at Port Colombo, it\’s going to cost you X. But if the line goes to Chennai or Nhava Sheva, it\’s going to cost them Y. Today, with the big ships coming through, they are not going to do a milk run – that is touching many ports. They are going to call only a few strategic ports and so the hub and spoke model is well applicable. So, if lines are to deploy above 16,000-teu vessels, there should be smaller vessels too carrying regional cargo back and forth as there is a market for those vessel sizes too. So, while Indian ports enjoy many direct sailings, there is a role for Colombo to be the hub to alleviate the pressure points by taking some of those transshipments. Sri Lanka and India complement each other.
Q In terms of paper work, how easy is it for a shipper or a shipping line to work in India vis-Ã -vis in Colombo?
Since we implement Electronic Data Interface systems, there\’s no paper work anymore for import delivery orders. For export delivery orders, the trial run is on now with shipping lines and we expect that to be rolled out in the next three months. But this relates to domestic cargo. On transhipment, we have not heard any single complaint or challenge. This is because the terminal has a load list or a discharge list and a transshipment list to load. However, the liner may have a few issues with the customs but it is beyond the scope of the terminal anyway.
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