An analyst says that the country’s export sector is badly effected by terminal handling charges (THC), and other factors, and said that a settlement should be reached soon so that exporters can concentrate on countering the threat of Chinese exports.

"High inflation, high rates of interest have caused production costs to rise and exporters are losing their competitiveness. The exchange rate is not helping the sector get its rightful dues either," the analyst said.

"Exporters are suffering to stay alive, especially the garment sector, which has been able to stay on top because of GSP+. But, if we lose duty free access to the EU, our exports may face the beginning of the end."

Even with GSP+ Sri Lanka is having to create niche markets for its garments and teas just to stay in the race against competitor countries.

"Trade restrictions on Chinese goods will be lifted next year and how are we going to compete with China? Their costs of production are much lower and they can easily turn out cheaper goods in huge quantities," the analysts said.

"I am not saying that Ship Agents should do away with the THC, but an agreement must be reached soon. Exporters, indeed the whole country, must concentrate on getting an extension of GSP+ and brain-storm solutions for countering China," he said.

He says that exporters had been lobbying for the inclusion of the THC into the bills-of-lading so that it can be recovered from the buyer.

The Sri Lanka Shippers Council took shipping agents to courts over the THC issue and the Chief Justice wanted the matter resolved at an arbitration level.

A Mediation Committee was set up to resolve this long standing dispute between shippers and shipping agents over the THC.

A report was released recently however the parties concerned have not reached a consensus as yet.

An official of the Merchant Shipping Division, who did not want to be named, said:

"Since we operate in an open economy there is no possibility of government trying to enforce price regulations on something such as the THC, which is practiced else where in the world. This is perhaps why the court ruled that the stakeholders should resolve the matter through mediation. They will have to come to a consensus."

He went on to say that while exporters had some grievances over the THC charge, it was not very reasonable to expect the shipping lines to bare the costs of handling cargo on land.

"There is no room in the harbour and containers have to be stored at a location outside the port so obviously there would be a cost component to transport the goods to the ship for loading and one cannot expect the shipping lines to bear this cost," he said.

He says on the other hand that competition had greatly reduced shipping costs.