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The importance of staying competitive in the face of digitalisation

Comments / {{hitsCtrl.values.hits}} Views / Monday, 25 September 2017 00:00

By Ceylon Association of Shipping Agents

Sri Lanka is driving towards establishing itself as a regional maritime and logistics hub. Being blessed with a geographical positioning to complement this objective along with a heritage of shipping and trading, we are making steady progress towards reaching this goal. But how ready are we to cater to the demands that come with this plan? 

Tackling digitisation 

Last week the National Trade Facilitation Committee conducted an awareness session on the National Single Window and Trade Information Portal which included a presentation by a Senior Trade Facilitation Specialist of the World Bank Group, who, among other things, highlighted the importance of streamlining trade and improving effectiveness and transparency, in achieving economic growth.  

The single window system would enable the transmission of standardised information and documents through a single entry point for all parties involved in the trading process. The system will integrate key institutions and organisations involved, including customs, banks, ports, insurers and all relevant public agencies and private participants. It was understood that the Trade Information Portal is expected to be active in six to eight months and a blueprint for the Single Window System would be completed by June 2018.

With a new trade facilitation agreement being ratified in May 2016, which has provisions for expediting the movement, release and clearance of goods, including goods in transit, we can hail this platform as a step in the right direction. 

As a measure of maintaining competitiveness as well as sustainable development, many countries have focused on the enhancement of trade facilitation through modernisation of existing processes and practices through the application of information and communication technology. Case studies and research shows that countries in the Asia Pacific region who have taken steps to exploit the use of digital technologies have provided great efficiency improvements for importers, exporters and other stakeholders in the supply chain. 

One such example appears in the success stories published in the trade facilities implementation guide of the United Nations Economic Center for Europe (UNECE), which discusses the Korean Customs modernisation in 2010 having brought in benefits valued at $ 18 million.

It is common to note that Customs administrations become the focus when the subject of trade facilitation is discussed. Although the functions and activities of Customs administration is an essential component towards facilitation, a view from a supply chain perspective helps to understand the various dependencies among other players, procedures and processes as well as linkages between these parties such as private sector traders, transport providers, service intermediaries and other regulatory bodies in the public sector. This has resulted in many countries making efforts to exploit digitalisation in order to drive efficiencies through automation, paperless trade, electronic data interchange, cashless transactions, etc.

Progress made so far

The Ceylon Association of Shipping Agents (CASA) believes that the Government of Sri Lanka has taken several positive initiatives to improve processes in the past. From providing shipping agents the ability to submit terminal departure reports (TDRs) online in the early ’90s to the recent launch of an on-line payment platform for the settlement of Customs Duty on a real time 24x7 basis, Government institutions have taken many initiatives to better facilitate trade and commerce in the country. 

Private sector contribution

Parallel to these developments over the years, the private sector too has embraced the technology driven shipping and logistics portals in order to reduce costs and increase speed and reliability of delivery. Systems such as INTTRA, facilitates cargo booking, shipping instructions, document exchange and visibility of shipment information to trading partners (such as exporters, lines, forwarders, etc.). 

Other trade portals such as BOLERO and GTNEXUS have complemented each other by providing digital solutions and allowed manufacturers, exporters and other partners to collaborate and effect contracts, source transport, exchange electronic bills of lading, make freight payments, etc., whilst providing facilities to integrate with partner systems enabling them to use existing systems. These private business initiatives have contributed immensely to trade facilitation by helping to harmonise and standardise exchange of information throughout the supply chain, whilst ensuring availability of timely information to the authorities.

From the viewpoint of CASA, the various institutions such as customs, ports, banks and other related agencies have made many efforts towards advancing their respective domains with the aim of improving the clearance process as well as accelerate cargo handling. Further, regulations such as the Electronic Transactions Act, Payments and Settlements Act, inter alia, have complemented such digitalisation initiatives and the improvements planned for these initiatives as well as to the Customs Ordinance, are expected to bode well for the industry. However, continuous improvement in this area is necessary in order to sustain and increase Sri Lanka’s competitiveness. 

Way forward

The World Bank has come up with a number of performance indices used to benchmark performance of countries on key dimensions such as the Logistics Performance Index (LPI) and Ease of Doing Business to name a few. They measure, among others, time taken for documentary and border compliance as well as cost to export and import.

There are many success stories on trade facilitation through digitalisation available in the region. If you refer figure 1, you will see that Sri Lanka has far to go in being competitive against countries like Singapore and Malaysia. If one were to analyse these closely, countries with successful models today have had no easy passage in reaching their current state. 

These countries have evolved from relatively small offerings with limited scope to become comprehensive national projects and platforms encompassing all stakeholders, providing seamless integration to fulfil end-to-end business processes covering activities of traders, lines, forwarders, banks, and the relevant Government authorities.

Although it may not be practically possible to replicate these models, we can certainly learn from their experience in order to suitably adapt and apply these learnings to improve ourselves. However, in driving towards this, we believe that the following should be in place:

  •     A single entity with the necessary legal mandate to take ownership and drive such an industry wide digitalisation initiative. Some countries have been highly successful with a Government Agency driving the project directly under a Minister whilst there are other cases where Public Private Partnerships have proved to be successful. 
  •     Ensuring active participation of all stakeholders to achieve a common objective with consistent monitoring at the highest level and continuous improvement. 
  •     A standard operating procedure to be put in place, which would ensure that expectations as well as obligations of stakeholders are clear in order to conform and comply.
  •     Necessary support for capacity building focusing on; research expertise, domain know how, digitalisation, funding and establishing cooperation among the public and private sectors.

According to the report titled ‘Review of Maritime Transport 2016’ published by the United Nations Conference on Trade and Development (UNCTAD), the fourth industrial revolution, through digitalisation and the leveraging of innovation, technology, data and the Internet of Things is set to revolutionise the service industry. This will shift established modes of production and consumption generating welfare and productivity gains and offering new opportunities. Therefore it is imperative for us to consider whether we are ready as a nation to face this revolution and the demands that come with it.

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