The GSF Report and the Sri Lankan Container Shipping Market

Sri Lanka is home to a variety of ports along the island’s coast. With the island strategically placed, it’s an integral part of the trade routes, especially when concerning refuelling, crew changes and so forth. The major commercial ports of Sri Lanka include the likes of the Colombo Port, the Hambantota MRMR Port, and the Trincomalee Port to name a few. However, with the changes in the Sri Lankan container shipping market, keeping an eye on the news and the horizons is always recommended as good business practices.

The existing business models utilised within the global container shipping market and the mega-ships that operate within the industry have been missing their mark in terms of fulfilling the requirements of the carriers or the customers in question. With the ever-increasing distance between the carriers’s provision of quality services and the expectations of the customers requiring such services, the Global Shippers Forum (GSF) has addressed the need for change. The changes will also affect the Sri Lankan container shipping market, as the new market structure will potentially change the norms as we now know.

The GSF Report, “The Implications of Mega-Ships and Alliances for Competition and Total Supply Chain Efficiency: An Economic Perspective” factors in the global container shipping industry, and analyses the competition policy between major shipping carriers as well as how consolidation (through mergers/acquisitions vertically) impacts the industry, including the Sri Lankan container shipping market. With these changes, it is also important that the competition policies and regulations also be updated to ensure a fair yet improved market structure to operate in. Whilst previous assessments have rendered that agreements for sharing vessels and alliances being formed in vertical integration is good for competition, the new market structure will remove parameters previously used for competition such as sail frequency, ship capacity, and ports of call. Many have questioned whether working with independent shippers would be better than dealing with allied shipping corporations.

Mr. Welsh, the Secretary General of the GSF, has stated the following in relation to the GSF report;

“Certain shippers believe that a degree of vertical integration between shippers and shipping companies is a potential method to increase the alignment of incentives between shippers and shipping lines. The nature of such integration, and the extent to which it might alleviate the problems felt by shippers, would of course need to be explored. Given the complexity of the issue, and the need for balanced consideration across the container shipping supply chain, there is strong merit in there being an active ongoing debate on the implications of mega-ships and alliances which GSF is keen to foster with the container shipping industry and other stakeholders.”