Daily News Blog

Is Colombo Port congestion easing, a respite to shippers’ agony?

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he long line of containers awaiting clearance from the Colombo Port and known as ‘container congestion’ is finally over now. This is a relief for the trade.

What is the assurance that it will not build up again. Ground level information is that the queues may build up if proper attention is not drawn to the root cause and delays will emerge once again. Greyline Yards GL1 and GL2 are slowly saturating and soon will clog up.

Going back to the fundamentals, the import-export trade in a country is a part of the supply value chain and we as a country aspiring for international status are partners of a Global Value Chain (GVC), supplying high-end products and food stuff to western and other countries and also the US markets.

They consider Sri Lanka as partners of the GVC. We have to as a country keep up to the expectations of the global community.

Significant hindrance

Inefficiencies and inadequate focus on trade facilitation remain a significant hindrance to development. For example, the Sri Lanka Port sector and Customs Laws and processors are lagging far behind global standards. They cannot even be compared to with the regional or neighbouring port operating countries such as India, Pakistan and Nepal.

This important sector can lower our import and export costs to be competitive with our trading partners internationally and also help lower the cost of living within the country, boosting greater consumer product satisfaction and sustaining consumer welfare at lower buying power levels.

Enhancing trade facilitation, streamlining Customs processors and incorporating advanced technologies are an immediate requirement. And the long-time suggested pre- clearance systems for import cargo, reducing delays and improving reliability.

It was reported that the business community which has international trade connections have lamented that while on the one hand, they are badly hit by raw material delays and processing for export and on top of that, missing the scheduled Colombo port call, ships with containers lying on trucks awaiting Customs clearance.

The manufacturing sector is struggling with the delay of material and this overall situation threatens Colombo’s status as an international and transshipment hub. Import/export being the backbone of a developing economy it is not the best of situations for the country to be in.

Missed shipping opportunities

Exporters have faced serious setbacks with imported inputs not being cleared and delivered on time and missed shipping opportunities. Delays have brought in increased charges – demurrage and port detention charges and other wharf side costs increasing manufacturing costs unexpectedly, threatening the competitive pricing to the global market. At present overseas buyers are shrugging off price increases.

The confidence of foreign buyers in Sri Lanka’s exporters and its export commodities will erode if the disruptions occur time and again.

The unpredictable exchange rate fluctuations and the increasing costs are not helping export pricing at this stage.

Freight rates, along with additional costs of freight forwarders and shipping lines are on the increase. Uncertainties of Maritime routes, the Middle East and the Gulf and Suez Canal crisis add up to diminutive opportunities, almost an impossibility for new SMEs to penetrate markets abroad.

Urgent and corrective action that should be taken into consideration are:

Enhance trade facilitation

Introducing fast track lines is the answer to simplifying procedure and expediting decision-making of the Customs. Streamlining Customs processors and adopting the use of advanced tecnology, pre-clearance facilities and post data management are paramount.

Implementation of scanning–screening and release or inspect

Use existing data and intelligence information

The use of the Green Channel for low-risk containers from companies that have a good track record and several other measures should be utilised to speed up clearing.

Clean-up and strengthen the Green Channel facility

The Risk Management Unit (RMU) division of the Customs has extensive data on the companies registered with them. So much so that they have the names and other sensitive information of company directors that must be declared and validated by registration and other records by the Grama Sevaka of the area and premises and office location records from the local authorities.

Use this data to identify low risk cargo and expand the exemption facility along with the green channel facility to overcome double screening.

Arrive at a solution of the complication regarding the HS codes in the system, which are subject to additional Govt. agency approvals. The Sri Lanka Standards Institution(SLSI) approval is to be obtained in advance and if it is approved by the SLSI, the Customs’ Asycuda system selects the particular HS code for RCT examination.

The Customs screening unit can base their findings on the SLSI prior approval, releasing containers instead of further directing them to the RCT for Customs examination. All these can be based on intelligence and prior action-data records.

Expand risk management and speedy clearance committee

As suggested by the Associations to streamline the approval process. With the committee that can be set up with representation from the associated agencies and related public and reputed organisations.

The recent distressing event of a large number of containers released marked ‘Red alert’ would not have happened.

Basic structure improvement

1. Additional container yard storage capacity – The container yard that was urgently constructed last week as per the TV news to be in operation fast. Also identify and use a container yard close to the Colombo Port to ease off space within the Port yard and move the congestion out of the Port and reduce the constraints on core port functions.

2. Skilled officer requirement – Recall experienced retired Customs officers to handle and position them at Customs cadre shortage points and supplement operational efficiency.

3. Digitise operations – The long-awaited end-to-end digitalisation of Customs document submittance and processing risk management systems and approvals needed to manage delays and enhance transparency.

4. The next batch of approvals for – Additional Authorised Economic Operators (AEO) and Customs Economic Operators (CEO)

Permitting low and high-risk cargo to be screened and avoid the costly and time-consuming excessive inspections.

24/7 operations of scanning and screening systems

Whenever required’ the full facility being available to streamline container processing.

Obtaining the support of other approval agencies such as the SLSI, Food Control and Inspection Dept, Plant Protection and Animal and Pest Control Quarantine units to expedite the process.

The work of these officers should be continuously available during working hours including any other Government officers required to fast- track the clearing of containers. There could be shifts to cover the 24-hour requirement to clear the backlog.

Accountability and transparency

Introduce a structured reporting system and framework to monitor and implement. The key word is accountability and the relevant parties to be held responsible without the blame game to continue when lapses and mistakes occur due to errors in decision-making.

Ad-hoc and unproductive measures introduced by the Customs and other authorities to increase revenue targets which was later found to be baseless.

Long-term strategies

Promote investment in the following Sectors-

Develop modernised and digitalised logistics centres to international standards and incorporate possibilities to accept a mature level of operations and inculcate attitudinal changes and best practices.

At many fora it was said that IT technology in Sri Lanka was highly developed and that we had professionals capable of supporting the digitalisation program. At many discussions it was said that our experienced expertise in the Customs Department was called upon to source Think Tanks of some of the neighbouring countries.

Also to assist in Customs modernisation drives and they have set up operations. Research on the National Single Window (NSW) concept to be completed and implemented. There is a project office that has been set up to handle this and once the platform is launched the functions will greatly move towards trade facilitation eliminating most of the deficiencies.

Existing laws will have to be incorporated for the NSW to be legalised and all supporting Government authorities must be in line with the operation and the Customs Department to be the active shareholder and facilitator.

There has to be a serious discussion and concern and the will to set up the NSW. There seems to be no other solution to the ongoing and recurring problems faced by the community.

Simplifying duty structure – Move from the multi-layer import duty and the fiscal and monetary levy’s which is complicated and cumbersome, making room for malpractice and miscalculation of funds. All this can be simplified in keeping with the Government revenue requirement as advised by the International Monetary Fund (IMF). Investment in the Colombo Port, roads, internal and external warehousing and storage yards and inspection facilities are vital.

The desire to keep core port operation within the Port premises and shift the secondary operation outside of the periphery to move any contingencies and delays outside the Port area.

Safety of the Port yard storage facilities and safety protocols – the recent fire in one of the containers lying in the yard is a case in point. The disastrous chemical fire on board the unfortunate cargo carrying dangerous goods, which was invited into the port by improper DG procedure.

The damage to the larger – extent port basin and the marine and sea life massive destruction still not being assessed and the damage claim awarded. Sea coast fisheries and livelihood disruptions, with no valued compensation being given.

Roundtable approach

As Associations working together and the pressure groups in the community, it has been advocated at all times to have a close dialogue with all organisations with a roundtable work approach. The Principle of the ‘three C’s’ associated with conflict resolution or decision-making are – ‘Communication’, ’Collaboration’ and ‘Compromise’; where communication involves open dialogue, working together ,collaboration means to find a solution and compromise where each party making concessions to reach a common agreement focusing on the paramount cause of national interest.

The Chairman of the Sri Lanka Ports Authority can play a lead role in arranging all the stakeholders and Port users with the Customs Directorate or senior officers at the round table meeting, to analyse and report all sector functions that help in the smooth operation of the Port and import /export and Transshipment functions. Take a look at the analytical approach based on open-ended and scaling questions that can be used as a model for solution focus:

• When was the last time that a container congestion of this nature experienced in the Port of Colombo?

• What was there at that time causing the congestion and the delays in movement?

• What were the resources that were or the resources that were not there at that time?

• How were the resources critically used in the planning and managing the situation then?

• How was the crisis averted or controlled, and normalcy restored?

• What was the top Management stand, and the compromises arrived?

• What was the final plan activated?

• Success story.

Finalising this report with utmost co-operation could achieve a successful ending and never to see a repeat crisis of this in the future.

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