Port services could expect hard times ahead as global trade volumes slump during the year despite positive growth in 2008, the Central Bank said.

The cargo handling, ports and civil aviation sub sector growth declined to eight percent in 2008 as against the 8.8 percent growth in 2007 due to the contraction in trade activities, the Central Bank Annual Report for 2008 said.

Total cargo handling grew by 9.1 percent to 50.6 million MT in 2008 compared to the 8.6 percent growth in 2007.

Total container handling also recorded an increase of 9.1 percent to 3.7 million TEUs while transshipments increased by 11.5 percent. Thus, the port of Colombo recorded the highest container throughput during the year.

"Improvements in efficiency at terminals contributed to the growth despite the slowdown of international trade activities during the latter part of the year," the Central Bank said.

"The Port of Colombo which has been ranked 30th in terms of container handling has been advanced to 27th place due to several measures implemented to under the three year port development programme," it said.

The installation of new terminal handling equipment, the introduction of a new terminal management system and increasing the scope of supervisors have led to gains in efficiency at the port.

But the Central Bank says 2009 could be a difficult year.

"The global economic slowdown and the resultant reduction in world trade could have a significant impact on port services this year," it said.

"The growth of container handling, transshipment handling, and cargo handling decelerated significantly during the fourth quarter of 2008 and this trend would continue to in 2009 with the prolonged global recession."

Shipping lines are expected to reduce costs as global trade slumps and the Central Bank says this could lead to re-negotiations of existing terminal service agreements.

Meanwhile, the first terminal of the expansion programme of the Colombo Port is expected to be completed by 2012 which would add a capacity of 2.4 million TEUs and take total capacity up to 11.7 million TEUs.

In 2008, the number of vessels calling at the port increased by 2 percent, down from 5.4 percent in 2007.

Construction of the Habantota Port commenced last year and the Central Bank says 99 percent of the lands identified for the project have already been acquired.

"The construction work of the Oluvil Port project including site preperations, road works and other utilities are in progress. Technical and financial evaluation of the Galle Port development project was completed in 2008 and bids called to find a suitable developer," the bank said.

Air cargo volumes contracted by 10.6 percent during the year. Total passenger kilometres flown by Sri Lankan Airlines contracted by 6.8 percent.