Liberalisation of shipping/freight forwarding a courageous move: Experts

The liberalisation of effective entry barriers for foreign firms to Sri Lanka’s shipping and freight forwarding industry via the 2018 Budget presented last week is being hailed as a courageous move by logistics experts. 

“This move will put Sri Lanka in the right place for maritime and aviation,” experts emphasised adding that the long desired liberalisation, despite reservations from protective local firms, will bring a host of benefits to the country. 

It was pointed out that Sri Lanka will not be able to call itself a logistics hub, and attract business without significant presence of global players in Colombo. 

“It is nearly impossible to think of any major hub, which has succeeded without substantial investments/presence of global firms and them being active on ground. These firms will be reluctant to put money into a destination if they are only minority shareholders,” experts said. 

The presence of global third party logistics firms in Sri Lanka according to these experts will enhance the brand value of Sri Lanka as a location.

“It will increase the confidence the multinational manufacturing firms have about Colombo, and will be more willing to use Colombo as a destination where they will be willing to carry out some of the value added logistics functions (e.g. packaging, labelling, quality checking, simple assembly) etc,” experts said. 

According to them one of the key factors that help attract logistics business to locations like Singapore is the presence of global leading third party logistics firms. 

“These firms also bring new technology, new knowledge about logistics and supply chain management and are experienced in managing highly sophisticated and complex supply chains for their clients. It is the trust the global firms have in their logistics companies, that make them outsource key logistics and supply chain functions. Hence, the presence of such firms will be a huge value add to the location advantage of Sri Lanka,” the logistics industry experts emphasised. 

They will also help market Sri Lanka as a destination for logistics- which is critical to get business. It is far easier for such firms with their global presence and networks, than for local firms

At present, Sri Lanka is operating far below its potential, especially in terms of logistics. Therefore, it is important to remove all constraints that are present, which prevent us from reaching our potential. 

Sri Lanka has been lucky for a long time, because we still retain our advantage in terms of serving the Indian Sub-Continent cargo, in transshipment business. The shipping lines visit us because Sri Lanka still offers value in terms of cost and time. However, it is naive to imagine that this will last

“It is still not too late for us to encourage major global players to come into Sri Lanka, and we must send the right signals to the global firms that we are serious about making Sri Lanka a regional hub. The presence of global players will increase the business opportunities available even for local firms,” experts pointed out.  They also stressed that it was important to complement liberalisation of the sector be complemented with other reforms necessary to make Sri Lanka a logistics hub in the region (e.g. fast track implementation of Single Window, that will electronically connect all border agencies).