Sri Lanka’S Position Under Logistics Performance Index
Introduction to Logistics
Logistics is basically the detailed organization and practice of an involute operation. In a general business sense, logistics is the management of the flow of things between the point of source and the point of utilization in order to meet needed of customers or corporations. Production and manufacturing adds form value by converting the raw material or components into components or finished parts. Place value is provided through transportation by moving the product where it is needed. The resources managed in logistics can include physical items such as nourishment, materials, animals, equipment, and liquids; as well as hypothetical items, such as time and information. The logistics of physical items conventional involves the combination of information flow,
- Materials handling
In military science, logistics is involved with maintaining army supply lines while disrupting those of the enemy, since an armed force without resources and transfer is defenseless. Military logistics was already skilled in the archaic world and as modern military have a paramount requirement for logistics solutions, advanced implementations have been advanced. In military logistics, logistics officers manage how and when to move resources to the places they are needed. Logistics management is the ingredient of supply chain management that plans, implements, and controls the efficient, efficacious forward, and change flow and storage of goods, accommodations, and universal information between the point of inchoation and the point of expenditure in order to meet customer's requisites. So Logistics Management is a small portion of Supply Chain Management that deals with the management of goods in an efficient way.
Quality of trade and transport related infrastructure IN 2013 OCT 05 Colombo International Container Terminal is a joint venture Company between China Merchants Port Holdings Company Limited. That located nearby to the Port of Colombo. It gives more facilities for traders, terminal have 18m depth alongside 4 berths, 70m outreach QGCs capable of handling 18,000 + TEU ships,2. 4 million TEU design capacity and 58ha Container Yard Facilities. New port in Hambanthota launched on January 2008 and the construction work was completed on December 2011. in 2016 it was proposed to lease 80% of the port in a debt-for-equity swap to the China Merchants Ports holding company, There are Two number of breakwaters, 312m long eastern breakwater, 988m long western breakwater, Excavation of 17m deep harbor basin, Dredging of 210m wide entrance channel. Mainly this port use for unload vehicles. The performance of the Colombo port sector has shown a marked improvement over the recent years owing mainly to a major infrastructure drive that has focused on strengthening the country's position as a regional shipping hub. The port of Colombo has remained the principal sea port of Sri Lanka over the years, The utilization of railway for goods transportation is a minimum in Sri Lanka. Past years prima Ltd transported their goods by rail. Sri Lanka railway system developed with more trains and railway roads.
So Sri Lanka’s quality of infrastructure at airport, roads and telecommunication and IT is 'good'; ports and warehouse facilities as 'average'; and railways very low. Sri Lanka has a total road network of 30,686 km's of which 4219 km's are Class A roads (Trunk roads) and 7,949 km's are main roads or Class B roads (Central Bank 2014). The total length of the national highways maintained by the Road Development Authority was approximately 12,168 km by the end of 2013. After 2013 construction of highways, widening of roads expanded. That is benefit for traders to send their containers by easy way to Colombo.
Sri Lanka improved connectivity through highways. Southern Expressway was opened in 2011. It is longest highway and is 126 km's long. The Colombo - Katunayake Expressway, the second expressway built in Sri Lanka, connects the country's main international airport to the capital. Opened in October 2013, the 25. 8 km expressway has reduced travel time between Peliyagoda and Katunayake from a previous 1 ½ hours to about 20 minutes. It is a 4-lane expressway with 3 interchanges. Both passenger and freight movement are allowed with some restrictions imposed on the type of vehicles that can use the highway.
Past years Sri Lanka’s information technology has developed with various new features. In the initial period customer service was only reactive in Sri Lanka. The complaints or information was difficult to reach the concerned department and was time consuming process. However with the improve of IT, customer service is more proactive as it reaches the customer through internet and takes continuous feedback from them Before long time in Sri Lanka, the procurement process in the organization was done by a separate department on the basis of least price from the supplier. But after 2013 with improvement of it of IT the e-procurement is done where online auctions are conducted and strategic relations are forged with good suppliers by long term contracts and relationships. A majority of the stages in the export process in Sri Lanka has been automated. The CUSDEC for both imports and exports can be submitted online, More than the inadequacy of warehouse in terms of numbers, traders highlighted the lack of adequate facilities available at warehouses.
- Lack of proper storage racking systems,
- Poor conditions within them, poor handling and
- Inadequate security that were some of the issues at warehouses. But now warehouses improved and there are so many facilities, CCTVcameras, huge space for store, quality racks and more workers than past time.
- Ease of arranging competitively priced shipments
Ease of arranging competitively priced shipments”. Sri Lanka’s prices are not greater than its competitors and according to the Domestic Logistics Performance Index have not changed much over the last years. In the past years government has invented new projects to provide the investment planning’s to both Government/Private sectors to expand the international shipments. The private sector for providing logistics services is highly internationalized. Government expanded the transportation of goods between the countries and increased the international relationships. Improvement of e commerce large number of small companies became strong and they able to found more international customers. Therefore traders increased their international transports.
- Competence and quality of logistics service After advent of customs ASYCUDA system, custom clearance became very easy. Customs Brokers are the only users who able to use this feature. It is digitally system for frame CUSDECS and CDN. The Customs also offers fast track clearance system to low risk consignees since September 2013. Ceylon chamber and National chamber facilitated to customers through electronic system. Now Exporters apply and receive COs electronically through a secure online system. After submitting the application, exporters receive confirmation of receipt of the e-CO by chambers. Exporters can also track the status of their CO application and receive it electronically. The export process has been facilitated to a great extent with the establishment of the Export Facilitation Centre. The centralized cargo processing facility is situated in close proximity to the Colombo Port and export cargo can now be processed 24 x 7 in this facility which came into operation in July 2014. Government introduced many programs to develop warehousing system, material handling and packaging, consoling and improvement of the information technology.
- Ability to track and trace consignments At present, Sri Lankan Cargo is the company that manages the ground handling of air cargo at the BIA Air Cargo Terminal. Sri Lankan Cargo uses an advanced automated cargo tracking system, which is called "Sky Chain” that tracks each shipment from the point of reservation through to the final delivery. So now track and trace system use for get details of vessels. Vessel berthing details, vessel cut off details, vessel terminal details, cargo de stuffing details, transshipment ports details, and other information. Shipping lines introduced the track and trace facility to their customers. If customer has bill of lading no, container no, or booking no, customer will able to track their shipment. Sri Lanka’s Score of the ability to track and trace the consignments is 2. 74 in logistics performance index. That is lower score against top performers of the index.
- Timeliness It’s speed of the shipments that reach destination with in the expected delivery time. Sri Lanka scored 2. 79 for the timeliness in the statistics of logistics performance index. It is very weak position against top performers of index. In transit of the container in to port or out from port there no standard time table. Most time transit time for destination delay than promised time for reach destination. That’s show poor improvement of field. Giving approximate arrival time is the best opinion for this. And so port authority and coordinate traders can manage the time of transit.
Top Performers of the Index
Top performer of the index is German with 4. 20 LPI score. Their customs score is 4. 09, infrastructure score is 4. 37, International shipments score is 3. 86, Logistics competence score is 4. 31, tracking & tracing score is 4. 24, Timeliness score is 4. 39. Sweden got second place with 4. 05 LPI score. Belgium got third place with 4. 04 LPI score. Respectively Austria, Japan, Netherlands, Singapore, Denmark, United Kingdom, Finland are the top performers of the index. Still German is the best performer after 2012.
Sri lanka’s Position Against Top Performers
In 2018 Sri Lanka’s position of LPI rank is 94 with 2. 60 LPI score. Their customs score is 2. 58, Infrastructure score is 2. 49, International shipments score is 2. 51, Logistics competence score is 2. 42, tracking & tracing score is 2. 79 and Timeliness score is 2. 79. Sri Lanka is at lower position against top performers of the index. Bad political situations and poor managing system cause for logistics decrease in Sri Lanka. Among several factors that affect the foreign exchange rates of a country, the inflation rate as well as the country’s current account and the balance of payments have a major impact. The interest rates of the country also play an important role in the fluctuation of the exchange rates. Sri Lankan rupee falls down against foreign currency. So that cause for economy falls in Sri Lanka.
How Sri Lanka Approach Should Be Next Half Decade
Need to improve better scanning system Scanning facilities at the port and airport are minimal in Sri Lanka which results in containers having to be opened up manually for checking. So that taken more time to do panel examination. This results in delays and additional costs with traders having to send their own staff members to unload and load goods, and also quality drops especially that of perishables. In Europe countries they have a good scanning system therefore they don’t want to manually open their shipments to check. So Sri Lanka need automatic scanning system for speed up logistics services.
Pay attention for road network system
Sri Lanka needs to pay more attention about road system. Express ways needed for all major cities. Heavy traffic and large number of vehicles and broken roads cause for huge congestion on roads. Roads need to be wide and better than now. Due to delicate of roads vehicles can’t reach their final destination on time. That cause to get low logistics performance in Sri Lanka. So road system is weaker than Europe countries.
Should improve railway system for freight transport
Europe countries uses railway system for move their shipments. That is very speed and so it’s saving cost, the current railway network and the services offered by the Sri Lanka Railway are not sufficient for freight transport. Furthermore, the current service only provides the facility of transporting good with little loading and unloading facilities available, i. e. labor for cargo handling should be provided by the customer himself. According to traders, despite railway transport charges being low, when all other relevant charges like handling charges are added, it becomes more costly than road transport. Therefore, if transportation of cargo on rail is to be improve. It is imperative that the rail network and services are developed. Furthermore, an Integrated multi-modal transportations system needs to be formed if traders are to receive cost and time benefits by using the railway system to transport goods.
Should Improve Trade Related Infrastructure
The need to improve quality/ efficiency of ports, roads, the quality of warehouses and the need to reduce loss/damage of cargo and the cost of using logistics services were some of the main areas of trade facilitation identified in trade related infrastructure. While acknowledging the recent developments of roads in the country, the respondents identified the congestion on roads to be a major drawback.
Need to develop information technology
Customs should prepare electronic/online submission for all documents. Currently, while the export process is almost entirely automated, the import process is yet to be completely automated. So Sri Lanka can use more resources to improve trade system. Custom should take IT degree holders as their employs and make whole system easy.
Upgrade facilities of sea/air ports
Some of the equipment currently at the Port is outdated. Improvements are needed if Sri Lanka is to become a maritime hub and not a mere transshipment hub as transshipment business depends on the success of the economies of neighboring countries, and competition from Countries like Singapore. So Colombo port can ease the congestion by taking necessary measures to open up more gates for container traffic.
Facilitate traders to extend their exports
By reducing custom taxes and giving equitable prices for exporters’ goods encourage them for do more exports. So government should be given more facilities for exporters.
Change the minds of government and private sector While recognizing the recent initiatives undertaken by the relevant authorities such as Sri Lanka Customs to improve trade facilitation which some businesses acknowledged to be admirable Some exporters/ importers are of the view that they do not function well in practice mainly due to the lack of change in mindset to accept and adopt to new ways of conducting business, etc. Therefore, the change of mindset among officers in key institutions in the import/export process to accept and adopt to new ways of conducting business and change of culture is vital if the Trading community is to benefit from trade facilitation initiatives. Need more attention about foreign investments Foreign investments are most valuable for improvement of companies. Giving facilities to foreign traders will helpful for build most strong and assured companies in Sri Lanka. Most of foreign companies give their shares for international partners. It will help for develop their economical level and popularity.
Should expand testing Laboratories in the Country
When shipments arrive in Sri Lanka with products that require testing certification, the shipments are cleared but not released until the test reports are produced. There are undue delays in some instances due to the lack of capacity to handle a large number of requests. It can sometimes take up to 2-3 weeks for a report to be issued, resulting in importers having to incur additional charges such as high demurrage fees. Introducing ‘LOGISTICS’ as a subject in the syllabus of Sri Lankan schools In present days we can see that the knowledge about the logistics sector is very low in school students. If it’s included as a subject in the curriculum of the school it will be helpful for students to start their carrier in the future in logistics industry.
At the same time introduction of degrees and diplomas on logistics will improve the jobs and knowledge on the logistics industry. Government should provide facilities and needed infrastructure specially for the small scale companies As an example government can provide favorable loan schemes to the small scale companies, providing favorable tax rates and to provide better employee labor development. Government should pay more attention about problems in this field and find the best solutions for those enquiries. So Sri Lanka can reach the level of top logistics performers with better managing and administrate in logistics industry.