JAAF strongly defends Govt. regulation on shipping

The Joint Apparel Association Forum (JAAF) has reacted strongly to recent reports in the media on a claim by a certain party accusing the Government of over-regulating the shipping industry. 

“We vehemently object to this self-centred view and denounce the article’s reference to Colombo being perceived as a negative port,” Tuli Cooray, Secretary General of the Forum, said in a news release.

Following is the release:

The JAAF is the apex body representing the largest manufacturing exporter, largest industrial employer and the largest user of logistics services. We speak for the entirety of exporter and importer community in Sri Lanka and we feel that these are baseless negative sentiments which will not augur well for the two communities, he added.

This new organisation formed by a handful of service providers not keen in following ethical practices in the market, making an attempt to fragment the freight forwarding industry to be in confusion.

They seek to gain recognition in order to reverse a regulation that was introduced to eliminate anti-competitive practices that was prevalent in the shipping industry.

JAAF feels that the obvious interest of this group is to send negative signals to the Government, for which we as a member of the Sri Lanka Shippers’ Council had prior knowledge of these attempts to scull the existing smooth process which has been in operation since 2014.

Their desire is to hold the shippers to ransom by avoiding market forces. The regulation referred to in the article has not, prevented any charge being collected from the party who is contracting for freight and it only prevents the imposition of charges on the non-contracting party by the service provider and that was the principle that was hailed by the JAAF in the struggle to bring about this regulation during the last 17 years.

The International Chamber of Commerce guidelines for transporters clearly defines the circumstances of carriages and delivery and the responsibilities of the service provider to understand the globally accepted contracting terms and to learn how to act ethically and not to impose charges under the guise of local handling to the unsuspecting shipper. 

Knowing very well that the port of Colombo is a liner in/liner out port and that imports or exports can’t deliver or receive on board ship but at the terminal, the responsibility of the shipping line is to deliver CY to CFS or CFS to CY, and collect all charges from the party contracting and making the booking for a shipment. If this new organisation thinks that their way of collecting money through the non-contracting party is the international practice, we invite them to consult the London based Global Shippers’ Forum, who represent cargo owners from around the world to obtain information as to what the best international practices are. 

In fact at the recent GSF meeting held in Colombo the Chairman of GSF from Canada congratulated Sri Lankan law and informed that the GSF has decided promote the same principle worldwide through UNCTAD, Furthermore, GSF view the so called THC and all other charges as barriers to trade. They must also refer to the latest version of INCOTERMS 2010 which clearly illustrates FOB is not the right incoterms to be used in container transport and that it be FCA, thus the carriage of transport begins from the point of CFS or CY which received the goods for onward transport.

We as shippers are also aware that these methods of money making by agents going against the international best practices is prevalent in Asia and Africa as there are no strong regulatory agencies for monitoring market manipulation. Our counterparts in developed nations have had no such issues as they are always able to negotiate all-inclusive rates and are guided by competition laws. This is the rationale for the intervention of the Government to bring about regulatory measures.

It is regretted that this organisation has tried to gain advantage by politicising the issue.

We wish to note that it was the incumbent Minister of Finance Ravi Karunanayake who first promised to the Sri Lanka Shippers’ Council to eradicate this problem in 2002, but unfortunately circumstances did not permit him to do so. 

However when in Opposition in 2013, he supported this part of legislation at a post-Budget discussion on a TV broadcast.

In this connection, it is noteworthy to mention that JAAF in the interest of the service industry had fruitful discussions with the Freight Forwarders and went to the extent of identifying Preferred Partners where a commitment from both parties was obtained to uphold the law and provide market friendly policies and practices. In fact, the apparel industry deals with such freight forwarders and has not directly obtained any services from any parties, unless our suppliers use them on CIF shipments to which the same law applies up to delivery point.

It is praiseworthy to note that ethical and market friendly freight forwarding community in Sri Lanka had understood this principle and adjusted well towards in this directions so as our external buying community.

JAAF representing the largest manufacturing exporter, largest employer and as the largest user of logistic services will strongly contest any attempt to disturb the prevalent law that ensures all-inclusive freight is paid by the contracting party who has agreed to pay the freight covering all costs for carriage of shipments from origin to delivery point. Contracting party only shall pay for the services rendered and not third parties outside the contract and that is the principle we uphold and protect.