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"Colombo has the potential to capture regional business but needs regulatory reform and simplified customs and other procedures," Maersk Lanka managing director, Eric Maard said.
Being able to connect to global markets is fast becoming a key aspect of a country's ability to compete and grow, provide employment and reduce poverty, he told a seminar on Sri Lanka's prospects of becoming a logistics hub for the region.
It was organised by the Asian Development Bank, the Freight ForwardersĄŻ Association and the Academy for International Trade and Transport.
"For those countries not able to connect, the cost of exclusion is large and growing," Maard said.
Colombo port needs to urgently expand capacity, improve productivity and ship turnaround times, cut red tape and make doing business easier and quicker.
If not it risks losing its competitiveness and losing shipping business to other competing hub ports that were cheaper and more efficient, Maard said.
He pointed to the key strengths of Singapore, one of Colombo main competitors, saying these include good infrastructure and connectivity, a fully liberalised and deregulated environment, and a critical mass of logistic professionals.
"We need to bring the business to Colombo because otherwise we can't become a hub," Maard said, adding that Singapore's strengths were almost a mirror image of Colombo's weaknesses.
A hub port's geographical location was becoming less important, he noted, because of the growing importance of communications and web-based ways of doing business.
Sri Lanka needs to attract all aspects of business that make a maritime and logistics hub.
These include a wide range of services from banking and insurance, to crewing, ship management and chartering.
Sri Lankan shippers today enjoy good connections to their markets and comparatively lower freight rates because of the deregulation achieved more than 10 years ago.
"It was the partial liberalisation of shipping in the early 1990s that created the basis for Colombo becoming a hub for the south Asian region," Maard said.
"If freight rates were controlled, none of this would have happened."
He warned that government efforts to control the way shipping lines do business and interfere with market mechanisms like pricing would only serve to make the island less attractive for shipping lines.
"This does not mean I want a completely open society or to throw out ethics and good governance."
Maard said he supported the idea of Sri Lanka having a strong regulatory body attached to a dedicated shipping ministry.
"It should be a US and European style body, not one that interferes with pricing."
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