SRI LANKA FREIGHT FORWARDERS ASSOCIATION COUNTRY REPORT For 35 th Executive Council Meeting of The Federation of Asia Pacific Air-cargo Associations in Tokyo, Japan 24 th 26 th April 2008 SRI LANKA FREIGHT FORWARDERS ASSOCIATION
REPORT OF THE EXECUTIVE COMMITTEE FOR THE YEAR 2007 / 2008 CHAIRMAN : Mr. Niral Kadawatharatchie VICE CHAIRMAN : Mr. Ruwan Waidyaratne TREASURER : Mr. Prasansa Rodrigo IMMEDIATE PAST CHAIRMAN : Mr. Rohantha Peiris ADVISORY COUNCIL : Mr. Sunil Malawana Mr. Romesh David Mr. Sumith Guruge Mr. Charles Wijesundera Mr. Diren Hallock Mr. Hanif Yusoof EXECUTIVE COMMITTEE Dart Express Lanka (Pvt) Ltd Expolanka Freight Ltd Freight Systems Logistics Lanka (Pvt) Ltd Hemas International Freight (Pvt) Ltd Mack International Freight (Pvt) Ltd Marine Transport Services (Pvt) Ltd Scanwell Logistics Colombo (Pvt) Ltd SECRETARIAT The Ceylon Chamber of Commerce 50, Nawam Mawatha Colombo 02. 2
INTRODUCTION The Sri Lanka Freight Forwarders Association was established in 1981 with the objective of bringing all Freight Forwarders under one umbrella, and with a view of institutionalizing and professionalizing the trade. Today the Government, relevant Government agencies and the trade have recognized the SLFFA as the Apex body representing the industry. The founder Chairman of SLFFA was Mr. S.S. Kumar of M/s. Aitken Spence Ltd. SLFFA currently has 93 leading Freight Forwarding Companies in its membership. SLFFA is a member of the regional freight forwarding body The Federation of Asia Pacific Air cargo Associations (FAPAA) and the International Freight Forwarding body FIATA. The Sri Lanka Freight Forwarders Association work towards maximizing the benefits to the freight forwarding industry by exploiting to the maximum the potential of Sri Lanka's strategic geographical location. It has identified the need for greater investment for the development of Air and Sea freight facilities, infrastructure and in the development of human resources to sustain the fruition of Sri Lanka becoming the hub port in the region. Towards this, SLFFA has played a participatory role in developing a comprehensive shipping policy for Sri Lanka and in formulating a National Civil Aviation Development Plan. The Association is mindful of the developments taking place in the international freight forwarding arena and tries to keep the Sri Lankan freight forwarding industry abreast with the rest of the world. 3
STATISTICS AIR FREIGHT Growth in Exports/ Imports/ Transshipments Jan-Jul 06 /07 Growth -5% Tons 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 49,693 43,980 19,857 19,203 ' 2007' Tons 14,800 14,600 14,400 14,200 14,000 13,800 14,689 14,194 ' 2007' Transshipments ( 3% growth) Imports (-3% growth) Exports (-11% growth) AIR FREIGHT EXPORTS (TONS) AIR FREIGHT Growth in Imports / Exports/Trans-Shipment Jan Jul 06 / 07 AIR FREIGHT IMPORTS (TONS) 3500 3250 3000 2750 2500 2250 2764 2868 2606 2466 3225 2790 2630 2655 2479 9000 8000 7000 6000 5000 4000 3000 2532 2582 2929 TRANS-SHIPMENTS 2989 (TONS) 2000 1000 3500 0 3250 7174 6484 6984 5985 8275 73796885 6767 6720 5849 6365 6888 5969 5949 JAN 2007 FEB MAR APR MAY JUN JUL 2007 2000 1750 3000 2750 JAN FEB MAR APR MAY JUN 2500 JUL 2352 2250 2164 2280 2237 2029 2048 2106 2096 2000 2025 2014 1909 1750 1807 1810 JAN FEB MAR APR MAY JUN JUL 2007 4
INDUSTRY AFFAIRS Freight Forwarders Licensing Regulations Following the Court of Appeal s ruling favouring SLFFA by declaring that the Regulations for Licensing of Freight Forwarder and NVOCC Operators submitted by the Director General of Merchant Shipping of the Ministry of Ports & Aviation and gazetted by the Cabinet, was illegal and ordering that it be quashed, the Association has commenced fresh discussions with the Director General of Merchant Shipping in order to draft new regulations prior to implementation of the proposed Freight Forwarders Licensing Act. The Association emphasized the importance that proper regulations was required to keep inline with the international norms and standards set by FIATA, which is the world governing body of the freight forwarders; and logistics providers. It is understood by a majority involved in the industry that regulations are needed to stop dilution of the industry and to avoid deterioration of the quality of services provided. Stuffing of MCC Cargo at the Port In October 2007 the Sri Lanka Customs implemented a regulation where MCC Cargo (Multi- Country Consolidation) had to be stuffed within the Port premises and all local cargo had to be brought into the Port for de-stuffing and consolidation. Customs had previously given permission to rework the MCC cargo outside port premises. The re-working operations were done at inland container depot (ICD) managed by private companies. In the meantime Sri Lanka Customs abruptly implemented a regulation where MCC cargo could not be taken to the private ICDs for re-working. AS a result of this all MCC operations was severely hampered and smooth flow of cargo was disrupted. SLFFA, on behalf of its members, expressed concern and stated that due to extensive queues and various other difficulties in bringing in local cargo into the Port for stuffing purposes, the freight forwarders were faced with numerous setbacks, impediments and severe delays in shipments. Hence, SLFFA made representation to all the relevant government officials for their assistance and intervention in this matter. Following the representations made by SLFFA, a separate warehouse was arranged at a location near the premises of the Colombo Port. However, the total operation had not returned to normalcy and SLFFA continues to pressurize the Customs and Government authorities to bring back the old facilities. CASS IN SRI LANKA IATA has been having a dialogue with the national carrier Sri Lankan airlines as well as other on line carriers to launch CASS operations in Sri Lanka. IATA has had discussion with SLFFA as well in this regard. Mixed responses are being received on this aspect at the moment especially from the carriers as they themselves are not certain how CASS should be implemented in Sri Lanka. 5
SLFFA has had a very good relationship with IATA so far but have not yet been able to agree on the basis of implementing CASS in Sri Lanka. SLFFA has requested IATA to enforce greater discipline in the industry as far as the airline members are concerned and stressed that IATA could use their infrastructure and expertise to set up better standards and achieve a benchmark before a very stringent payment system like CASS is introduced. This dialogue is being continued but there is no specific time frame agreed upon for implementation as the procedure suggested by IATA has not so far been completely acceptable to SLFFA. DEVELOPMENT OF THE AIR CARGO INDUSTRY The Association commends the Government initiatives in the development of the Airport and stresses the importance of implementing development plans, taking into consideration the future needs of the industry with the due consultation of relevant trade bodies and user groups. The Colombo Airport (Bandaranaike International Airport - BIA) is being transformed into a major Cargo Hub in the South Asian region. An additional cargo warehouse is currently under construction at the BIA and on completion would increase the annual handling capacity by at least 30,000 metric tones. SLFFA CARGO SERVICES LTD SLFFA Cargo Services Ltd, a commercial venture established by 26 members of the Association, operates an import cargo terminal at the Colombo International Airport. This is a unique operation managed by an independent management and Board and has shown an impressive performance since its inception in 1994. The gross turnover of the Company decreased to Rs. 95,696,849/- from the previous year of Rs. 97,330,166/-. This was due to a decrease of cargo weight delivered by over 1.2 million kgs. The number of Agents who transferred their cargo to SLFFA Cargo Services terminal during the 2007 financial period stands at 70. SLFFA Cargo Services Ltd has paid Srilankan Cargo a sum of Rs. 32.82 million as handling charges during the period under review compared to last year s payment of Rs. 32.78 million. SLFFA Cargo Services Ltd had a proud record of error free delivery since October 2003 and ensured its customers were provided with a fast and trouble free delivery service during the period under review. LIAISON WITH OTHER ORGANIZATIONS The Sri Lanka Freight Forwarders Association continued to work in close co-operation with international agencies, governmental and private sector organizations, and others responsible for and concerned with the freight forwarding industry. The Association continued its amiable relation with the Department of Civil Aviation; the Department of Inland Revenue; 6
the Department of Exchange Control; Airport and Aviation Services Ltd, the Sri Lanka Ports Authority, the Central Freight Bureau of Sri Lanka; the Sri Lanka Shippers Council; the Ceylon Chamber of Commerce; the Board of Airline Representatives; Sri Lanka Airline Cargo Association and the Sri Lanka Customs. The Association while being represented on the Sri Lanka Shippers Council, the apex body of the exporters and importers of Sri Lanka, worked very closely with the Shippers Council in settling numerous trade disputes among shippers and service providers. The Association received the fullest co-operation and support from these organizations and wishes to place on record its appreciation of the co-operation extended. 7