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ANNUAL REPORT & ACCOUNTS 2003/2004

Council

Mr. Ravindra Ratnapala
Chairman

Mr. Noel Priyatilleke
Vice Chairman

Mr. Rohan Masakorala
Immediate Past Chairman

HONARARY MEMBERS
Mr. S.S. Jayawickrama

OBSERVER
The International Chamber of Commerce

SECRETARY GENERAL
Mr. Prema Cooray

SECRETARIAT
The Ceylon Chamber of Commerce
50, Nawam Mawatha
Colombo 02
Telephone: 2422156
Fax: 2449352
Email: [email protected]

MEMBERSHIP

The Ceylon Chamber of Commerce

Mr. Lal Kodagoda
(Representative)

Mr. Ruwan Senanayake
(Alternate)

The Ceylon Chamber of Commerce

Mr. Clement Pereira Import Section
(Representative)

Mr. Mahesh Wijewardena
(Alternate)

The National Chamber of Commerce

Mr. S. Pushpanathan of Sri Lanka
(Representative)

Mr. Gihan Kuruppu
(Alternate)

Exporters’ Association of Sri Lanka

Mr. Jayanath Perera
(Representative)

Mr. M.F. Jiffry
(Alternate)

The National Chamber of Exporters of Sri Lanka

Mr. Rasa Weerasingham
(Representative)

Mr. Randolph Perera
(Alternate)

The Colombo Tea Traders’ Association

Mr. Ravindra Ratnapala
(Representative)

Mr. Manjula Agalawatte
(Alternate)

The Colombo Rubber Traders’ Association

Mr. Anura Edirisinghe
(Representative)

The Ceylon Coir Fibre Exporters’ Association

Mr. I Piyasena
(Representative)

Mr. Lasantha Wickramasekara
(Alternate)

The Sri Lanka Freight Forwarders’ Association

Mr. Niral Kadawatharatchie
(Representative)

Mr. S. Mohanadas
(Alternate)

The Sri Lanka Apparel Exporters’ Association

Mr. Noel Priyatilleke
(Representative)

Mr. Ajith Jayasekara
(Alternate)

Sri Lanka Fruits & Vegetable Producers, Processors & Exporters’ Association

Mr. M.A. Junaid
(Representative)

Mr. Ahamed Kabir
(Alternate)

Sri Lanka Association of Air Express Companies

Mr. Shyan Fernando
(Representative)

Sri Lanka Logistics Providers’ Association

Mr. Andre Fernando
(Representative)

Mr. Harith Jayasuriya
(Alternate)

Sri Lanka Coir & Allied Products Manufacturers Association

Mr. Shalinda Perera
(Representative)

Mr. Sarath Wickramaratne
(Alternate)

APEX Committee Export Processing Zone

Mr. Ananda Wijesuriya
(Representative)

OUR VISION

"To enhance the competitiveness of our members by abolishing hidden logistics costs."

OUR MISSION

We facilitate our customers to be more competitive in their Business Logistics; performance and cost, by the following;

  • Being the APEX Body, protect the interest of our customers and being a strong Advocate to the Government.
  • Ensuring cost effective strategies are developed and implemented in the logistics and value chain to make our members more competitive.
  • Facilitating greater efficiencies in logistics by reducing logistics barriers and simplifying trade.
  • Acting as the mediator in resolving conflicts amongst our customers (members).
  • Facilitating a level playing field by developing and promoting a code of conduct / ethics for our customers (members).
  • Establishing a centre for excellence for information sharing and to upgrade competencies of members to compete globally.
  • Leveraging regional and global partnerships and facilitating global best practices in logistics in Sri Lanka.

OUR DEFINITION OF LOGISTICS

Activities in the supply chain in the movement of goods from sourcing to delivery (desk to desk, door to door), which involves;

  • All types of freight
  • Border controls and regulatory authorities (customs, quarantine, chambers, ministries, embassies, etc.)

THE SRI LANKA SHIPPERS’ COUNCIL

The Sri Lanka Shippers’ Council was established in March 1966 to protect and promote the interests of shippers. It was the first National Shippers’ Council to be set up in Asia and was formed on a request made in 1965 by the local Committee of the Ceylon/Continental Conference, and a subsequent request made by the Director of Commerce in January 1966, to the Ceylon Chamber of Commerce. The Sri Lanka Shippers’ Council is the apex body that represents the interest of shippers.

Membership of the Council consists of Chambers of Commerce and Trade Associations, and fifteen such organisations are currently members of the Council and the Council represents more than 95% of the import/export trade. The Council derives its broad based representation and membership from these trade Associations. The Council has now opened its doors to individual companies as Associate Members so that companies in the import/export trade could have access to the Council's resources and expertise to resolve their shipping related problems.

The Sri Lanka Shippers’ Council is headed by an elected Chairman, assisted by a Vice-Chairman who is also elected by the constituent members.

The Ceylon Chamber of Commerce provides secretarial services to the Council and also acts as the Secretariat.

The Council actively promotes the Sri Lankan Government's vision of making the Colombo Port a competitive Maritime & Logistics Center in the Asian region, which would result in the generation of enhanced economic activity, employment and wealth. As such all Council activities have been planned and prepared to support this vision.

OFFICE BEARERS

At the Thirty Third Annual General Meeting held on 19th June 2003, Mr. Ravindra Ratnapala was re- elected Chairman of the Council and Mr. Noel Priyatillake was re- elected Vice-Chairman.

ACTIVITIES OF THE COUNCIL

The activities of the Council have been focused on issues faced by shippers on shipping and port related matters. The Council always performed a lead role in resolving problems and serve as the focal point where various shipping and port related matters are brought up and discussed. In addition, the Council actively advises the Government on matters relating to port and shipping whenever its advice is sought after.

Four (4) Action Committees headed by an Action Committee Chairman was appointed to look into the different aspects relating to the Council activities and report at the monthly meeting. They are namely: the Issues Sub Committee, Membership Sub Committee, Trade Complaints Sub Committee and the Finance Sub Committee.

A detailed description of the activities of the four action committees appears elsewhere in this report. However, in this section for your easy reference we give below the main topics covered in this report.

  • Terminal Handling Charge
  • Freight Rates & Surcharges
  • War Risk Surcharge
  • Maritime Security
  • Trade Complaints
  • Performance of the Port of Colombo
  • Electronic Data Interchange (EDI)
  • Seminars & Training Programs
  • Ceylon Shipping Corporation Ltd
  • Central Freight Bureau of SL
  • Shipping Development Fund
  • Federation of Asian Shippers’ Council (FASC)
  • Association of Shippers' Councils of Bangladesh, India, Pakistan & Sri Lanka (ASCOBIPS)
  • SLSC Website

ISSUES COMMITTEE

TERMINAL HANDLING CHARGE (THC)

THC was introduced in Sri Lanka in 1997 and since then the Council identified THC as a major issue, which needed to be resolved. The Council has taken up the position that this issue can only be resolved if both parties to the dispute (Shipping Lines/Shipping Agents and Shippers) have a mutual respect for each other’s views. The Council is of the view that both parties should work towards a win-win solution to resolve this long-standing issue.

The Council had recommended THC cost components be divided into ship based cost and land based costs. The Council had identified these costs and have proposed that ship based costs be included in the freight rate and the land based cost be paid directly to the port.

The results of the cost component study undertaken by the Council are as per table 1. It is clear from the data that certain cost elements included in the THC are not terminal based but instead ship-based costs. There is also an amount, which cannot be accounted, and this justifies our claim that there is a profit element when THC is recovered separately. It should be noted that discharging and loading cost was always a part of freight and was included in the all inclusive freight rate on both exports and imports up to 1st January 1997. Harbour Tonnage and Consolidation charge does not involve Terminal Cost.

TABLE 1 – COST COMPONENT OF THC
20FT (USD)40FT (USD)
For Discharging & Loading Containers on board81.00121.50
Harbour Tonnage8.0016.00
Movement from ship to marshalling yard or vice versa27.0041.00
Mounting / De - Mounting25.0038.00
Consolidation charge while container vessel "AT BERTH"
  • Handling Hatch Covers
  • Tally Charges for vessel operators
  • Charges for Plan Clerks Services
  • Planners & Duty officers Services
  • Provision of security
2.805.50
Un accounted/Hidden Profit4.206.00
TOTAL148.00228.00

*Source – Sri Lanka Ports Authority Tariff

Unfortunately as in the past the shipping lines and agents have refused to accept this suggestion and the dispute continues. The Council has pointed out that as long as THC is separated from the freight it is anti-competitive and goes against the principle of free market forces of supply and demand. From the data available to the Council, it is clear that it is to the advantage of the shipping lines to separate the THC from freight. Furthermore, there is a profit element when THC is recovered separately. This position is proved when comparing the figures in table 2 in respect to LCL shipments.

TABLE 2 – OVER RECOVER ON THC – LCL SHIPMEMENTS.
20FT CONTAINER (USD)40FT CONTAINER (USD)
Recovered on Imports12.00 x 25M330012.00 x 50M3600
Recovered on Exports10.00 x 25M325010.00 x 50M3500
Actual Payment to the Port148228
OVER RECOVERY
On Imports152 372
On Exports102272

* Source - SLSC research data

THC in Sri Lanka is the second highest in Asia, and our exports continue to be uncompetitive and consumers are at a disadvantage when it comes to imports. A comparison of the THC levels in Asia is presented in table 3. It also should be noted that other than in Sri Lanka, Indonesia and Philippines , the tariff for THC is published and payable in local currency.

TABLE 3 – THC IN ASIA
COUNTRY20FT CONTAINER (USD)40FT CONTAINER (USD)
Hong Kong265350
Taiwan167210
Indonesia150230
Sri Lanka148228
Dubai115170
Singapore107158
Japan100150
South Korea88119
Pakistan78117
Philippines7897
Malaysia75115
Thailand6595
India60N/A
Vietnam5786
China4565
Iran (Bandarabbas)4565
Bangladesh3055

* Source –Federation of Asean Shippers’ Councils

Despite the various assurances the Council received from successive governments, which have been in power during the past 5 years, that government would intervene to resolve the matter, it has not happened to date and the government authorities have failed to realise the gravity of the situation.

The Council wish to propose that the Government appoint an independent committee comprising of academics, judges, lawyers and other professionals to inquire into this matter and give a ruling. It is hoped that the Government will even at this late stage investigate this unfair practice without succumbing to the pressure of the shipping lines.

The Council was successful in preventing shipping lines from increasing the present THC by conducting press briefings, educational programmes and making the shippers and the public aware of this anti competitive practice.

We will continue to discuss this matter with government authorities to achieve an amicable solution by engaging in constructive deliberations. We will further pursue this issue at regional and international fora to bring about a favourable conclusion however long it may take.

FREIGHT RATES & SURCHARGES

The policy of the Council is to allow market forces to determine freight rates. Freight rates will vary among Shipping Lines depending on the service patterns, service levels and transit times. However, if a General Rate Increase (GRI) is required, the Council will only look in to it if the consultative procedure that is established between the Council and the Ceylon Association of Ships' Agents is followed.

During the year under review Shipping Lines announced many GRI’s without adhering to the consultative procedure. However, shipping lines were not successful in implementing these GRIs due to non-acceptance of these increases by the trade.

However, during the past two months we have seen an upward trend in freight rates in the major Far East, Europe and USA trade routes. The Council continues to monitor these increases.

In most instances Sri Lankan exporters continue to enjoy freight rates, which are much lower than the rates paid by other shippers’ in the region, due to Colombo being the last port of call for many of the shipping services operating in the Far East, Europe and USA. However, this is also a disadvantage as on some instances there have been space restrictions when export volumes were high in the Far East and space allocated to Colombo was drastically curtailed.

During the year under review, the lines announced many surcharges on account of Bunkering and Currency adjustments. In such instances, the Council always advised its members to always negotiate for all inclusive freight rates rather than accept surcharges over the freight rates even though surcharges are temporary.

WAR RISK SURCHARGE

Sri Lanka continues to be placed under held cover by the War Risk Rating Committee (WRRC) based in London and the Joint Cargo Committee of Lloyds. The Council on many instances has expressed its concern about this situation.

Taking into consideration the progressive positive developments in Sri Lanka resulting from the peace efforts and the ceasefire, at the request of the Council this issue was taken up by the Ministry of Foreign Affairs and the Sri Lankan High Commission in London with the

WRRC and Lloyds. The response of the WRRC and the Joint Cargo Committee of Lloyds had been that there was no valid reason to release Sri Lanka from the list of countries under Held Cover.

This effectively means that Sri Lanka is still considered a high risk country and that additional insurance premiums on vessel calling at Sri Lankan ports can be enforced at any time resulting in freight rates going up at short notice or ships bypassing Colombo.

MARITIME SECURITY

Recent world events have made it necessary that all those involved in maritime activities to address the issue of Maritime Security. Sri Lanka is fully aware of the importance of this having faced many security threats over the years, even before the events of September 11 of 2001.

A monthly report on maritime security is made available to members for discussion at monthly meetings. This report is based on new rules and regulations, which come into force worldwide from time to time.

Together with the Institute of Chartered Ship Brokers, the Council conducted an awareness programme on the 24 hours manifest rule implemented under the Container Security Initiative of the US Government. Mr. James Dozier, US Customs Attachι for India, Sri Lanka, Maldives, Nepal and Bhutan was the keynote speaker at this seminar.

Under the US Customs Container Security Initiative, the Colombo Port was selected as one of the Asian Ports to implement the CSI programme. The Sri Lanka Shippers' Council supported this initiative, but insisted that the cost incurred to implement this programme should be shared between Shippers, Shipping Lines and the various Government Institutions rather than being passed down only to the shippers. However, it is regrettable that no significant progress has been made to implement the CSI initiative, which in the long term is beneficial to all port users and not only to those shipping cargo to the United States.

The International Ship & Port Facility Security Code (ISPS) regulation will be in full implementation worldwide commencing 1st July 2004. We are pleased to record that the Director of Merchant Shipping of the Ministry of Ports & Aviation has confirmed that all Sri Lankan Ports will fully comply with the ISPS Code effective 14th June 2004. (Please see annexure 1)

MEMBERSHIP COMMITTEE

The membership of the Council is now open to All Trade Chambers and Associations engaged in Shipping and Port related activities as well as individual companies in the import/export trade. The membership committee is responsible for developing and increasing the membership of the Council.

The annual membership fee for Trade Associations/Chambers is Rs. 5000/-, while the membership fee for individual companies is Rs. 2000/-.

FINANCE COMMITTEE

The Finance Committee is responsible for raising funds to sustain the activities of the Council. The Ceylon Chamber of Commerce manage the Council funds on behalf of the Council

Under the Chairmanship of Mr. Manjula Agalawatte (representing the Colombo Tea Traders Association in the Council), the Second Sri Lanka Shippers' Council Dinner Dance was held on the 6th of September 2003 at the Colombo Hilton. Over 400 guests graced this occasion with two bands – "Gypsies" and "Antonette & Cross Section" providing music for the evening. The Funds generated by the Dance is utilized to fund various activities of the Council.

TRADE COMPLAINTS COMMITTEE

This Committee endeavours to resolve disputes that arise between Shippers, Freight Forwarders and Shipping Lines. Whenever such disputes are referred to this committee, members of the committee mediate between the parties to arrive at an amicable settlement. However it should be noted that this committee has no legal right, nor a mandate to pass judgement, therefore the Committee acts only as a mediator to resolve the disputes. Of the disputes, which were referred to the committee, some were successfully resolved, while others were not. In such situations the Council advised the disputing parties to take other necessary actions that they feel was appropriate.

REPRESENTATIONS

The Council closely associated with many Government and Private Sector Organizations and also with Trade Associations in order to improve the service levels of these organizations, which has brought about tremendous benefits to the Shippers. The Government too has recognized the efforts of the Council and has appointed members of the Council to serve on various Committees and Director Boards of public sector organizations.

SRI LANKA CUSTOMS

The Council has maintained a very close working relationship with the Sri Lanka Customs.

There were instances where shippers complained that service levels at the customs were not up to the required standard. Whenever such complaints were made, the Council took it up with the relevant divisions of the Customs and resolved them to the satisfaction of both parties.

PORT OF COLOMBO

The Colombo Port serves as Sri Lanka’s main port facilitating the movement of exports and imports. It is also the major transshipment port of South Asia. It is strategically located in the East – West trade route and is the last port of call for many of the shipping services. It has the capability to handle container vessels as well as conventional vessels.

The performance of the Colombo Port has been always of concern to the Council and over the years the Council has contributed in many ways to improve the performance of the port. It is with great pleasure that we note and record the excellent performance of the Colombo Port during the calendar year 2003 in respect of container throughput and container handling efficiencies.

Two main container terminals namely Jaya Container Terminal (Capacity 2.25 Million TEU's) and South Asia Gateway Terminal (Capacity 1 Million TEU's) handled all container movement at the Port in 2003. A third terminal Unity Container Terminal with a capacity of 350,000 TEU's will commence operation in June 2004. The total container handling capacity of the Port now stands at 3.6 Million TEU’s

The Port handled a total of 1,959,351 TEU’s in 2003. This is an increase of 11% over 2002.

A major expansion project for the Port has been planned and the feasibility studies have been completed. The Colombo South Harbour Development Project namely South Harbour consisting of 4 container terminals with a total container handling capacity of 9.6 Million containers is to be completed in 4 stages by the year 2025. The first stage of the project comprising the building of a new brake water terminal, and the first of four terminals is expected to be completed by 2009. The Council wish to point out that considering the current trends of the Global Maritime industry where the concept of “Mega” ports are envisaged, the Colombo South Harbour Project has to be placed on fast track to prevent the port from being relegated to a feeder port before long. In this context it is important to note that Colombo is situated between two of the world largest and busiest Ports namely Singapore and Dubai. The developments in these ports as well as the developments taking place in Indian, Malaysian and Middle Eastern ports will naturally have an effect on the long term unless the Colombo South Harbour Project is expedited.

However it should be noted that the delay in de-stuffing LCL cargo continues without any improvement whatsoever. In Singapore it takes only a maximum of two days for this process, while in Sri Lanka it goes up to two weeks in certain instances.

JAYA CONTAINER TERMINALS LTD (JCT LTD.)

JCT is the largest container terminal in South Asia with a total container handling capacity of 2.25 Million TEU's. JCT handled 1,334,915 TEU's in 2003 comprising of 371,346 domestic exports/imports, 910,484 transhipments and 53,085 re-stows. It achieved a 10.5% growth in the number of containers handled over 2002. The many productivity enhancement measures introduced during the year and the Terminal Service Agreements between major shipping lines and the terminal contributed towards this increase.

SOUTH ASIA GATEWAY TERMINALS LTD (SAGT)

The South Asia Gateway Terminal is the second largest container terminal within the Port of Colombo. This privatised container terminal is owned by a consortium led by P & 0 Ports. The major share holders are Evergreen of Taiwan, International Finance Corporation (IFC), Commonwealth Development Corporation (CDC), John Keels Holdings of Sri Lanka, Sri Lanka Ports Authority and P & O Nedlloyds, and is managed by P & O Ports. The terminal has a capacity to handle 1 million 20' ft TEU's per year.

SAGT handled 624,436 TEU’s in 2003 comprising of 217,865 domestic exports/imports, 376,985 transhipments and 29,586 re-stows. It achieved an 11.9% growth in the number of containers handled over 2002.

The Council maintained a close and cordial working relationship with SAGT during the period under review.

CEYLON SHIPPING CORPORATION LTD (CSC)

As an island nation it is of vital importance for Sri Lanka to have a national merchant shipping fleet that would fulfil the defence, trade and strategic needs of Sri Lanka rather than depending on foreign lines for such needs.

As the national line CSC continues to enjoy a high brand image particularly in the European trade sector. There is high value attached to the brand name "CSC"

The Council emphasized the need for a properly managed national line, as the absence of a properly run/managed national line has been felt by the shippers on many instances. The Government of Sri Lanka through the Public Enterprise Reforms Commission (PERC) made several proposals to revitalise CSC. The proposals and views submitted to PERC by the Council in this regard were as follows;

  • The Government should have shares in the National Line.
  • The Sri Lanka Government, Sri Lanka Private Sector, and the Sri Lanka Ports Authority should own at least 51% of shares of CSC.
  • The National Line should establish a training centre to educate those in the industry that would lead to overseas training and scholarships.
  • The National Line should make available ships for national security and national emergencies
  • The National Line should assist the local import & export trade without seeking large profit margins

The Public Enterprise Reforms Commission invited the Council for a discussion on 10th October 2003. The Council also discussed the Privatisation of CSC with the Chairman, Ceylon Chamber of Commerce on 19th December 2003.

CENTRAL FREIGHT BUREAU OF SRI LANKA (CFB)

The Sri Lanka Shippers' Council was instrumental in the formation of the Central Freight Bureau of Sri Lanka in 1973. However since the liberalization of shipping in 1990 the role of the CFB has changed, as it no longer serves the purpose for which it was originally established.

The Council is of the view that the CFB should be restructured to meet the challenges of today’s sea borne trade which has dramatically changed with the introduction of containers. Even in a liberalized market the CFB should continue its services to the shipping community taking into consideration the present day needs. The CFB should be managed by an experienced and knowledgeable management team, which should be drawn from the trade associations.

The Government having realized the role, which the CFB should play in the future appointed a committee in 2003 to review and make necessary amendments to the CFB Act of 1973. The Council Chairman served as a member of this committee and the Council submitted its proposals for consideration by the committee. It is however regrettable that the recommendations of this committee has not been published nor communicated to the authorities concerned.

Mr. Rohan De S. Wijeyeratne, Past Chairman of the Council is currently a member of the Board of Directors of the CFB.

MINISTRY OF PORT DEVELOPMENT & SHIPPING

The Council has maintained a close working relationship with the Ministry of Port Development and Shipping. The Ministry on many occasions has sought the views of the Council on various shipping related matters, where the Council readily responded to these requests.

The Council received a grant of Rs. 500,000/- from the Shipping Development Fund, which is administered by the Ministry towards meeting partial expenditure of the Council.

SHIPPING DEVELOPMENT FUND (SDF)

Even though the Council was a beneficiary from this fund during the years 2001, 2002 & 2003, it is regrettable that the billions of rupees lying in this fund has not been used for the purpose for which the SDF was originally established. The Council expressed its concern to the authorities and presented its views and submissions for making optimum use of the SDF to be included in the National Ports & Shipping Policy of Sri Lanka (1997), which was revised in 2002.

The Council urged the government to appoint a committee to properly administer the funds of SDF.

The funds for the SDF is contributed by the Ship's Agents from the freight income they derive from the freight payments collected from Shippers. Therefore, the Council wishes to emphasize that the funds of the SDF equally belongs to the Shippers of this country and that they too through the Council should participate in the management of the SDF.

ELECTRONIC DATA INTERCHANGE (EDI)

With the rapid development in information and communication technology exchange of information electronically between key participants involved in international and domestic trade, Electronic Data Interchange (EDI) has become the standard in a large number of countries worldwide. It has been proved that EDI not only significantly improves the efficiency of handling imports and exports at ports and airports as well as documentation with regulatory authorities but also eliminates unnecessary bureaucratic delays and fraudulent activities.

The Council has long stressed the need for electronic exchange of information via EDI, particularly between Exporters/Importers, the Sri Lanka Customs and the Ports Authority.

The Ministry of Commerce and Consumer Affairs of the Government of Sri Lanka in 2002 having realised the importance of the EDI system appointed an Advisory Council (AC) to implement the SRI LANKA AUTOMATED CARGO CLEARANCE SYSTEM (SLACCS). The Chairman of the Council served as a member of the AC along with members from other Trade Organisations, Sri Lanka Customs, Sri Lanka Ports Authority, Srilankan Airlines and South Asia Gateway Terminal. This committee has worked tirelessly to implement the

SLACCS but due to reasons beyond their control have so far failed to implement SLACCS, even though the service provider has assured that they are ready to implement the system.

The Council while supporting the move would like to re-iterate that there should be a cost benefit to the trade and that the system should be implemented without any further delay. The Council urge the authorities to take immediate steps to implement the SLACCS.

CEYLON ASSOCIATION OF SHIPS’ AGENTS (CASA)

The Council continued to have a close dialogue with CASA on issues that were affecting the trade, notable amongst them being;

  • Terminal Handling Charge
  • Freight Rates
  • Lack of shipping opportunities / vessel space from Colombo to Karachi
  • Movement of containers during the period where the Customs Officers launched Trade Union action.

SRI LANKA FREIGHT FORWARDERS’ ASSOCIATION (SLFFA)

The Council fully appreciates and recognizes the role played by the Freight Forwarders in moving shipments across the globe using multi-modal means of transport. If not for the services provided by Freight Forwarders, shippers would not have been able to reach certain inland destinations across the world to deliver cargo on time and safely.

SLFFA being a member of the Council has assisted the Council and its members in numerous ways to resolve disputes that have arisen between members.

It is now common knowledge that many organizations/individuals who are not professionally qualified to carry on the business of Freight Forwarding continues to do so and all such organizations/individuals are not members of SLFFA. The Council only recognizes members of SLFFA and strongly advises members only to use members of SLFFA as the complaints against non-SLFFA members for failure to deliver cargo and loss of cargo continues to increase.

The Council has proposed that a Registration/Licensing process be implemented for all Freight Forwarders with the Government so that only Registered/Licensed Freight Forwarders could carry out the business, thus preventing unauthorized companies/individuals engaging in this business.

The Director of Merchant Shipping is in the process of formulating a policy to register/license Freight Forwarders.

SRI LANKA LOGISTICS PROVIDERS ASSOCIATION (SLLPA)

The Council also recognizes the role played by the members of the Sri Lanka Logistics Providers Association (SLLPA). Logistics providers have been associated with moving shipments around the world. This has helped many overseas customers in the fashion/retail or general department stores business to seriously consider Sri Lanka as a reliable origin to source products.

The Council has proposed that a Registration/Licensing process be implemented also for logistics service providers, thus preventing unauthorized companies/individuals engaging in this business.

The Director of Merchant Shipping is also in the process of formulating a policy to register/license logistics service providers.

THE CEYLON CHAMBER OF COMMERCE

The Chairman of the Council is a member of the Committee of The Ceylon Chamber of Commerce, the oldest Chamber in Sri Lanka with a history of over 165 years. The Council members have had several meetings with the Chamber officials on policy matters relating to ports and shipping.

SEMINARS/TRAINING PROGRAMMES

The Council is highly focused on upgrading the knowledge of shippers on Port & Shipping related activities. The Council identified that the knowledge base of employees of member organisations as well as members should be enhanced if they are to perform their job functions effectively and efficiently.

Mr. Shalinda Perera a member of the Council who was nominated to follow the Institute of Chartered Ship Brokers – UK course covering the ICS Foundation Diploma, obtained the highest marks in Sri Lanka on the subject covering Port Agency. He has followed the study course to be admitted as a Member of the Institute of Chartered Ship Brokers, UK, and is currently awaiting the examination results. The Council sponsored his course fee.

Following the achievement of Mr. Perera, the Council allocated funds and sponsored three employees of member organisations who were selected among a number of applicants to follow the courses conducted by the Chartered Institute of Ship Brokers and the University of Colombo. Ms. Inoka Herath of David Peiris Motor Company & Mr. Sajith Fernando of Prym Newey Lanka (Pvt) Ltd followed the ICS Foundation Diploma, conducted by the ICS – UK, while Mr. Thushara Wasantha of ABC Freight Services (Pvt) Ltd followed the Certificate Course in Shipping & International Trade conducted by the University of Colombo. They are now awaiting their examination results.

A portion of the grant received from the Shipping Development Fund was allocated towards the sponsorship of these students.

BRAIN STORMING SESSION

All members of the Executive Committee serve in a Voluntarily Capacity, and come from different backgrounds representing different product/service sectors with different interests,

but unite under the banner of the Council. The Executive Committee was of the view that in such a situation the commitment of the members is vital to properly organise activities and equally distribute responsibilities. With this in mind, a Brain Storming Session amongst the members of the Council was held on 27th March 2004.

At this session a decision was made that the Council should have a Vision and a Mission and that members be encouraged to work towards achieving the Vision. Accordingly the Council obtained the services of a management consultancy company – Third Wave Consulting (Pvt) Ltd to conduct a workshop to establish a Vision for the Council. This workshop was held on 27th March 2004 at the Ceylon Chamber of Commerce and was attended by the Executive Committee of the Council. Having deliberated many ideas, the Council adopted the following as its Vision Statement;

“The Vision of the SLSC is to enhance competitiveness of its members by abolishing hidden logistics costs”.

FEDERATION OF ASEAN SHIPPERS’ COUNCILS (FASC)

The Twenty Sixth Annual General Meeting of the FASC was held in Beijing, China, from 19th to 21st October 2003. The China Shippers’ Association hosted the meeting. A team of five members from the Council attended this meeting. Representatives from China, Singapore, Malaysia, Philippines, Indonesia, Thailand, Hong Kong, Macau, Japan, Bangladesh, Korea, and Australia participated at this meeting.

The meeting covered a broad range of subjects including country reports which highlighted the accomplishments and activities of members, the THC charge and other surcharges, maritime safety and security, ocean freight market, EDI, Regulations on the use of Wood Packaging Material, IATA regulation 502 and the future direction of the FASC.

A Key highlight of the meeting was the issue on THC. The meeting received an update from the China Shippers’ Association in its ongoing struggle against the liner conferences over THC, which was implemented in China on 15th January 2002. The members are very concerned about the legitimacy of THC, as its introduction violated both traditional practices and the UN code of conduct for liner conferences. By adopting a unified approach in dealing with the liner conferences, all the delegates were confident that shippers would succeed in forcing the liner conferences to abolish the THC.

The meeting noted with dismay that increase of freight rates unilaterally imposed by shipping lines, and the ability of shipping lines to work together in imposing higher rates. Members endeavored to work through national and international agencies to remove the anti-trust immunity granted to shipping lines, to uphold the principles of free market practice and subject the shipping lines to the same rules as other businesses.

On the issue of Maritime Security, the meeting recognized the need for tighter security to prevent terrorist acts, and to support the measures adopted by governments and industry to ensure the integrity of ships and cargo. The meeting abhorred the way shipping lines had used this requirement in exploiting shippers through surcharges, which were imposed without consultation with shippers’.

The meeting also reaffirmed the need for dialogue and consultation among shippers to formulate common strategies in dealing with the many complex problems confronting shippers, by taking active participation in regional and international fora on trade and maritime transportation.

Delegates also agreed that a Global Shippers' Forum was the appropriate platform to address challenges through a unified approach to effect the necessary changes in the maritime industry. The next AGM with the theme "Global Shippers Forum” will be held in Singapore and the formation of an Asian Shippers' Council to integrate with Shippers’ Council of Europe, America and Africa is under consideration. The proposed organizational structure of the Asian Shippers’ Council is attached. It is hoped that this would finally lead to the Global Shippers’ Forum. Annexure 2 provides details of the proposed Asian Shippers’ Council.

Sri Lanka’s representation at this meeting comprised of Mr. Ravindra Ratnapala (Chairman), Mr. Noel Priyathilake (Vice Chairman), Mr. Jayanath Perera, Mr. Ruwan Senanayake and Mr Manjula Agalawatte. The Council wishes to record its appreciation to Freight Links International (Pvt) Ltd and Standrad Trading Company (Pvt) Ltd for bearing the expenditure in respect of the traveling of Mr. Ruwan Senanayake and Mr. Manjula Agalawatte.

ASSOCIATION OF SHIPPERS’ COUNCILS OF BANGLADESH, INDIA, PAKISTAN, SRILANKA (ASCOBIPS)

The Sri Lanka Shippers’ Council held the Chairmanship of ASCOBIPS and Bangladesh Shippers’ Council took over the Chairmanship at the 15th AGM held in Dhaka, Bangladesh from 20th – 21st May 2004. Representatives from Pakistan, Bangladesh and Sri Lanka attended the meeting. Mr. John Lu, Chairman, FASC attended as a special guest, while a representative from Bhutan attended as an observer.

After many years the activities of ASCOBIPS has now been revived. A permanent ASCOBIPS Secretariat was set up in Dhaka to co-ordinate the activities of ASCOBIPS members.

Issues facing the Shippers' in the region were discussed and notable amongst them were THC, Freight Rates, the Freight Forwarding Industry and Maritime Security. Mr. Ravindra Ratnapala, Chairman SLSC represented Sri Lanka in his capacity as Chairman, SLSC, as well as Chairman, ASCOBIPS.

WEB SITE

The Council website which was launched in 2001, was re-designed and re - launched. The website is regularly updated with trade related information and hosts value added services. The website address of the Council is www.shipperscouncil.lk

SECRETARIAT

The Ceylon Chamber of Commerce provides secretarial services to the Council. The infrastructure of the Chamber is readily available to the Council.

it has now been highlighted that the Secretariat should perform a vital role and the Council is considering other options available to make the Secretariat more dynamic and effective. One of the priorities of the new committee shall be to explore the task of establishing a Secretariat of their own.

ACCOUNTS

KPMG, Ford, Rhodes Thornton & Co, continued to audit the Council’s accounts during the period under review.

The Audited Statement of Accounts of the Council for the period 1st April 2003 to 31st March 2004 is annexed to this Report.

BY THE ORDER OF THE COUNCIL
Sgd
PREMA COORAY
SECRETARY-GENERAL
29th June 2004

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