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By Shehan Aponso

The millennium year was significant for the air cargo industry in Sri Lanka. Apart from being in the dawn of the 21st century, the year 2000 recorded the highest throughput tonnage at the Colombo International Airport, with an export tonnage of 77,294 tons and an import tonnage of 50,596, totalling 127,890 tons. The percentage increase in the year 2000 was 30% over 1999 and the highest increase in the history of air cargo in Sri Lanka.

Over the years, we have seen an impressive growth in air cargo exports and imports, notching the 100,000 mark in 1999. The growth in the year 2000 was the most important with a 30% increase in export tonnage. Imports have also kept pace with export growth recording moderate growth of 14% year on year since 1991.

A analysis of the airfreight commodities reveal foodstuff (fruits and vegetables) account for 28.51% of the total airfreight export tonnage while garments and apparel accounted for 30.6%. While foodstuff volumes has grown from 16,473 tons in 99/2000 to 21,662 tons in 2000/1 a increase of 32%, garment volumes have come down from 26,175 tons in 99/2000 to 23,294 tons in 2000/1 a decrease of 11%.

Transshipment traffic had the highest growth of 50.79% from 8,071 to 16,402 tons in 2000/1. While general cargo accounted for 12.87%, betel leaves recorded 2.49%, plants 2.10% and live fish 1.40% were the other significant airfreight export commodities.

A series of events were to dramatically alter the impressive gains over the last 20 years. Year 2001 started at the same airfreight tonnage levels as in the year 2000. With the softening of the US economy the largest segment of air cargo, which was Garments, fell by 10% from February to June this year. It was predicted at the beginning of the year that Sri Lankan exports would fall by 10 - 12%, and the actual figures were not far off with a 14% drop in airfreight exports tonnage from January to June 2001.

If industry analysts and industry personnel were hopeful that the air cargo industry would recover from the drop from August to December, worse was yet to come.

Sri Lankan airfreight industry has ridden the crest of the wave in 2000 and it had come crashing down in 2001.

On June 24, the attack on the only international airport in Sri Lanka sent shock waves through the aviation industry, travel and tourism sectors. The fallout of this event was the imposition of exorbitant insurance premiums on airlines, which operated to Sri Lanka.

The travel advisories by USA, UK and Germany was to further restrict tourist arrivals in Sri Lanka.

From a 14% drop in air cargo from January to June, after this incident, volumes tumbled to a 29% drop in tonnage over the last year.

The security risk as envisaged by a few European Governments and the high insurance charges levied by Lloyds Insurance on aircraft operating to Colombo, dealt a body blow to the already fragile Air Cargo Industry and July to September quarter recorded the highest drop of tonnage over the last 20 years. If the 30% was impressive, the fall was equally dramatic, with gains made in the year 2000 being wiped off in 2001.

The number of scheduled airlines in June this year was 22. This figure was to drop to 14 after the attack on the airport. The number of scheduled flights both passenger and cargo was 142 flights per week prior to July 24, which has fallen to 117 flights at present.

It is significant to note that Emirates which was the second largest operator to Colombo after the national carrier resumed additional 11 flights from October 28 which they had suspended and Korean air will operate their once a week freighter to Colombo from the first week of November. If the attack on the Colombo Airport proved disastrous, barely three months later, the attack on the World Trade Center in New York and the Pentagon was 100 times more disastrous in magnitude and scale. In the Colombo airport attack, no civilians lost their lives, although six empty aircraft were destroyed.

The four aircraft involved in the attack in USA had passengers in them and almost 600 people lost their lives apart from the demolition of the WTC towers and the Pentagon. The Colombo attack was a mere dress rehearsal compared to the attack in the USA.

Civil aviation is facing the biggest crisis of all time and Colombo is no exception. The question is, where do we go from here, and how do we face the crisis affecting the civil aviation industry in Sri Lanka, and air cargo in particular.

Once again, Sri Lanka has come off the block fast with the Government underwriting the higher insurance risks to the tune of US$ 50 million for ships and US$ 100 million for aircraft. The government has also introduced a series of relief measures to help carriers reduce the cost of operating to Sri Lanka.

The Department of Civil Aviation has taken the initiative in waiving off landing charges and parking fees on airlines operating to Sri Lanka as an interim measure till December 2001. This should be of some relief to airlines that are also affected by the current crisis.

This relief should be extended to attract more airlines to operate to Colombo. The Sri Lanka Air Cargo industry and airlines have to work out a long term plan of resurrecting the industry.

Sri Lanka's main airfreight commodity which is Garments, accounting for 30.6% of the total tonnage, reported a decline of 7% in the number of pieces exported and a 25% drop in revenue up to August this year. This is going to slide further according to garment industry analysts.

The situation is not expected to improve till the second quarter of next year. Sri Lanka's airfreight industry will have to look elsewhere to bridge the gap created by the decline in the Garments trade. Fruits and vegetables, which account for 28.51% of the industry, recorded an increase of

32% from March 2000 - March 2001 as against the previous year. Such commodities should be encouraged with more frequencies and competitive rates.

Transhipments, which recorded the highest growth of 50.79% in 2000/2001 compared to 99/2000, holds great promise for the future. Much of the transhipments were however handled by Sri Lankan as Sri Lankan Airline home base is Colombo.

Technically, such movements cannot be classified as transhipments as shipments are carried on through airway Bill basis. However, there is a substantive volume of transhipments taking place from the South Indian ports of Chennai and, Trivandram via Colombo mainly by sea freight, with a small quantity by airfreight.

We need to transform Colombo as a Transhipment and Logistics Hub, as a gateway for South Indian exports. This seems easier said than done. It will involve commercial viability of the freight rates cheaper than those available ex South India.

It would mean attracting Fortune 500 companies to locate their distribution facilities in Sri Lanka and creation of distriparks to distribute goods from Sri Lanka to end users. It would mean a stable political climate and peace in Sri Lanka. It would mean simplifying customs procedures and time definite transhipments and export procedures.

Till this can be achieved, we will have to contend with mediocre airfreight growth and chasing the traditional airfreight commodities like garments, fruits and vegetables and foliage exports.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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