Over-regulated reforms affecting development of shipping – A call for correctness

We refer to articles that appeared in your esteemed paper Daily FT wherein it stated that shipping lines and service providers have failed to fall in line with the international practices.

This is the exact point that we require attention. Currently the Logistics Service Providers including the NVOCCs and shipping lines are prevented from exercising international practices due to a section of the Extraordinary Gazette notification No. 1842/16 dated Friday 27 December 2013. This is indeed detrimental to the image of the country and hinders development of shipping and logistics as well as the import freight market in Sri Lanka.

The Gazette Notice was encouraged by parties with vested interests and the anomaly requires to be corrected for the betterment of the shipping industry in Sri Lanka.

The Government must not be allowed to be misled with wrong interpretation of INCOTERMS and in fact the examples drawn from USA trade and transshipment of containers via Colombo are testimony to the prevalence of market forces which is in no way guided by regulatory controls. 

INCOTERMS, as has always been underlined by International Chamber of Commerce, deal with the relations between sellers and buyers under the contract of sale and carriers are not a party to it; most importantly market forces should be allowed to come into play for any trade and thus over-regulated restrictions against international practices require immediate correction.

When the THC issue was brought up before the Supreme Court in 2007, the then Chief Justice directed the parties in question to resolve the issue through mediation and the Director General of Merchant Shipping was appointed to chair a committee comprising the stake holders. The Mediation Committee did find a solution but the parties with vested interests ignored the recommendations of the Mediation Committee and politicised the issue, thus bringing Sri Lanka into disrepute among the international and regional carriers and logistics service providers worldwide. 

Nevertheless, it is a well-known fact that 70% of the total Sri Lankan exports prior to the introduction of restriction/prohibition were free of collection of Terminal Handling Charge. Therefore, it is no longer the intention of the service providers to hamper the competitiveness of the Sri Lankan exports. But the unfair regulatory controls to completely prohibit the service providers from exercising international practices including the application of THC on imports and issuance of Bills of Ladings as the service providers deem fit, have caused grave harm to the shipping and logistics industry as well as the aspirations of making Colombo a maritime hub.

The regional NVOCC operators who contribute 30% of the regional throughput of volume via Colombo, have also sent warning signals to Sri Lanka that Colombo is an undesirable destination to do shipping and logistics businesses in view of prohibition of THC recoveries in Sri Lanka particularly for their import land-based costs; a forced act of control against international practices and norms.