SRI LANKA FREIGHT FORWARDERS ASSOCIATION
31st Executive Council Meeting
The Federation of Asia Pacific Air-cargo Associations
23rd – 25th May 2004
SEATED: Left to Right – Mr. Chandrarathna D. Vithanage, Assistant Secretary General,
Ceylon Chamber of Commerce, Mr. Niral Kadawatharachchi, Treasurer,
Mr. Sunil Malawana, Chairman, Mr. S. Mohandas, Executive Committee
Member (Dart Express Lanka (Pvt) Ltd).
STANDING (Executive Committee): Left to Right – Mr. Lasantha Rodrigo (ATE Lanka
(Pvt)Ltd), Mr. Ruwan Waidyaratne (MIT Cargo (Pvt) Ltd), Mr. Giovanni
Goonetilleke (Scanwell Freight Express Colombo (Pvt) Ltd), Mr. Edward
Fernando (Hemas International Freight (Pvt) Ltd), Mr. Nilhan Mendis
(Maersk Logistics Lanka (Pvt) Ltd - until October 2003), Mr. Manik
Swaminathan (drh Logistics Lanka (Pvt) Ltd).
SRI LANKA FREIGHT FORWARDERS’ ASSOCIATION
CHAIRMAN : Mr. Sunil Malawana
VICE CHAIRMAN : Mr. K.R.T. Peiris
TREASURER : Mr. Niral Kadawatharachchi
IMMEDIATE PAST CHAIRMAN : Mr. Romesh David
ADVISORY COUNCIL : Mr. Sumith Guruge
Mr. Charles Wijesundera
Mr. Diren R. Hallock
Mr. Hanif Yusoof
ATE Lanka (Pvt) Ltd
Dart Express Lanka (Pvt) Ltd
drh Logistics Lanka (Pvt) Ltd
Hemas International Freight (Pvt) Ltd
Maersk Logistics Lanka (Pvt) Ltd (until October 2003)
MIT Cargo (Pvt) Ltd
Scanwell Freight Express Colombo (Pvt) Ltd
The Ceylon Chamber of Commerce
50, Nawam Mawatha
DEVELOPMENT OF THE AIR CARGO INDUSTRY
The external sector in 2003 gathered momentum from the recovery seen in 2002. International
trade expanded. The external sector responded positively to favourable developments in both the
global economy and the domestic economy. The global economy grew at a rate of 3.9 percent
higher than the earlier expected growth rate of 3.2 percent, while Sri Lanka’s major export
market, the US, performed better, growing at 3.1 percent. Exports in US dollar terms increased
by 18 percent during the first half of 2003 in contrast to a decline of 17 percent during the first
half of 2002. Compared with an 11 percent decline in the first half of 2002, imports increased by
7 percent during the first half of 2003 in response to several factors including increased derived
demand for intermediate goods, domestic economic recovery, which raised the demand for
investments and consumer goods and higher prices of petroleum and other major commodities.
With the expected growth in the global economy particularly, USA and European countries,
annual export earnings are expected to increase by 11 percent, while annual expenditure on
imports is projected to increase by 13 percent in 2003.
The Services sector continued as the main driving force in the economic recovery. The transport
sector, one of the largest sectors in the economy, grew by 3.8 percent as against 3.6 percent in
the previous year. This increase was the outcome of the combined performance of passenger and
freight transport. In comparison to the negative growth of 5.7 percent in passenger kilometers
flown by Sri Lankan Airlines during 2002, an increase of 12.1 percent was recorded in 2003.
STATISTICS ON AIR AND OCEAN FREIGHT
Growth in Imports / Exports
Jan Dec ‘2003
2,000 Growth in Exports/Imports/Transshipments
Jan to Nov ‘2003
During 2003, the average freight rates for many destinations in respect of different commodities
showed mixed changes. The basic freight rates to major destinations, i.e. USA and European
countries, showed increases despite the removal of the war risk surcharge. The general freight
rates to UK, North Continent (Germany, France, Austria, Denmark and the Netherlands),
Scandinavians and the Baltic, Mediterranean Ports, USA, Canadian and Mexican ports increased
during the year. However, rates varied within a wide range with respect to major exports.
Freight rates were inclusive of one or more of surcharges, such as terminal handling charges,
bunker adjustment factor, Suez Canal transit fee, export bill of lading fee, and peak season
surcharge. The Cargo Declaration Data Charge (CDDC) came in to effect subsequent to the
security initiative taken by US government as a result of September 11. The US government
introduced the US Customs 24 hour Advance Manifest Rule. In the event of non-conformity
with the rule, a penalty of US dollar 25 per bill is charged.
USD Average Rate
With the fluctuation of the US dollar, the Executive Committee immediately took necessary
initiative to negotiate and reduce the exchange rate by informing Sri Lankan Airlines to revise
the exchange rate with immediate effect, as all forwarders were experiencing substantial losses.
The Association by making such submissions, the relevant authorities have accepted the
arrangements proposed by the Association and have agreed to favourably consider the request
made by SLFFA.
SRI LANKA AUTOMATED CARGO CLEARANCE SYSTEM (SLACCS)
The Ministry of Commerce & Consumer Affairs announced that the project for the
implementation of Sri Lanka Automated Cargo Clearance system (SLACCS) has made
significant progress and user registration, training & education and testing of electronic facilities
prior to making them available for commercial operation will begin shortly.
The primary objective of the Government of Sri Lanka by initiating this project is to improve
local cargo clearance processes & procedures by reengineering the existing business processes
utilizing latest but proven information technology solutions wherever possible and applicable to
achieve higher productivity and efficiency levels, thereby providing substantial cost savings and
convenience to the trading community while ensuring maximum controls with stakeholders both
state and private sector.
E-Services Lanka Ltd., the outsourced service provider for provision of electronic
communication and messaging facilities for the implementation of Sri Lanka Automated Cargo
Clearance System (SLACCS) has confirmed implementation of infrastructure facilities required
for the SLACCS operation.
The following agencies will be connected to the system in the initial stage of the operation.
1. Sri Lanka Customs
2. Board of Investment
3. Sri Lanka Tea Board
4. Sri Lanka Standards Institute
5. Plant Quarantine
6. Ministry of Finance
7. Animal Quarantine
8. Controller of Imports & Exports
9. Ministry of Foreign Affairs
10. Ministry of Industrial Development
11. Sri Lanka Ports Authority
12. South Asia Gateway Terminals
13. Sri Lankan Airlines
14. Shipping Agents
15. Freight forwarders & consolidators
16. Shippers, Consignees & Customs House Agents
Testing of electronic CUSDEC submission facilities prior to making such facilities available for
commercial use will begin in January 2004 to ascertain robustness and the effectiveness of the
facilities at various points of the system in handling high volume of transactions.
The Advisory Council intends testing up to 2,500 CUSDECs a day continuously with the
assistance of selected Importers and Exporters and their Customs House Agents and monitor
systems performance at various points handling CUSDECs, initially over a period of two weeks.
A task force has already been appointed under the leadership of Sri Lanka Customs to formulate
test plans and to coordinate related activities. Commercial readiness of the facilities will be
assessed based on test results.
All technical and functional specifications with regard to electronic messages to be exchanged
between various state & private sector organizations for cargo clearance purposes are almost
finalized. E-Services will handover final technical specifications as mutually agreed with
respective individual organizations, by 31st December 2003 enabling all stakeholders to
implement electronic facilities required for the complete implementation of SLACCS.
The Advisory Council has requested E-Services to begin registration of users and to complete
receiving applications for registration by 31st January 2004. Training & Education programs will
be organized to educate users on the usage of new electronic facilities & processes from January
2004. A separate sub-committee has been appointed for this purpose.
The Legal Sub-committee of the Advisory Council has confirmed that provisions required to
legalize electronic messages in place of manual approvals and documents have been incorporated
in to the Electronic Transaction Law act, which is due to be tabled in Parliament in January
The Advisory Council has proposed to the Hon. Minister to consider setting up of a one stop
center to accommodate all statutory agencies involved in cargo clearance in Sri Lanka, as a
complementary facility for the implementation of new processes and to further facilitate local
The Advisory Council in consultation with all stakeholder organizations listed above has decided
on following dates to be production cut-over dates for the complete implementation of SLACCS
connecting all stakeholders above, subject to resolution of technical & functional issues arising
out of comprehensive tests to be carried out and also subject to resolution of legal issues.
Imports 1st May 2004
Exports 1st August 2004
Transshipment 1st April 2004
One of the main objectives of this project is to significantly reduce manual document handling
by utilizing electronic messages with appropriate electronic security controls to meet legal
requirements. When SLACCS is fully implemented, manual document handling will be
restricted to the point of delivery or unless otherwise authorities find information not sufficient to
process declarations any further.
THE AIR CARGO VILLAGE
The Association made special attempt to streamline the security services at ACV, with a view to
minimizing pilferage. As a result the security at the ACV was handed over to a new security
firm and new security systems were introduced. The installation of the CCTV is a major boost
not only to the member occupants but also to the freight forwarding industry as a whole as it is
beneficial to all the parties using the ACV. It has helped reduce pilferage at the ACV to a greater
extent. These new measures and value added equipment enhance the quality of service at the
Katunayake Air Cargo Village.
SLFFA ACADEMY / SECRETARIAT
The Sri Lanka Freight Forwarders’ Association is currently in the process of finalizing a
proposal to set up its own regional training center, which will cater to the professional needs of
the industry and will eventually extend the training facility to the South Asian Region.
Realizing the importance of catering to the human resource development need of the industry
through organizing professional training the Minister of Commerce and Consumer Affairs has
agreed to allocate a suitable land from a prime location in Colombo. The Association has
decided to seek funding for the Training Center from the United Nations Economic and Social
Commission for Asia and the Pacific (UN-ESCAP).
SLFFA CARGO SERVICES LTD
SLFFA Cargo Services Ltd, a commercial venture established by 26 members of the
Association, operates an import cargo terminal at the Colombo International Airport. This is a
unique operation managed by an independent management and Board and has shown an
impressive performance since its inception in 1994. The percentage of cargo cleared from
SLFFA CS on a “demurrage free” basis has shown a steady increase since the time SLFFA CS
began operations in 1994. The percentage of cargo cleared then on a demurrage free basis was
less than 50% whereas it has been over 70% of all cargo cleared in the year under review.
SLFFA CS continues to attract non- share holding freight forwarders to use the facility because
of comparative efficiencies achieved in the break bulk operation.
A new Cargo Terminal with 140,000 metric tons handling capacity is planned for construction
close to the passenger terminal. It is proposed to use it as an import cargo terminal, while the
existing terminal is expected to function as an export cargo terminal.
The existing distance between the proposed terminal and SLFFA CS Terminal II will be
extended, but the disadvantage of distance could be minimized proved good access systems are
made available. The proposed terminal is expected to be accessible, to a new cargo apron, which
in turn will facilitate, cargo loading and unloading from aircraft, particularly freighter aircraft
that could be accommodated on the cargo apron.
SLFFA is also encouraging the expansion of the present activities of the air cargo terminal of
SLFFA Cargo Services Ltd into providing value added services, which would enhance the faster
flow of import/export and transshipment of air cargo at competitive costs.
The Association through its untiring efforts re-established the Debtors Database with the support
of the Ceylon Chamber of Commerce. The freight forwarding industry has been facing a serious
problem due to high outstanding debt to the industry and the lack of a proper system to identify
regular defaulters/debtors, which has been a major impediment. The attempts by the Association
to share information on defaulters/debtors among members through a debtors’ database
administered by the Ceylon Chamber of Commerce has been successful. The Ceylon Chamber
of Commerce acts as an independent party, and maintains the confidentiality of information and
provides an impartial report.
The Ceylon Chamber of Commerce has developed a new user-friendly PC based debtors’
database to suit members’ needs, which has been in operation since September 2002. During the
early phase, only a few members actively contributed information to the database of debtors but
towards the latter part many members have been contributing information to the database.
Currently over 30 members have been submitting debtor’s information on a regular basis. Thus,
a considerable number of member companies have made reference to the database as an integral
part of their credit approval procedure. However, the Association earnestly solicits the
cooperation of the members who have not yet actively contributed information to the database to
make it a more comprehensive database.
The Association envisaged operating this database on an electronic platform facilitating inquiries
as well as reports through Internet and e-mail.