2020 the most challenging year for freight forwarding: SLFFA Chief

Monday, 12 October 2020 00:00 -     - {{hitsCtrl.values.hits}}

SLFFA Chairman Roshan Silva 

Sri Lanka Logistics and Freight Forwarding Association (SLFFA) Chairman Roshan Silva who was re-elected at its Annual General Meeting held recently said 2020 was the most challenging for the industry and assured greater progress in 2021 which will be its 40th anniversary.

Following are excerpts from Silva’s speech at the AGM at which the Chief Guest was Sri Lanka Ports Authority Chairman Gen. Daya Ratnayake, Ceyline Group Chairman Capt. Ajith Peiris was the Guest of Honour whilst Director General of Merchant Shipping A.W. Senevirathne was a special guest:

 This is a monumental year for SLFFA as it steps towards its 40th Ruby anniversary. As an association, SLFFA has grown and matured in many ways. Today it is held in high esteem by the regulators, industry specialists and the general public. As envisioned by the pioneers, SLFFA is the home of some of the most elite freight forwarders, including large conglomerates, global giants and a league of persevering local freight forwarders. Together, we, the 121 SLFFA members represent over 90% of the freight forwarding volumes of the country – by and large, this makes us a formidable force of the Sri Lankan economy. 

The association has been active in supporting the growth of the industry and today as we step into the 40th year, all of us can take pride in being a part of this well respected and recognised establishment. 

As many of you may be aware, SLFFA commands the distinguished position of being the leading representative body of the industry and maintains the highest standards of professionalism and ethics. As the Board of Directors of SLFFA, we are determined to drive all the players in the industry towards these ideals and over the years our predecessors have worked closely with the regulators to ensure that these best practices are always followed. 

At the threshold of the 40th year, I wish to reiterate the importance of these standards and declare that we, as the current board will not hesitate to take action or even dismiss any member who is found to be in violation of these principles that form the basis of our beloved association. 

I would like to start off SLFFA’s highlights for the year by speaking about the progressive discussions had with the officials of SLPA under Chairman Gen. Daya Ratnayake’s guidance. I am sure all those in our profession will agree with me when I say, that some of the most pressing issues that we have faced are now being addressed under the new leadership. Let me elaborate with an example or two – For many years, we as freight forwarders are compelled to pay MCC excess charges for local cargo stuffed outside the port. Charging a stuffing fee for MCC cargo within the SLPA premises is accepted but charging for the stuffing done by an outside CFS for which charges already been paid is something we believe to be re-evaluated. Similarly, we face undue demurrage charges for abandoned or detained cargo, which have also caused issues to us. With your intervention to solve these matters is greatly appreciated. 

Thank you General for the support and methodical following up that has made the entire process of liaising with SLPA much more effective and efficient. Your accommodative detailed and comprehensive approach to an issue has really helped us not only during the COVID-19 lockdown but also solving long standing issues of above nature.

Roughly 15 months ago, when I stood up to address the previous SLFFA AGM, little did I know that the year 2020 would prove to be the most challenging year of my freight forwarding career. Even amidst the crisis, the SLFFA committee’s tireless efforts ensured that some important strides were taken in the direction of sustainable growth for the association and the industry. 

The SLFFA Board of Directors had an eventful year in spite of the months of lockdown. The main committee and the sub committees held regular meetings throughout the year, mapped out plans and systematically implemented them with the view of uplifting the industry. I invite all of you to peruse the SLFFA Annual Report to gain an understanding of some of these initiatives. 

Some of the initiatives that we are actively working on centre around the issue of extending credit – a topic that we highlighted in the SLFFA column in the Daily FT a few weeks ago. 

Those in the trade are aware that as freight forwarders, we extend large amounts of credit to our customers without any collateral or visibility of their creditworthiness. This comes at a huge cost to all of us, but we understand that this boosts the economy and as logistics service providers we wish to continue to render this service. But with the increased cash flow issues we had to face due to the COVID-19 pandemic, extending credit has become more challenging than before.

As an initial step to mitigate this credit risk, we started to revamp the debtor database operated by SLFFA. This way, we hope to identify wilful defaulters who have defaulted payments to fellow SLFFA members. 

In order to bring a more comprehensive solution, we approached the CRIB and formally requested to be granted access to view the credit reports of potential credit customers. CRIB indicated that this is the first time in its history that such a request was made but the officials have responded positively and are working to accommodate our request. 

Further, we opened discussions with the Sri Lanka Export Credit Insurance Corporation (SLECIC) to understand new ways of minimising the risks taken by our members when handling exports. This cover would be available to member organisations in the near future. 

We are also exploring the option of introducing a co-branded credit card with the assistance of MasterCard to reduce the cash flow pressures further. Discussions are currently being held with banks to facilitate the requirement and we are hopeful of receiving positive feedback.

During the pandemic when the Government extended numerous benefits to businesses, SLFFA was quick to write to the Finance Ministry and request that the logistics industry be recognised as an industry which requires financial support. Afterwards, we were pleased to see the revisions made to the circulars to accommodate freight forwarders.

Drawing from my personal experience, I am aware that most of our member organisations require professional support with respect to maritime law and freight forwarders liability insurance. After our committee assumed duties, we spoke to Allianz Insurance and a few other insurance service providers to find new ways of assisting all members. I am pleased to say that these insurance companies were good enough to volunteer to carry out a risk assessment free of charge for all the SLFFA members and guide them on the policies that they should obtain.

To make use of these services and also a preferential rate that has been promised to us, we request all members to contact the secretariat before renewing their freight forwarders’ liability insurance for the year 2021. 

A committee comprising experts in insurance, maritime law and freight forwarding will be appointed. Through this committee we want to support members when they apply for claims, obtain the required insurance protection and whenever they need legal advice or a legal opinion. 

With a long term view to educate our members on these topics, we also hope to carry out knowledge sharing sessions and focused training programs. 

The AITT Board took a number of steps to reactivate all the programs related to logistics which has been inactive for some time. As most of you witnessed, almost 60 students completed their studies and received accolades today at a glittering ceremony – another first in this scale for SLFFA and AITT. 

SLFFA Cargo Services which is the commercial arm of SLFFA was strengthened via an MOU between SLFFA and SLFFA cargo Services. Both boards reviewed the current royalty structure and that the sum paid to SLFFA by SLFFA Cargo Services as royalty was increased by 500%. This is incidentally the first review and revision in 20 years. I believe that both parties would benefit out of this and I take this opportunity to remind all our members to patronise SLFFA Cargo Services for all their movements. 

Very soon SLFFA Cargo services will create an opportunity for more SLFFA members to invest in its equity and I encourage anyone who is in a position to make an investment to do so. SLFFA Cargo Services has some interesting projects lined up – one such project is the commencement of an off port facility to handle LCL cargo, transhipment cargo and entrepot trade. This project would improve the operational efficiency, reduce losses and pilferage, which in turn would help many exporters and the total industry. 

General Rathnayake, you would be particularly interested to know that this project would help to free up space at the port which could then be used for more lucrative ship related activities. Given the experience SLFFA Cargo Services has in carrying out a similar operation at the airport and given that SLFFA Cargo Services is willing to invest up to Rs. 500 million for the project, I am confident that all stakeholders would benefit from it. 

As we move into the 40th year of SLFFA, I look forward to seeing more active participation from the general membership. We will set up more specific committees to work on different areas which need attention. Plans are underway to publish a coffee table book to capture the illustrious history of SLFFA and steps are being taken to improve the publicity for the industry and SLFFA. We are also working on a National Logistics Awards program to provide a platform for all logistics service providers to showcase their expertise and service excellence.

Before I conclude, I wish to leave you with a few thoughts about the future of our industry based on my own observations. Our trade, being an essential service, showed resilience. We will always be stronger as a unit and together we can overcome the setbacks. Digitisation is inevitable and it comes with many advantages – it is up to us to open our minds, embrace new ways of doing business and accept the changes. Fore seeing customer requirements and proactively finding solutions to support their new ways of doing business will make sure that freight forwarding remains not only relevant but also essential in the minds of the customer. 

Let’s believe in the difference we can make and the success we can achieve as a group and strive to nourish each other. 

I would leave you with a quote: “There is no limit to what can be accomplished as long as you do not mind who gets the credit...”