LOGISTICS SECTOR
Compiled by Yamini Sequeira
HOW TO REINVENT THE WHEEL
Mahesh Kurukulasuriya moots an inter-modal offering for logistics firms
Q: How has the logistics sector progressed in the last five years?
A: Sri Lanka has experienced major infrastructure development across the country.
The Hambantota and Colombo ports have developed deep-water terminals that are deemed to be best in class in the subcontinent. Development of roads and highways has reduced transport costs.
And new warehouses and distribution facilities have been built, complemented by state-of-the-art warehouse management technology by the private sector countrywide, as well as free zone activities.
However, Sri Lanka lags behind in the ease of doing business due to bureaucracy and slow adoption of digital technologies, making it uncompetitive when benchmarked against regional hubs.
Q: What are the policy roadblocks to achieve greater sector milestones?
A: The lack of a defined national logistics policy is the main hindrance. An integrated digital platform is needed to ease bureaucracy and manual transactions to facilitate the export-import trade.
Sri Lanka must modernise customs processes, and implement policies that enable a single window facility for trade, cargo clearance, payments, transportation and regulatory documentation submissions.
Locally, the lack of coordination and avoidance of intermediary wastage – together with a dearth of investment in infrastructure, and road and rail networks – further increases the burden of the sector.
Q: How much innovation do you observe in the logistics sector?
A: With the concept of Industry 4.0 giving birth to Logistics 4.0, the global logistics sector is moving towards the automation of ports, warehouse and transport management, and ships.
The global logistics sector has moved into green sustainable technologies and is edging towards concepts such as 3D printing. As for local innovation, Sri Lanka lags behind; and unless it addresses this now, will move further away in terms of competitiveness.
Q: What is the potential for the export sector to grow and expand logistics?
A: It is substantial especially in the post-COVID context with countries looking to shift away from single sourcing locations.
Sri Lanka’s maritime hub (especially containerised transportation) is considered one of the best. In the last five years, the World Shipping Council consecutively ranked the Colombo Port amongst the top 50 world container ports and Sri Lanka is known for having the 11th best connected port in global shipping.
But in terms of expansion, multimodal transport in the country – especially developing a road and rail network connecting airports, ports and export processing zones (EPZs) – would be a catalyst in driving the export and logistics sectors.
Further investment in entrepot and infrastructure will support the availability of cheap and efficient methods of transporting goods, and improve connectivity.
Q: And what opportunities will the Port City (Colombo International Financial City a.k.a. CIFC) bring to the logistics sector?
A: It will open up opportunities in the logistics sector – e.g. yacht and cruise tourism related logistics, and domestic distribution activities for international brands that might want access to growing affluent international populations establishing themselves within the Port City.
Construction of the Port Access Elevated Highway from the New Kelani Bridge to CIFC will ensure transport costs are reduced for companies in EPZs. With the Kelani Bridge directly linked to the Colombo-Katunayake Expressway, connecting with the Port Access Road will facilitate travel to the outskirts of Colombo.
Q: How about the notion of positioning Sri Lanka as a logistics hub?
A: Today, becoming a logistics hub has more to do with the ease of doing business, and being competitive in benchmarking both in terms of cost and value generation opportunities, than mere geographical location.
Secondly, logistics hubs require strong manufacturing and trading based industries being accessible. This is the challenge facing Sri Lanka.
With the Colombo Port already capturing transhipment traffic, Sri Lanka should continue building on this.
Increasing the number of berths with deep enough draughts to handle ultra-large container vessels would push it to fully optimise capacity in terms of yard space. In this regard, fast tracking the East Container Terminal commissioning would be key.
Q: How has the pandemic affected the logistics sector?
A: The outbreak restricted international trade, and quarantine measures reduced consumption, introduced import restrictions and brought global trade to a standstill.
As regulatory bodies imposed port lockdowns, restricted members on boarding vessels and embarkation or disembarkation, the ability to continue logistics services and freight operations was directly hampered.
The logistics sector will recover fast but it has to operate in a new environment by maintaining sustainable growth, re-strategising and realigning to new global trends.
For instance, traditionally B2B companies are moving to B2C, thereby disrupting the supply chain. It is time logistics companies reassess their productivity and commodity mix, and consider an inter-modal offering.
