Sri Lanka is key in the Indian Ocean, holding the highest GDP per capita in South Asia, and facing fierce competition on all fronts. In your experienced opinion, how do you see Sri Lanka’s social and economic structure evolving in the next five years?
Sri Lanka is heavily dependent on services and I believe that is going to be the key in the coming years. Our industrialization is a bit behind other countries, but our service sector is quite well developed. We are in a good geographical location as we are situated along the main sea trade route and that has turned Sri Lanka into a transshipment hub over the past 30 to 35 years which has been critical for our economy. We have good intellectual capacity which combined with our location and infrastructure can strength the base of the growing services sector.
From the agricultural point of view, we are seeing a dramatic decrease in the industry in both small scale as well as industrial farming. It is rapidly decreasing rather than growing, mainly because the younger generation is slowly moving out of it and companies are not really investing in the industrial farming sector. The country has diversified its economy from agriculture to developing a very competitive logistics and transport sector which I believe is the key to Sri Lanka’s economic success.
Since independence the country has diversified its economy and is developing a very competitive logistic and transport sector. Could you please brief our readers about the strengths and the potential in the Sri Lankan transport and logistic sector?
Sri Lankan infrastructure and port facilities are very important to our economy. In the early 1980’s we developed the Queen Elizabeth Container Terminal (QCT) and then the Jaya Container Terminal with the goal of turning Colombo into a transshipment hub. The vision of the then Minister of Ports and Shipping, Lalith Athulathmudali, was to offer something different to what everybody else was offering. He invested in the port and made sure that we had the capacity, efficiency and the knowhow to handle ships and especially containers. Over the years, the port has developed; we were overwhelmed by the volume of traffic we received, we could not expand the port fast enough. The Port then privatized the QCT which brought an international terminal operator into the port sector, which benefitted us in many ways including better work culture, processes, efficiency and additional competition. When the Colombo South harbor was developed which included a 6.5 Km break water and expansion of the port area, the construction of the south container terminal which is named as Colombo International Container Terminal (CICT) under a Public Private partnership with another large international terminal operator, added a huge value to the entire logistics industry. The new facility had a depth of 18 Meters with the ability to handle the largest vessel afloat in the world.
In addition to that, we also saw a lot of investment from local and foreign companies in the logistics sector. Making container depots and warehouses and all sorts of infrastructure, bringing added value and volume capacity into Colombo. Right now, 80% of the cargo handled at the Port of Colombo is transshipment cargo. Meaning it is only 20% domestic cargo accounting both imports and exports. Therefore, because of the port facilities, we have been able to attract high volumes of transshipment cargo that otherwise would have gone elsewhere. We have also seen the airports developing, along with the other ports such as Hambantota and Trincomalee coming along. These ports that have not yet lived to their full potential. Until now, Colombo Port is the key and the center leading the logistics sector.
The maritime freight, cargo and logistics are some of the oldest services in the Aitken Spence portfolio. Backed by its talent and over 150 years of history, is one of the most respected and reliable logistic conglomerates in the country. Could you please tell our readers the story of Aitken Spence’s venture into logistic services and what are your objectives for 2022?
We have been pioneers in the logistics industry. If you take the shipping agency side of it, we have been shipping agents from the time that the company started in 1868. When we started trading in the tea and rubber industry, ships started coming and they made us the shipping lines agent in the country. When the economy opened, in the late 1970’s, we were one of the first companies to go into freight forwarding. We started air freight, sea freight and the freight forwarding. Previously this had been done by the exporters and importers themselves and when the container revolution started in Sri Lanka, we were one of the first companies to set up outside container yards for the shipping lines storage of empty containers outside the port, avoiding the congesting of the port. We were also the first companies to set up Container Freight Stations outside the port for stuffing/consolidation of export cargo and also the first to start the concept of handling multi country consolidation, where we take a container from one country and separate its cargo and send it out to multiple countries.
From the port management sector, we were the first Sri Lankan companies to go overseas to carryout port management activities and to enhance productivity and efficiency. In 2006 we were in Durban, South Africa where they were struggling with labor issues. t. We assisted them in streamlining their processes, improving the efficiency in handling containers and ships and in the process. We were able to mitigate the labor issues and ensure that the efficiency level in the port improved and ships turned around faster without facing delays. In addition we assisted Transnet Port Terminal in training their ship and yard planners, crane operators and staff to continue the efficient handling of vessels. We were in South Africa for around five years. We were invited to assist the Port of Nacala in Mozambique, to provide port management services and where we are currently still working. In 2013 we were successful in bidding for a tender to manage the ports in Fiji and we entered into a public-private partnership with the government of Fiji. We are the first Sri Lankan company to be involved in a Public Private Partnership overseas. In Sri Lanka we feel that there are areas to grow, we are looking at expanding our logistics services not only for the local market but also for the international market. We are also looking into marketing ourselves in other countries where we are not yet present and to expand our base whether it be on our own or as a joint venture.
In November you started a project to build a new container freight station, which will be operational by the end of 2022. Aitken Spence is also the first Sri Lankan company to venture in port management services overseas. What is the expected expansion of the maritime and freight logistics division of Aitken Spence? Are you looking for new international partnerships? Where are most of your clients from?
Our main focus is going to be overseas, because, as our deputy chairman said, around 70% of our profits come from overseas projects, and overseas activities. From a hotelier point of view, we are in places like the Maldives, Oman and India and from the logistics and port management perspective we are outside of this region. Quite a substantial amount of revenue is generated from overseas which is a good sustainment source through any problems that Sri Lanka may face.
We are looking at mainly the South Pacific, Africa and Southeast Asia as these are growing economies. We are always looking for International partnerships, we feel that in most countries it is easier to work with a local partner that is already established and we can enrich from their knowledge of the country.
Our predominant client base is currently in Sri Lanka; however, we work with many different international partners from around the world in the freight forwarding side of the business and that is where we are concentrating our efforts.
The United States of America is the main economic partner of Sri Lanka, its annual trade represents over 24% of all Sri Lanka’s exports. What is your business volume in the USA? What is Aitken Spence Maritime and Freight strategy to gain presence and increase its exposure in the US market?
We mainly deal with the carriage of cargo to USA, especially when we’re looking at the freight and logistics sectors as that is one of the main services we provide. The shipping lines we represent offer direct services to the USA and almost 25% of the cargo we export goes to the American market. Our Freight forwarding sector too handles cargo to USA through our network partners.
Currently we are not advertising Aitken Spence in the USA as we are just piggy-bagging on the shipping lines and freight forwarding lines that we represent. This is something we would like to develop in the future, we want to market our own brand as a freight forwarding company and not just an agent for other freight forwarding networks. In terms of advertising, we get most of our business through the various shipping networks, where people look for agents such as us to export their goods.
Aitken Spence is a major freight service provider in Sri Lanka. We are well known in our market and people know that they can trust us. We are also promoting and benefiting of the geo-strategic location of Sri Lanka, which is our biggest advantage.
Mr. Cuttilan, with over 22 years as director in Aitken Spence Group and over 30 years with the company you are now leading most of the Aitken Spence Maritime affairs, including managing the port services in Fiji or leading with your port management services in Africa. In your personal life, what are you most proud of?
In my personal life am involved in social service and supporting the less fortunate. I come from a small community known as the Sri Lankan Malays, we are descendants from Indonesia and Malaysia. We have a community of over 50 000 in Sri Lanka. I was President of the Sri Lankan Malay’s Association which is 100 years old, and I am very much involved in this Association. I help the community empower their lives and educate them on career choices. I am also involved in Industry Associations and the Past Chairman of the Ceylon Association of Shipping Agents (CASA) and Past President of the Sri Lanka Malaysia Business Council. Through these associations we support the industry and assist personnel develop themselves to be industry leaders and help the nation.
I have also been very involved in sports which has always been one of my passions, such as cricket and field hockey which I played at a national level.
What is your final message for the readers of USA Today across the world?
Sri Lanka is a country that has great potential, once we overcome all of the current issues, it is a country that will really blossom and bloom. Our people are very friendly, well-educated and able to do anything. We have very powerful human resources in Sri Lanka. Our future is bright and we have the potential to become a very strong economic country.
