Shipping industry expresses shock as National Chamber moots cartelisation
Monday, 3 March 2014 01:23
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It was reported in a weekend national newspaper, that the National Chamber of Commerce Sri Lanka (NCCSL) shipping committee has spoken of carrots and cartels in order to resolve a national and macro-economic issue of Sri Lanka which was gazetted by the President. Using a respected name of a chamber most likely without informing its chairman and the committee, a huge damage has been done to the said organisation by an individual who has probably links to the few unscrupulous service providers to stop anticompetitive practices being checked by the Government of Sri Lanka.
Industry sources said the most surprising factor is that the National Chamber of Commerce which had been a long standing member of the Sri Lanka Shippers’ Council (The Apex body for shippers) and have chaired the council from years 2010-2012 takes a sudden position to protect the interests of a few elements who are trying to manipulate market by distorting the import export full freight.
In fact when the industry went to the Supreme Court to stop such anticompetitive practices, the National Chamber of Commerce was one of the petitioners citing the unfairness of separation of freight into various components for export/import trade.
Sri Lanka Shippers’ Council Vice Chairman and the convenor of the Asian Shippers’ Council for South Asian region Sean Van Dort, when contacted expressed his shock and horror to the unprofessional manner in which statements have been made by an individual calling himself a representative of the NCCSL.
Van Dort went on to say that a few bad eggs of the service industry are using various local organisations and international organisations to tarnish the new rules, misinterpret the same and to damage the image of the country. These too are anti-nationalistic elements who at any given opportunity will work against the country to safeguard some dollars into their pockets. The Government must look into these elements in detail as they may be racketeering in various other forms to earn illegal money. Other industry sources said that these reforms bring in a best practice that has been over looked by most of the Asian countries and successive Sri Lankan governments.
In fact opposition politician Ravi Karunayake and Anoma Gamage have openly welcomed this reform.
Crux of the matter
Industry sources said the law has taken corrective steps against market manipulation and anti-competitive practices by some service providers which have had a serious effect on export competitiveness and also to stop unlawful foreign exchange drain out from the country and duty evasion along with burdening the domestic consumers and manufacturers through surcharges. They said that the Government has not prohibited any charge, but made such charges accountable to contracting parties. That is the crux of the matter.
The law only ensures that a party contracting for freight transport has to bear full freight including all surcharges, THC from the point of acceptance to point of delivery; this can be collected either from the buyer or the seller who negotiates with the carrier or the service provider who enters into such legal contract.
Due diligence
NCCSL, shipping committee (if true) should have done its due diligence prior to advising on how to do business on avoiding government duties along with carrots and cartels to the rest of the industry! It is unfortunate that such a committee is not aware that globally every Shippers’ Council is against separate THC, including where it started in Europe. Sri Lanka has played a major role in the Asian Shippers’ Council, where 16 member countries of Asia representing cargo owners and more than 50% of world trade, have flatly rejected unbundling of freight charges to avoid market forces determining the best freight rates up to the delivery point from the pickup point. THC was the starting point in many countries that started unbundling of freight and now various service providers at their will add charges on an ad hoc basis from non-contracting parties since no body checked on them and their anti-competitive practice, with the government law genuine service providers will prevail, sources said.
Joint Apparel Association Forum (JAAF) too expressed disbelief, as the article suggested that its members are affected and that they should get into cartels to solve issues. JAAF believes in open market competition and does not protect anti-competitive practices externally or within. “We have strategy and that it to make this country among the first ten nations of the world in the business of apparel manufacturing. We believe through expanding trading activity all of us including shipping lines, logistics providers, ports and the country will benefit. We do not appreciate hidden charges and hidden agendas to make our exports uncompetitive. We only request financial dealings to be done with contracting parties,” JAAF said.
The National Chamber of Commerce of Sri Lanka which represents exporters and importers and is a chamber that expresses national interest at large has been used by an unnamed source to tarnish its image. Industry observers said that the public of this country who are interested of this topic should follow carefully to get a proper understanding of what has been going on to which the trading community had requested redress to put a process in place that can be justified to the rest of the world.
The local industrialists too believe that this anticompetitive practice have been slowly embedded to show as an international practice and to confuse governments especially in Asia, Africa and Latin America. They said that breaking up actual freight rate is a clear tactic to avoid market driven full rates being established according to economic theory of supply/demand.
Industry sources said they hope that the main committee of the NCCSL will look into this article and will take appropriate action to correct the position which has been abused by an individual and corrupting the chamber’s name.
