“Paradigm shift in thinking needed to become logistics hub” – SLFFA Chief

Following is the speech delivered by the newly-appointed Chairman of the Sri Lanka Freight Forwarders Association (SLFFA) Mohan S. Mohanadas at the SLFFA AGM 2011, last week:

Honoured Chief Guest Prasanna Wickramasuriya, Chairman Airport Aviation Services Limited, distinguished Invitees, Members of the Advisory Council, fellow members, ladies and gentlemen, today I stand before you with great honour and with profound gratitude for the confidence placed in me by the membership, in electing me as Chairman of SLFFA for the ensuing year.

I humbly accept the appointment with an unwavering resolve to honour that trust. I would also like to thank the membership for electing a committee uncontested.

My dear friends, ladies and gentlemen, my appointment comes during a time when peace has dawned upon our nation and during a time when our focus is on rapid economic development. It was not long ago that many of us experienced the horror of terrorism that plagued our country. Our economy was hit hard due to the conflict; development in the country was at a standstill.

In the last two years Sri Lanka has been focusing on developing its battered economy. With the security situation improving vastly, we have seen a growth in the economy thus creating optimism amongst our business community.

Central Bank reports have indicated that the GDP is expected to grow at a healthy 8-9% this year and foreign reserves are at the highest with the rupee being stable against the US dollar and other currencies.

Sri Lanka has experienced a tremendous growth in the tourism sector with the latest reports indicating a 40% increase over last year. Currently top priority has been given for infrastructure projects which are taking place across the country.

In the light of these developments, we are challenged with the task of adapting to the rapid growth of the country and to provide our services to the best of our capabilities. Therefore, in order to build Sri Lanka into an economic power in the service, manufacturing and agriculture sectors, it is imperative that we have an efficient and cost effective logistics sector.

Recently I attended a workshop organised by UNESCAP. There a presentation was made by the World Bank on the ‘Logistics Performance Index & Indicators for the year 2010’. This was a study conducted by the World Bank with the support and participation of the International Federation of Freight Forwarders Associations (FIATA), the Global Express Association, the Global Facilitation Partnership for Transportation and Trade, 10 major international logistic services companies and several medium-sized logistics companies worldwide.

The survey was designed and implemented by Professor Lauri Ojala, Professor of Logistics at Finland’s Turku School of Economics who also presented it at the forum.

Taking into consideration Sri Lanka’s geographic positioning and the hub status for the region which is much spoken of, I expected Sri Lanka to be ranked at a higher position amongst the countries in the region and closer to those developed nations. However, I was surprised at what I saw. We were ranked 137 out of 155 countries that were evaluated – well below all the countries in the region except Nepal and Afghanistan, both landlocked and amongst African countries which are very much underdeveloped.

Due to my disapproval of the rankings, I inquired from the Professor the basis by which they had arrived at these numbers. I was told that the rankings were given based on responses received from those participating forwarders and users who have been asked to assess Sri Lanka. I was further told that these respondents had been selected based on the trade statistics.

Key criteria for the evaluation were quality of infrastructure, competence and quality of service, efficiency of processes, sources of major delays, fees and charges and changes in the logistics environment since 2005. As the numbers show we have ranked rather poorly in these.

Whilst these numbers may not be 100% accurate and many of us here today may not accept it, it is nevertheless a clear indication as to how our own overseas partners and those who use international transportation services to and from Sri Lanka rank us.  This in my view can go very much against our drive as a nation to promote investment and business as we could be considered a logistical nightmare. On the other hand Singapore and Dubai which we want to emulate as a logistics hub are ranked at number two and 24 respectively. As you can see we are a long way off. The only compensating factor was that these surveys had been carried out in the late 2009 soon after the war ended.

However, we shouldn’t let numbers or past statistics for that matter discourage us in achieving excellence and taking the industry to the next level.

We are one of the oldest civilisations in the world. History has shown us how Sri Lanka during ancient times was a transit point for merchants around the globe. Due to our unique geographical positioning we were able to connect the east and west and at one point had one of the world’s busiest ports. We were a regional hub that connected the maritime Silk Road which stretched from modern Hanoi and went up to Alexandria, Rome and Constantinople.

Even as recently as 30 years ago quite a number of airlines used to transit via Colombo to Australia and beyond, Far East and even South Africa. But today it’s not the case, Aircrafts can fly longer distances without a stop and vessels are capable of going around the world with one re-fuelling. They have inbuilt desalinating plants so don’t require fresh water supplies either.

So being on a shipping route or geographical positioning by itself will not make us a hub. We need to create the required environment so that carriers and businesses will be convinced that Colombo is the ideal hub for South Asia.  It is certainly not an impossible task to achieve this or for us to regain our former glory. With the current development taking place in Sri Lanka, it is essential for us to strive to achieve a dominant position and be a leading player in our industry in the global race.

We have seen a tremendous interest shown by the President and the Government to develop the logistics sector. Massive investments have been made in developing new ports and airports and to upgrade the existing facilities. However, mere investment in physical facilities will not be adequate.  Whilst investing in upgrading physical resources we must also be seriously looking at streamlining and improving the processes of export, import, transhipment, multi country consolidations and entrepot trading. We need to provide an efficient, quality and timely service. The current processes must be reviewed and simplified. We have to improve the professional competency and eliminate the causes of delays.

Last but not least we must be competitive in terms of tariffs and charges. This would be of paramount importance if we have to compete in this highly competitive and demanding market and make Sri Lanka a hub for South Asia. We need a paradigm shift in the thinking of the agencies involved in this sector to make this happen.

Having said that, I am glad that initiatives are being taken to achieve this. The Secretary to the Treasury has had a couple of meetings with the stakeholders to expedite the long drawn customs automation process and also streamline other related issues as well online payments.

We started Customs automation well before many countries in the region. But many of them are far ahead of us now. Since we started governments have changed a couple of time and many ministers have come and gone. But even after a decade we have not been able to link the various agencies and the trade.

We are still going about desk to desk at different locations carrying documents to get our exports and imports processed. We hope we could see an end to this and have an online system linking all the connected agencies within this year.

I am also pleased at the fact that the EDB under the direction of the Minister of Commerce and Trade has reconvened the Advisory Committee for Trade Facilitation after 10 years. SLFFA is also represented at this committee. This committee has had a few meetings and proposals have been submitted to simplify the import and export processes. Here again we would like to see the implementation of such recommendations for the betterment of the industry.

Heading the SLFFA is a great honour. It comes with great responsibilities and by no means is it an easy task. It involves time and commitment. My predecessors who have all been stalwarts in the industry have set standards. They worked hard with dedication and determination to bring SLFFA to the position it is today. But I am confident with the efficient committee I have been provided with and with the support of the Advisory Council, we can achieve our goals.

SLFFA in its 30-year history has strived to make the forwarding fraternity a professional outfit. It has had an excellent relationship with all the connected agencies and has been in the forefront in dealing with matters affecting the industry whilst also instilling standards and ethics amongst its members. In addition SLFFA has actively involved itself in training and social activities for its members and CSR initiatives.

Whilst I hope to continue on these same lines, my focus in the ensuing year will be on two key issues. One is training and capacity building and the other is membership development.

Though we started our training arm AITT over three years ago, we have not reached the expected milestone. AITT is the sole training facility in the country which is authorised to conduct the FIATA accredited courses leading to the FIATA Diploma. We have invested on resources and will also soon have accreditation to conduct IATA courses. The question is, up to how far the membership has used these facilities to improve standards in their organisations.

Whilst we can ask the Government agencies to improve the processes and efficiency of the systems and improve the infrastructure, it is our responsibility to upgrade the professional standards and build capacity within our membership. Investment in training in our industry has been very poor. We need to change this. Today’s logistics services are complicated; we need people with a good knowledge of the various aspects of supply chain management to serve our clients in a professional manner.

My committee will be focusing on promoting training amongst its members and I look forward to the fullest support of the membership in this initiative. This will eventually help the members reap bigger benefits. I would like to see training and professional studies be taken to a level that in the near future, we should be only recruiting into the industry those with an entry level professional qualification

Currently SLFFA has over 90 members and as I noted before, membership development is the other aspect I would like to focus on. All established organisations which are actively involved in complete air and sea logistics services are currently members of the association. However, there are equal or smaller organisations especially those providing import break bulk services that are currently not part of the membership.

One reason for this is the strict entry requirements SLFFA maintains. My committee will look at options of bringing this segment of smaller organisations into the membership whilst not diluting the standards that have been set.

It is my view that by having all entities involved in freight forwarding and logistics services in the membership it will further help the industry and the users. It will also help those smaller organisations which are now outside the membership to upgrade their services.

At this juncture, I would like to take this opportunity to thank outgoing Chairman Tony Livera and the Committee for an excellent job done over the last two years. As highlighted in his address, much was achieved during this period. Thank you, Tony.

As mentioned earlier, I am honoured to have this opportunity to serve SLFFA. I look forward to the fullest support of my committee, the advisory council, the secretariat and the membership to carry out my duties as Chairman and continue the good work that has been done thus far. I shall do my best as Chairman of SLFFA. Thank you!