The freight forwarding industry andshippers in Sri Lanka have expressedserious concerns about the attemptsby the Director of Merchant Shipping,(DMS) to regulate the industry usinglow standards and hastily drafted legislation.
Freight forwarders in Sri Lanka,whose representative body, the SriLanka Freight Forwarders Association(SLFFA) completed 25 years ofexistence this year, have played aninfluential role in making Sri Lankaa leading logistics and freight hub inSouth Asia.
Unlike shipping agents, which remita major share of their earnings abroad,much of the foreign exchange earnedby international freight forwardersremains within the country. Hencetheir contribution to the country’sGDP growth over the years has beennoteworthy.
Freight forwarding being an internationalbusiness dealing withinternational logistics firms as well aslarge multinational companies who arebuyers and sellers engaged in internationaltrade, the industry in Sri Lankahas traditionally been benchmarkingitself with the established internationalfreight forwarding industries abroad.
In setting such standards SLFFA, hasbeen playing a pivotal role as the mainbody among the freight forwarders inSri Lanka. The standards that SLFFAhas set for its members are on parwith that of leading freight forwarderassociations in the world.
With these standards in place, SLFFAqueried whether there would be a needfor any more regulating of this industry.The trade body noted that this wasmainly due to the fact that there aremore non-SLFFA member forwardersand fly-by-night operators in Sri Lanka,who are operating without adhering toany standards and charging arbitraryamounts for their services, usuallyfrom gullible consignees who bringimport cargo.
The authorities may have basicallylowered the standards to such a lowlevel only with the intention of bringingthese errant forwarders to the "fold".
For example, any forwarder who hasa minimum capital of LKR 250,000 andwho is able to provide a bank guaranteefor a value of LKR 500,000 could nowregister as a freight forwarder with DMSand obtain a licence to operate. Thishas and will allow any trader who haslimited knowledge of the business toget a freight forwarding licence as it is not compulsory to adhere to standardssuch as having an experienced seniormember in the management teamunder the new regulations.
SLFFA said that another irony is that,under the new directive of the DMS,shipping lines (carriers) or airlines,which have limited business operations,could engage in freight forwardingwithout registering and obtaining a licence.
"This is unfair and goes against theethics and norms of creating a levelplaying field. Furthermore, it is anunfair intrusion into a legitimate business",says one leading internationalfreight forwarder. "It seems that someoneacted in haste to get these regulationsgazetted without even studyingthe consequences of doing it provingonce again that "fools rush in whereangels fear to tread" he quipped.