A sea lane that saves billions for global trade
This ‘Ocean Expressway’ enables vessels to sail, just outside the Sri Lanka’s territorial waters – about 10 miles off the Port of Hambantota, and Dondra Point, the southernmost location of Sri Lanka.
This course allows for cargo ships to sail in a straight line rather than sailing in a circular route outside of the 200 nautical mile Exclusive Economic Zone (EEZ) of Sri Lanka. This path enables a vessel to reduce its distance travelled by 400 miles, thereby saving one day of sailing time (aircraft also ﬂy across this zone which saves about one hour of ﬂying time).
Every year, 35,000 ultra-large container vessels (ULCV) and bulk carriers, and another 5,000 ultra-large Crude Oil Carriers (ULCC) journey through Sri Lanka’s Ocean Expressway which realises importers, exporters, freight companies and consumers, savings to the tune of $ 8 billion per year – without a cent of revenue being given to Sri Lanka.
To provide some perspective on the volume of traffic and the cost of passage, the 20,000 vessels that passed through the Suez Canal in 2020 paid $ 6 billion to Egypt. In comparison, Sri Lanka’s ‘Ocean Expressway’ not only enabled vessel and aircraft owners/operators to reduce their cost and enhance proﬁts by about $ 8 billion per annum, but also allows them to offload Carbon Dioxide (CO2) emitted to the tune of 20 million tons annually on Sri Lanka without any levy.
Sri Lanka currently only earns revenue from the 5,000 ships that make direct calls annually to its ports. The 45,000 aircrafts ﬂy over Sri Lanka annually more or less in a similar manner.
Assuming additional risk with no reward
Over a long period of time Sri Lanka’s economy has been bombarded by the above mentioned CO2 and pollution causing crop failure, droughts, ﬂoods, landslides, famine, human-elephant conﬂicts, and threatening our food security, supply of clean water and our biodiversity.
This ocean pollution and the noise is also driving away the endangered blue whales off the island’s coast, also the other sea creatures and diminishing our ﬁsh supply. The incremental yet compounding effects have begun to threaten the very livelihood of the peasant farmers, ﬁsherman, and self-employed daily wage earners who comprise of more than half of Sri Lanka’s population – leading to increase in poverty ratios, and threatening sustainable development. Beach pollution, smuggling and gunrunning are other threats.
Sri Lanka’s ‘Ocean Expressway’ carries about 30% of the world trade, transported by the world’s largest TEU 20,000 capacity container ships, 350,000 MT capacity bulk carriers, 300,000 MT crude-oil tankers and aircrafts with 500 seating capacity.
The annual world trade carried by these 35,000 vessels, 5,000 tankers and 45,000 aircrafts crisscross Sri Lanka’s EEZ annually, at their pleasure and convenience, without a levy for passage. Big producer and consumer economies, big corporations, big governments and their citizens around the world all beneﬁt from the resulting reduced transportation costs, and faster delivery, whilst the fragile economy of Sri Lanka and its citizens have been burdened by the pollution being offloaded 24 hours per day, and 365 days of the year for decades.
Sri Lanka as a country had emitted 21 million tons of CO2 as documented in the 2018 World Bank study, and has taken on an additional of 20 million tons of CO2 disbursed by passing ocean carriers. This situation leaves the small island of Sri Lanka having to absorb and neutralise a pollution problem double in size without any assistance.
This burden does not allow for a level playing ﬁeld, and is not tenable. These difficult conditions have continually eroded the Sri Lankan GDP by about 8% each year, for decades.
In addition to the economic impact of these environmental factors affecting Sri Lanka, due to COVID-19, the nation has also lost $ 4 billion per year in tourism income, and the nation’s external reserves fell to its lowest level of $ 3 billion in July 2021 from a pre-COVID-19 high of $ 8 billion in December 2019. This has caused the parity to the US Dollar to rise from LKR 190 per dollar to LKR 225 per dollar.
Further, Sri Lanka’s debt service requirement of $ 6 billion per year, the recent 60% rise in crude oil import prices, and the pressure to ease temporary import restrictions that were imposed to arrest the foreign exchange shortage is now crippling the economy.
This situation now requires thinking that is “out of the box” as well as the implementation of immediate measures to mitigate this foreign exchange crisis.
An opportunity to mitigate an immediate problem
The immediate economic crisis facing Sri Lanka comprises an external debt which stands at $ 60 billion (about 80% of Sri Lanka’s GDP), a debt service requirement of $ 6 billion per year and dwindling foreign exchange reserves of $ 3 billion as of July 2021 from a pre-COVID-19 high of $ 8 billion in December 2019.
Current land based development programs being implemented to rebuild foreign exchange levels are either facing opposition from the people, owed to enforced acquisition of scarce land, or are not progressing at the required pace needed to overcome the burden of this economic problem.
By looking to Sri Lanka’s ‘Ocean Expressway’ and the unused sea within our Exclusive Economic Zone (EEZ), there lies an opportunity to negotiate a waiver of the repayment of external debt from global trade partners.
In this regard, as an independent professional and citizen of Sri Lanka, I have researched and published a concept paper entitled “SEA – Sri Lanka’s Competitive Advantage” (published 2 March 2021 – ISBN 978-624-97686-0-4) proposing that international development partners, who are the ultimate beneﬁciaries of the economic beneﬁts of cheaper and quicker cargo delivery via Sri Lanka’s ‘Ocean Expressway,’ could waive off our external debt repayment obligations against the damage caused to economic resources of Sri Lanka by ocean passage through our Exclusive Economic Zone (EEZ).