Gaining a competitive advantage through logistics development

By Roshenka De Mel

The Chartered Institute of Logistics and Transport Sri Lanka (CILT LK) hosted a panel discussion on Tuesday at the Ceylon Continental on how a competitive advantage could be achieved through logistics development in Sri Lanka. The forum addressed user perspectives and key speakers from across the logistics industry provided their input.

CILT LK Immediate Past Chairman Saliya Senanayake moderated the panel discussion, which commenced with a welcome address made by CILT Chairman Professor Amal Kumarage, who stated that the purpose of the forum was to meet and exchange user perspectives within the Sri Lankan logistics industry, be they positive or negative.

CILT LK is the leading logistics organisation in the country with a global membership of 33,000. The discussion forum was an endeavour organised by CILT as part of a series of evening lectures and seminars to highlight relevant logistics concerns and issues in the country and showcase the projects being undertaken by the Government in the area of logistics and development in Sri Lanka.

Sri Lanka Freight Forwarding Agents Vice Chairman S. Mohanadas began the discussion by addressing the competitive advantage needed for the development of the logistics industry in Sri Lanka.

Mohandas stated: “There is a lot of interest shown by the Government in the logistics sector. A lot of investments have been put into infrastructure of ports, roads and airports. In order to be a logistics hub, our geographical location alone is not going to help us. We have to look closely at every process and we need to do a lot more if we want to be positioned as a logistics hub in South Asia.”

“We have to improve our current processes and address areas of concern. We also have to be competitive and attract others to use Colombo as a logistics hub. From the private sector, we have to improve our competency in training and education. Today’s supply chain management and logistics is complicated and there are many areas which must be understood. It’s not just about building a port; it’s about training people as well,” he added.

Senanayake mentioned how Sri Lanka was placed 137 out of 160 in the LPI logistics index published by the World Bank and asked what needed to be done to improve the country’s logistics services and bring its ranking up to at least 50.

Ceylon Association of Ships Agents (CASA) Chairman N. Ranchigoda stated: “We are very concerned about development of the ports in Sri Lanka, especially in the light of shipping lines investing in big shipping carriers. We are trying to get the Colombo Port Expansion Project on the way and we need the shipping lines to be improved. The financial crisis of 2008 caused shipping lines to lose millions of dollars and shipping lines are losing money again due to rises in freight prices and the escalating price of oil. CASA has been working closely with customs to implement the electronic transmission of manifests to reduce the cost of logistics operations.”

Elaborating further on improvements that need to be made for the benefit of users of logistics services in the industry, Association of Clearing and Forwarding Agents (ACFA) Chairman A. Emmanuel stated: “The most important thing is for Sri Lanka to be competitive with other ports in terms of efficiency. It boils down to how efficient we are at all levels. There are many processes involved in logistics services and the cooperation of several government departments is essential to smooth operations. We should concentrate on expediting every process on all levels.”

Commenting on issues affecting the logistics industry in Sri Lanka, Association of Container Transporters (ACT) Chairman Upali Gunawardena stated: “All the speakers before me are planners; we have to put every plan into operation. Our industry is not sustainable at present, waste exceeds real cost. It has become a business that is not profitable anymore, the estimate operations cost ratio exceeds 90% and for every rupee of income, profit remains at only 8.3 cents.”

Gunawardena continued: “Operational inefficiencies, direct and non direct taxation and idling as well as other impediments have really affected the entire industry. If full use was made of the present infrastructure and if it was well managed I believe we would be able to cut down expenses by 50%. Drivers and other staff are undertreated and retaining them is difficult. The Sri Lanka Ports Authority needs to address these issues as it’s really affecting the trucking industry and logistics industry as a whole.”

Sri Lanka Ports Authority (SLPA) Chairman Dr. Priyath Bandu Wickrema responded by stating: “We are trying to do the best we can, we try to educate our staff, to change their patterns and introduce a few systems to manage these issues. The port has a long history with workers who have 30-40 years of experience and have been following traditional processes; implementing the change of mindsets is our biggest challenge. We are working on developing online manifest transmission to allow for online clearing payments. There are a few gaps which still need to be addressed; otherwise we hope to implement this electronic facility shortly.

“We will also be developing an online terminal management and tracking system so cargo can easily be detected and traced regardless of where it is. Congestion of roads is a key concern; we are currently developing road expansion projects and moving all administrative operations out of the port to create more space.  We will also be increasing access to free ports and using Peliyagoda more extensively as a cargo village by 2014.”

Gunawardena countered: “The Chairman of SLPA is of the opinion that implementing high technology is going to solve all the problems the logistics industry is Sri Lanka is facing; kindly think of what steps could be taken to give a little immediate relief to the present problems.” The SLPA Chairman responded by stating that issues were being addressed with long-term and short-term solutions in mind, all of which require changes in physical infrastructure changes, systems and attitudes in order to be resolved.

Addressing why developments regarding an electronic manifest process had been started but not completed yet, Sri Lanka Customs ICT Division Deputy Superintendent Thilak Pragnarathne stated: “Delays in providing electronic manifests are due to the challenge of creating industry standards. Definitions defer from agent to agent, we have to create a standard and that takes time. We will however implement electronic manifesting shortly and an e-payment gateway will be introduced. We are also going to streamline the clearing process by using high risk indicators which will automatically highlight select shipments for document and cargo examinations. These developments will make Sri Lanka a more user-friendly logistics hub.”

The discussion ended with questions from the audience being directed to the panel, CILT LK memberships being presented and a vote of thanks to all participating panellists. All panel representatives concluded the forum by acknowledging the need for a strong advisory body with authority to maintain the dialogue between all parties involved in the logistics industry in Sri Lanka and put crucial plans that will ease logistics operations into practice.