From ‘freight forwarder’ to ‘logistics service provider’
Monday, 1 July 2013 00:00
The Sri Lanka Freight Forwarders Association (SLFFA) recently elected Dushmantha Karannagoda as the new Chairman at its Annual General Meeting. Chief Guest at the event was Hayleys Plc Chairman and Chief executive Mohan Pandithage.
In his speech, Karannagoda said the election as SLFFA Chairman was a very significant day in his career as a freight forwarder.
“When I started my career back in 1980 as a school leaver, I never had any idea of getting into the transportation industry. But I got my direction, when I was given an opportunity to join McLarens Group as a shipping trainee in 1982. Thirty years since, and today I stand before you as your Chairman,” he told the AGM.
He also said the election was a great honour as the Chairmanship was a prestigious position. He expressed appreciation on SLFFA membership for the confidence placed in him and said he looks forward to working for the freight forwarding industry with members’ support and assistance in achieving common goals.
Following are excerpts from Karannagoda’s speech at the AGM
Transportation infrastructure development
We have gone through a very dark period in this country, during the 30 years of terrorism. Fortunately, we have seen an end to that period, thanks to the leadership of this country that lead and guided the forces to victory, and to those war heroes who gave their lives and limbs for the betterment of our tomorrow. Though it has been four years since we gained peace in this country, I believe it is important that we continue to speak about it for the next decade or even more, apart from writing it in golden letters in our history.
I’m sure nobody will disagree with me if I said that we are blessed with the safest country on earth, with immense opportunities!
The Government has very clearly identified the fact that the development of the transport sector is vital for the development of the country. Therefore, we can see much focus and attention is given by the Government to the development of transportation infrastructure.
If I may highlight some of the key projects:
Commissioning of phase one of the Hambantota Port in December 2011: All RO/RO vessels are being handled at Hambantota since mid last year, thereby easing the congestion that would have otherwise been added to the Port of Colombo.
The advantage of this port is not only being located close to the international East-West shipping lane. The land mass available for this port for further development is so vast that it can accommodate many other shipping related sectors such as warehousing, repacking, vehicle assembling, etc. Several investments on these lines are already approved by the Government and will commence soon.
Construction of South Port or Colombo International Container Terminals (CICT): This will commission its first phase in July this year. This new terminal is equipped with a depth of 18 meters alongside the berths and gantry cranes with longer outreach, making it unique, and it is the only terminal in the Indian Sub Continent with these facilities. It is therefore geared to handle the largest Triple E Class vessels with 18,000 TEU capacity. It will add further capacity of 2.4 million TEUs initially, and it is expected to go up to 7.2 million by the final stage.
The first phase of Mattala Airport was commissioned early this year: This airport is expected to develop its own cargo and passenger markets, in time to come, because of its location close to many tourist attracted areas. It is also closely located to the Agriculture Processing Zone, thus easy access to the fruits, vegetables and dairy product industries for exports.
These developments add capacity to take up increased volumes. We also need to have a strong National Carrier. It is interesting to note that the SriLankan Airlines has ordered 13 more Airbuses, a combination of A330-300s and A350-900s.
Adding more value to the new port and airport facilities is the development of the road and rail networks. The opening of new Airport Highway, the extension of the Southern Expressway up to Hambantota and Mattala, and the interconnecting Circular Roads will add value to these new developments.
The amount of time saving and connectivity among those towns and villages that were perceived as far locations will become reachable within a couple of hours. Moreover, this will help us find combined and innovative transport solutions for our overseas partners and clients, in our endeavour to be the shipping, logistics and aviation hub of Asia.
At the same pace that we develop the transport infrastructure, we also need to improve on the systems and functioning of these facilities. We need to remove the bottle-necks that hamper day-to-day operations. As the Forwarders Association, we have ongoing dialogues with the authorities in order to address those issues and find solutions collectively.
We are fortunate to have very good leaders and project champions heading and guiding some of those institutions. I’m confident that their positive attitudes will filter down to the lowest ranks in those institutions, so that we will see a better environment that is more conducive to business in time to come.
Logistics service provider
Looking at our own industry, the former freight forwarder has evolved with time, to become ‘the logistics service provider’ through many value additions, as the market demands. We also speak of supply chain management, 3PL, 4PL, etc., all because of the innovations and value additions made by logistic service providers to meet the market needs and have gone well beyond our primary freight forwarding services. It is a profession that is well recognised in the developed world. Unfortunately, some sectors outside the industry and certain Government institutions that do not deal closely with us still look at our industry members as twenty rupee companies. They still have the mentality that a freight forwarder is just a customs broker who operates on a brief case.
I will not blame them. Because we still have in our industry certain operators who do not maintain the minimum standards, mislead the client, violate all regulations including those of exchange control. This is the reason why this association was formed 32 years ago, to uplift the standards of the industry and give due recognition to the membership by labelling them as SLFFA members. We also welcome the regulations introduced by the Government in this regard, so that the entry to the industry is subject to having the minimum standards.
Surprisingly, some of the shipping lines too look at freight forwarders as aliens who have moved into their territory of business. Such lines try to block the forwarders and try to reach the shipper directly, because they have a fear that the forwarder will eat into their volumes and profits. They need to understand that forwarder is an extension of their own marketing arm, who will bring the shipper to their doorstep. In the developed markets like Singapore and Hong Kong, the forwarders and the shipping lines work hand in hand, complementing each other rather than competing with each other.
Full implementation of ASYCUDA WORLD
Going forward, as far as I can see, we need to work on a few areas on a priority basis:
The first point is the full implementation of ASYCUDA WORLD. We have been working together with the Sri Lanka Customs for few years, with trial runs. We welcome the decision by the Director General of Customs to reduce the number of copies of manifests. However, we still have to make a visit to Customs to submit a hard copy, after having submitted the manifest electronically, and after receiving the successful acceptance notice.
As for the CUSDEC too, we still have to make a visit to Customs, after having submitted the document electronically and receiving acceptance notice.
We are looking forward to the day that we need not pay any visit to the Customs, except for meeting with the DG and his team on courtesy, over a cup of tea.
With the current leadership of Sri Lanka Customs, we are confident that we can see that day around the corner. Let me say on behalf of the association, we will work closely with Director General of Customs and his team, and offer our fullest support in making it a reality as early as possible.
There is a similar situation with the Port too. I have no doubt that Dr. Wickrama will see that we will soon see the day of a paperless environment with the SLPA as well. Once again, we as SLFFA will give you our fullest support in achieving it.
Regulation of the industry
The next point is the regulation of the industry. The Government brought in an amendment to the Shipping Act to accommodate the freight forwarders and NVOCC operators, with a view to regulating them, because there were many complaints from the trade of overcharging for import cargo.
We are happy that the regulations have come through, but we are yet to see the benefits of it. This is because, though the registration process has commenced, it is not fully enforced. As a result, some freight forwarders may still operate without a license. A Class B freight forwarder may issue documents of carriage. This is because there is no policing or monitoring system in place at the moment. Moreover, over charging continues without any controls.
We hope that the Director General of Merchant Shipping will address this area of implementation of the regulations and we as the association would like to closely work with the DMS, perhaps together with the Shippers Council and other related bodies, in order to see the full implementation and enforcement of the regulations.
Private sector participation
The third point is the private sector participation in cargo handling. The Government has demonstrated public-private sector participation in many sectors, including in the transport sector. The development of the SAGT and the CICT are good examples of foreign investor participation in this sector.
The SLFFA Cargo Services, which is the commercial arm of the association, has a proven track record in handling in-bound air cargo at the Katunayake Airport, alongside SriLankan Cargo. We have submitted proposals to the SLPA and Sri Lanka Customs to develop and operate an independent inland container terminal, jointly with SLPA. This is to handle and give delivery of inward cargo, receive and load export cargo, to handle multi country consolidations, to handle Temporary Imports for Export Purposes (TIEP) and to handle entrepôt cargo. We hope this proposal will receive due consideration from both institutions, so that we could take cargo handling to the next level by creating some kind of competition among the terminals.
Training and capacity building
The forth point is training and capacity building. We have identified the need to have trained staff. SLFFA has shown its commitment to this by the incorporation of AITT, the training arm of SLFFA. We have joined hands with training professionals, Achievers Lanka Business School, to offer the logistic training in a more organised manner. SLFFA is accredited by FIATA to offer courses up to FIATA Diploma, and beyond. SLFFA is also accredited to conduct IATA training programs.
However, we don’t see our members making full use of this facility. The response from the trade is very poor. We therefore urge our members to consider this facility more objectively, and train their staff for the betterment of their own organisations and the industry as a whole.
Apart from those points, I also see a lack of information flow between the Ex co and the general membership. Many members are not aware of the amount of work being carried by the Executive Committee. This shows poor communication among us in the Association. I would like to see more dialogue among our members and the Exco. Perhaps we could look at introducing a newsletter so that everybody is aware of any developments.
Furthermore, we would like to expand our Sub Committees, especially Ocean Freight, Air Freight, Publicity and CSR. I’m keen to see more participation by the general membership working through the sub committees, so that we would have better inputs from everybody, and also strengthening the hands of Exco.