Logistics: A long way to go

Following is the address delivered by Outgoing Chairman of the Sri Lanka Freight Forwarders Association (SLFFA) Tony De Livera at the SLFFA AGM 2011 last week:

Honoured Chief Guest Prasanna Wickremasuriya, special invitees, members of the Advisory Council, fellow members, ladies and gentlemen, it is indeed a great honour to have Prasanna Wickremasuriya as our Chief Guest today, at our 30th Annual General Meeting. Thank you for taking time off your busy schedule to grace this event.

I would like to thank the SLFFA members for electing me for two consecutive terms as your Chairman. These last two years have indeed been a wonderful experience and great challenge.

In May this year, Sri Lanka celebrated the second anniversary of the end of the ethnic conflict which engulfed our nation for many years. With the end of the conflict, there appears to be a strong recovery in the Sri Lankan economy.

The Central Bank Annual Report indicated that per capita GDP increased in excess of 14% from 2009 to 2010.

As for our industry, as stated in the Central Bank Annual Report, it is impressive to highlight that the cargo handling-ports and civil aviation sub-sector expanded substantially, with a growth of 16.8% in contrast to the marginal growth registered in the previous year. This expansion was backed by the increase in both transhipment and cargo handling in 2010.

It is also worthy to note that the Colombo Port handled a highest recorded volume of 4.1 million TEUs during the year. This is indeed an impressive and commendable improvement. We have come a long way, but I feel we still lag far behind the developed world.

Matter of concern

This brings me to a concern I would like to share with our distinguished guests tonight. I’m sure some of us would have seen a World Bank Report, wherein they use a Logistics Performance Index (better known as a LPI), which is an interactive tool created to help countries identify the challenges and opportunities they face in their performance of trade logistics and what they can do to improve their performance.

The LPI 2010 themed ‘Connecting to Compete – Trade Logistics in the Global Economy’ allows for comparisons across numerous countries of the world. We all know that improving logistics performance has become an important development policy objective of countries in recent years, because logistics has a major impact on economic activity of any country in the world.

For example, take the largest island nation in the world, Australia. Transport and logistics is often referred to as the backbone of the Australian economy. As it directly affects every part of the economy and everyone’s standard of living – from what we buy, to the price we pay for goods, to how we get from place to place.

The transport and logistics network comprises ports, roads, railways, freight terminals, airports, and distribution and materials handling centres. Because of its integration within the economy and the embedded nature of its functions, the relative ‘health’ of the transport and logistics industry is often considered a barometer for the overall strength of the economy.

Getting back to this survey, it is conducted by the World Bank every two years and in a survey conducted in 2007 SL’s ranking was 92. However, here is the worrying factor. In the survey conducted in 2009, for which the report was out in 2010, our ranking had gone down even further to 137 out of a total 155 countries. We are behind countries like Ethiopia, Myanmar, Nigeria, Libya, Bangladesh and so on.

Bad trend

This is a very bad trend as far as Sri Lanka’s economy is concerned and I feel the negative ranking is giving us an indirect message. Being an island nation, our connectivity to international trade is through our main gateways, meaning the international airport and seaport.

Since we have both the Chairmen of AASL and SLPA in attendance, I would like to ask you sirs, what is it that Sri Lanka is not doing right for us to keep on dropping down in our LPI ranking?

In a simple expression, our economy is export and import trading. We are not considered an industrial economy as yet. Apart from garments, the rest of the products are still connected to our agricultural base.

With the new trend in global commerce, Sri Lanka has more opportunities in this direction as opposed to industries and we need to export more to earn more hard currencies to service our imports.

In such a scenario, we come back to the burning issue: Sri Lanka must provide a hassle free logistics platform to improve the export and import opportunities in order to achieve the cost reductions to be passed on to the consumers. Therefore, in order to provide a hassle free logistics platform to the service providers like ourselves, Sri Lanka Customs, SLPA, AASL, SriLankan Airlines and other Government trade agencies must all contribute positively.

Let me assure you that SLFFA as the apex body of our trade will continue to support all relevant trade agencies concerned to eventually make this a reality.

SLFFA’s annual report was shared with all of you. The report contains a detailed description of the activities of the association for the past year. Therefore, I will only touch upon some important areas the Executive Committee concentrated on during this period.

SLFFA Air Cargo Village at Katunayake

It’s now been a year since cargo acceptance moved to the new UL terminal situated approximately 500 meters away from Terminal 1 of the ACV.

Despite our numerous requests and discussions held with both AASL and UL Cargo on reducing rent charges for the ACV warehouses of the occupants and to obtain office space for SLFFA members in the new terminal, no agreeable outcome has yet been reached in benefit to both parties.However, with the best interest of our members at heart, I’m sure the new committee will continue to pursue this matter with the relevant authorities and I sincerely hope our honoured Chief Guest will support us on this.

We have also seen some high tech developments and improvement made by Sri Lankan Cargo, by introducing E-MAWBs and bar-coded labels. This is an important milestone within the industry. In this day and age of vast opportunities and competition, we have to strive to provide our clients with the best services to ensure maximum customer satisfaction. Hence, the introduction of such advanced technology will indeed be of great assistance in fast tracking the clearance of cargo, which is an immense advantage for us all.

Freight forwarders’ licensing regulations

After meeting with the Director General of Merchant Shipping on several instances and as advised by him, we re-drafted submissions and forwarded them to him. Thereafter, several amendments were recommended by the DMS, which were discussed and incorporated accordingly by SLFFA. We are currently awaiting a final confirmation from the DMS on the submissions presented.

E-manifesting

By now we have informed the members of all XML formats required to transmit the relevant information through the e-manifesting system and currently testing and compliance is being carried out. However, the date of full implementation hasn’t been finalised as yet. In the meantime, I urge all SLFFA members to commence using this system for manifesting.

Debtors’ database

I am pleased to inform you that there has been a positive response from our members on the new and modified web-based debtors’ database system. Majority of you have been uploading your debtors’ information on a regular basis and I sincerely urge all of you to kindly support us by submitting your information.

In conclusion, I would like to take this opportunity to thank each and every member of the association for having given me and my Executive Committee all the support in all the activities that we had throughout the year.

I know we have been troubling you for sponsorships for the various activities that were organised, but as we are a non-profit organisation we rely a great deal on you, our members and I’m sure you are aware it has always been for a very good cause. We are extremely grateful.

I’m also very thankful for the work and support I received from my Executive Committee and the Advisory Council which supported me in all the initiatives and stood by me right throughout all the decisions that we took in the interest of the association. Thanks!