MAC HOLDINGS
Q: How are supply chain and delivery times faring in the local context – and how are distribution channels evolving in the logistics sector?
A: The drastic volatility in supply chain elements resulting from the pandemic has led to a major imbalance in terms of demand and supply in the logistics sector.
Although demand has been constant since last year, the shortage in ocean and air freight capacity, equipment and local land transport has led to customers being denied appropriate services even with the price hikes.
This situation has also unsettled the entire process flow. The continuously expanding deficit has provided key suppliers with more bargaining power when it comes to maintaining very high yields, which leads to an increase in the prices of their products.
Some recent increases in the price of various consumer products in Sri Lanka are the result of these transport cost hikes.
Q: From a policy and regulatory standpoint, what is required to make the most of Sri Lanka’s location advantage?
A: We’re an island that has been greatly improving its ports and airports infrastructure.
Additionally, we need to look at an open sky policy for our airports. Sri Lanka’s airport infrastructure has not been used as much as we would like with minimal freighter carriers calling the airports.
In my view, we need to develop the island into a hub for all key supply chain service providers, which includes freight airlines.
One way of achieving this is fast tracking business to the Hambantota Industrial Zone. This move will naturally develop port infrastructure in the region, positioning it as an industrial port and bringing in bulk vessels. This in turn will boost GDP by bringing in much needed foreign exchange to the country.
Moreover, such a move would also cater to the need for freight carriers in both Colombo and Mattala.
Q: How has the logistics sector approached the adoption of new technologies and innovations in terms of enhancing distribution channels, in your assessment?
A: The adoption of technology in this part of the world has been relatively slow.
Resistance to change has been a major challenge in adopting new technologies to improve efficiencies across all channels. A majority in the logistics sector continues to be controlled by those who are either not well equipped or haven’t adjusted to the new technologies of the world.
As an example, I’m considered to be one of the younger leaders in this sector and I first saw a computer in 1993 – two years after I began working. This means that the first transformation emerged only after the millennial generation and those born thereafter.
From a business perspective, I believe that our sector has failed to innovate.
We prefer to be followers rather than leaders, which is why MAC Holdings was one of the few organisations to innovate and challenge the sector when it introduced final buyer quality check inspections at our container freight station (CFS) as early as 1997 – avoiding additional high costs and rejections at destinations – and barcode scanning.
All these operations are still carried out by only a handful of organisations in the country.
Q:And how would you describe competition in the sector?
A: MAC has managed to stay ahead of the competition by investing heavily in new technology. Having said that, this is in comparison to SMEs in the sector.
But when it comes to the MNCs, they are far ahead in terms of technology. We’re proud to say that we are a technology driven group with our own as well as outsourced systems. But considering the sector as a whole, the only way we can all mature is by being willing to invest and include new forms of technology in our frameworks.
Despite this, many local and regional players have managed to use new technologies even if it is limited to the transportation systems in their business models.
However, Sri Lanka isn’t sufficiently innovative for stakeholders to consider us as being a technologically driven origin. The supply chain sector must identify new ways to innovate beyond basic systemisation because this will become a mere commodity soon.
Where the shipping industry is concerned, we see vessel owners such as Maersk diversifying and entering new terrains, such as the freight and logistics businesses.
However, I am yet to see this happen the other way around – i.e. logistics and freight companies acquiring their own vessels and aircraft.
Q: Could you outline the latest trends in the logistics sector?
A: The pandemic has brought on a form of innovation with many companies now looking at ship and air charters to tackle the bottlenecks we face at the ports and airports. Here again, one must think of how the small and medium players will survive.
MAC too has been lucky in this sense as we procure our space well in advance through contracts. However, people who lack even that will most certainly not have the capacity to buy their own vessels.
Another innovation we have witnessed is e-commerce, which has gained traction among the community in Colombo.
One needs to look at developing this into an e-commerce and postal hub. Once again, we still see only a few local logistics companies making a mark in this arena, which is a concern as it has great potential.
