17 October 2016 12:00 am
We refer to the articles that appeared recently in the press wherein it stated that shipping lines and service providers have failed to fall in line with the international practices.
This is the exact point that we require attention. Currently the logistics service providers including the NVOCCs (non-vessel operating common carriers) and shipping lines are prevented from exercising international practices due to a section of the Extraordinary Gazette notification No. 1842/16 dated Friday, December 27, 2013.
This indeed is detrimental to the image of the country and hinders the development of shipping and logistics as well as the import freight market in Sri Lanka.
The Gazette Notice was encouraged by parties with vested interests and the anomaly requires to be corrected for the betterment of the shipping industry in Sri Lanka.
The government must not be allowed to be misled with wrong interpretation of Incoterms and in fact, the examples drawn from the USA trade and transshipment of containers via Colombo are testimony to the prevalence of market forces, which are in no way guided by regulatory controls.
Incoterms, as have always been, underlined by International Chamber of Commerce, deal with the relations between sellers and buyers under the contract of sale and carriers are not a party to it; most importantly, the market forces should be allowed to come into play for any trade and thus overregulated restrictions against international practices require immediate correction. When the terminal handling charges (THC) issue was brought up before the Supreme Court in 2007, the then Chief Justice directed the parties in question to resolve the issue through mediation and Director General of Merchant Shipping was appointed to chair a committee comprising the stakeholders. The Mediation Committee did find a solution but the parties with vested interests ignored the recommendations of the Mediation Committee and politicized the issue thus bringing Sri Lanka into disrepute among the international and regional carriers and logistics service providers worldwide.
Nevertheless, it is a well-known fact that 70 percent of the total Sri Lankan exports prior to the introduction of restriction/prohibition were free of collection of the THC. Therefore, it is no longer the intention of the service providers to hamper the competitiveness of the Sri Lankan exports. But the unfair regulatory controls to completely prohibit the service providers from exercising international practices including the application of the THC on imports and issuance of bills of ladings as the service providers deem fit, have caused grave harm to the shipping and logistics industry as well as the aspirations of making Colombo a maritime hub.
The regional NVOCC operators who contribute 30 percent of the regional throughput of volume via Colombo, have also sent warning signals to Sri Lanka that Colombo is an undesirable destination to do shipping and logistics businesses in view of prohibition of THC recoveries in Sri Lanka, particularly for their import land-based costs, a forced act of control against international practices and norms.