ANNUAL REPORT ACCOUNTS 2017/2018 - SLFFA Report 2017-18...SLFFA OFFICE BEARERS & EXECUTIVE COMMITTEE...

SRI LANKA LOGISTICS & FREIGHTFORWARDERS’ ASSOCIATION

ANNUAL REPORT &

ACCOUNTS

2017/2018

SRI LANKA LOGISTICS & FREIGHT FORWARDERS’ASSOCIATION

REPORT OF THE EXECUTIVE COMMITTEEFOR THE YEAR 2017 / 2018

CHAIRMAN : Mr. Jagath Pathirane

VICE CHAIRMAN : Mr. Roshan Silva

TREASURER : Mr. Dinesh Sri Chandrasekara

IMMEDIATE PAST CHAIRPERSON : Ms. Tania Polonnowita Wettimuny

ADVISORY COUNCIL : Mr. Dushmantha KarannagodaMr. Mohan S. MohanadasMr. Tony De LiveraMr. Niral KadawatharatchieMr. D R Hallock

EXECUTIVE COMMITTEE

Ace Cargo (Pvt) LtdAgility Logistics (Pvt) Ltd

DHL Global Forwarding Lanka (Pvt) LtdMAC Supply Chain Solutions (Pvt) Ltd

Mack International Freight (Pvt) LtdMaersk Lanka (Pvt) Ltd

Speedmark Transportation Lanka (Pvt) Ltd

SECRETARIAT

Sri Lanka Logistics & Freight Forwarders’ AssociationNo. 37 D, Torrington Avenue

Colombo 07.

2SLFFA Annual Report 2017 - 2018

SLFFA OFFICE BEARERS & EXECUTIVE COMMITTEE2017/2018

Standing from Left to Right: Ranil Polonnowita (Agility Logistics Pvt Ltd), Prasansa Rodrigo(Speedmark Transportation Lanka Pvt Ltd), Ahmed Fazlee (DHL Global Forwarding Lanka PvtLtd), Sadeeptha Illangatilleke (Ace Cargo (Pvt) Ltd), Chaminda Hewamallika (Maersk Lanka PvtLtd) Jagath Pathirane (Chairman), Dr. Parakrama Dissanayake (Chairman, Sri Lanka PortsAuthority), Tania Polonnowita Wettimuny (Immediate Past Chairperson) Roshan Silva (ViceChairman), Dinesh Sri Chandrasekara (Treasurer), Peter Jasinghe (Mac International Freight PvtLtd), Sushani Jayakody (Manager SLFFA), Rohan Induruwa (Secretary General SLFFA) and PrasajPathirana (MAC Supply Chain Solutions (Pvt) Ltd)


MEMBERSHIP

AAbans Logistics (Pvt) Ltd

ABC Freight Services (Pvt) LtdACE Cargo (Pvt) Ltd

ACE Distriparks (Pvt) LtdAdvantis Freight (Pvt) LtdAgility Logistics (Pvt) Ltd

Air Marine Logistics (Pvt) LtdAitken Spence Cargo (Pvt) Ltd

Aitken Spence Shipping LtdAPL Logistics Lanka Freight Forwarding (Pvt) Ltd

Aramex Freight Corporation (Pvt) LtdASB Freight (Pvt) Ltd

Asia Pacific Logistics International (Pvt) Ltd

BBollore Logistics Lanka (Pvt) Ltd

CC G Logistics Lanka (Pvt) Ltd

C. H Robinson Freight Services (Pvt) LtdC.L. Synergy (Pvt) LtdCare Logistics (Pvt) Ltd

Cargo Boat Co. LtdCargo Partner Logistics (Pvt) LtdCargoplan International (Pvt) Ltd

Clarion Logistics (Pvt) LtdCrown City Developers (Pvt) Ltd

CWT Globelink Colombo (Pvt) Ltd

DDBS Logistics Limited

Dart Global Logistics (Pvt) LtdDellogistics (Pvt) Ltd

Dellogistics International (Pvt) LtdDHL Global Forwarding Lanka (Pvt) Ltd

Dinlanka Logistics (Pvt) LtdDLR SCS Lanka (Pvt) Ltd

DRH Logistics Lanka (Pvt) Ltd

EEagle Logistics Colombo (Pvt) Ltd

EMG Spedition (Pvt) LtdEuro Asia Freight (Pvt) Ltd


Eurotrans Express (Pvt) LtdExpelogix (Pvt) Ltd

Expo Lanka Freight (Pvt) Ltd

FFamous Pacific Shipping Lanka (Pvt) Ltd

Fast Transit Logistics (Pvt) LtdFits Express (Pvt) Ltd

Foreway Logistics (Pvt) LtdForwardair (Pvt) Ltd

Freight Line International (Pvt) LtdFreight Links International (Pte) Ltd

Freight Masters International (Pvt) LtdFreight Systems Lanka (Pvt) Ltd

Freightplan (Pvt) LtdFrontier Freight Lanka (Pvt) Ltd

GGAC Logistics Ltd

Global Freight Management (Pvt) LtdGlobactive Logistics (Pvt) Ltd

HHarrisons Shipping (Pvt) Ltd

Hellman Worldwide Logistics (Pvt) LtdHTL Logistics (Pvt) Ltd

IInterfresh Logistics (Pvt) Ltd

KKerry Malship Logistics Lanka (Pvt) Ltd

Kingslog Supply Solutions (Pvt) LtdKuehne & Nagel (Pvt) Ltd

LLaksiri International Freight Forwarders (Pvt) Ltd

Lanka Shipping & Logistics (Pvt) LtdLovikta Logistics (Pvt) Ltd

MMAC Supply Chain Solutions (Pvt) Ltd

Mack International Freight (Pvt) LtdMaersk Lanka (Pvt) Ltd

Marine Transport Services (Pvt) LtdMaritime Shipping & Logistics (Pvt) Ltd

McCallum Cargo (Pvt) LtdMCS Logistics International (Pvt) Ltd


Mega Trend Lanka (Pvt) LtdMercantile Freight Services (Pvt) Ltd

Metro International Asia (Pte) LtdMIT Cargo (Pvt) Ltd

Mountain Hawk (Pvt) LtdMSA Shipping (Pvt) Ltd

NNetwork Cargo Services Ceylon (Pvt) Ltd

OOcean HD Through Transport (Pvt) LtdOn Time Worldwide Logistics (Pvt) Ltd

Orient Global Logistics (Pvt) Ltd

PPership Synergy (Pvt) LtdPower Freight (Pvt) Ltd

RR.P.C. Logistics Limited

SS. G. Logistics (Pvt) Ltd

Salota International (Pvt) LtdScanwell Logistics Colombo (Pvt) Ltd

Sea Shipping Colombo (Pvt) LtdSea Trade Services (Pvt) LtdSealink Shipping (Pvt) Ltd

Setmil-United Cargo (Pvt) LtdShermans Logistics (Pvt) Ltd

Shipping & Cargo Services (Pvt) LtdSpeedmark Consolidation Services Lanka (Pvt) Ltd

Speedmark Transportation Lanka (Pvt) LtdSphere International Freight (Pvt) Ltd

TT L World (Pvt) Ltd

TDL Logistics (Pvt) LtdToll Global Forwarding Lanka (Pvt) Ltd

Trans Global Lanka (Pvt) LtdTranscargo (Pvt) Ltd

Trans Global Lanka (Pvt) LimitedTrico Customs Brokers (Pvt) Ltd


UUCL Logistics (Pvt) Ltd

Unicorns Clearing & Forwarding (Pvt) LtdUniversal Freighters International (Pvt) Ltd

US Shipping & Cargo Services (Pvt) LtdUTI Pership (Pvt) Ltd

WWigynsa Global (Pvt) LtdWings Logistics (Pvt) Ltd

World Express (Colombo) LtdWorld Gate Freighters (Pvt) Ltd

YYusen Logistics & Kusuhara Lanka (Pvt) Ltd

20 Cube Logistics (Pvt) Ltd


OVERVIEW OF THE ECONOMY

As per official data released by the Department of Census and Statistics (DCS), Sri Lanka’s realGDP growth decelerated further during 2017 to 3.1 per cent, from the growth of 4.5 per centrecorded in 2016.

Agriculture related activities recorded a contraction of 0.8 per cent against the backdrop of adverseweather conditions that continued from 2016, while a slowdown in economic activity in bothservices and industrial sectors was observed. Amongst the sub activities of agriculture, growing ofoleaginous fruits, vegetables and rice reported negative growth rates. However, the growth offorestry and logging, fruits and tea helped contain the contraction in agriculture activities to someextent.

Industry related activities, accounting for 26.8 per cent of real GDP, grew by 3.9 per cent in 2017.The growth in industrial activities was primarily supported by manufacturing activities, constructionactivities, and mining and quarrying. However, the growth of construction activities that supportedoverall economic growth throughout the post conflict period, with the exception of 2015, deceleratednotably during 2017. Services activities, which accounted for 56.8 per cent of real GDP, grew by 3.2per cent in 2017, on a year-on-year basis, driven by the expansion in financial service activities,wholesale and retail trade, and other personal service activities. On the other hand, publicadministration and defense activities recorded a contraction, dampening the services sector growth,while the slowdown in transportation activities also contributed towards the moderation in overalleconomic growth during the year.

According to the expenditure approach of GDP estimates, economic growth in nominal terms wassupported by the expansion of both consumption and investment expenditure in 2017. Consumptionexpenditure, which accounts for the largest share of total expenditure of the economy, recorded agrowth of 9.0 per cent in nominal terms during 2017, compared to the modest growth of 3.1 per centin 2016. Higher growth of consumption expenditure was a result of the expansion in both public andprivate expenditure. Meanwhile, investment expenditure continued to support growth, with anexpansion of 16.6 per cent in nominal terms. However, the slowdown in the growth of constructionactivities during 2017 contributed towards lowering the growth momentum in investmentexpenditure, compared to 2016.

Exports rebounded during 2017 to record the historically highest value in terms of earnings, thusreversing the lacklustre performance in exports, which has seen them declining from 33.3 per cent ofGDP in 2000 to 12.6 per cent in 2016. Accordingly, earnings from exports increased by 10.2 percent to US dollars 11,360 million in 2017. The increase in exports was supported by the restorationof the EU GSP+ facility, recovery in external demand, expansion in investment in export relatedindustries, increased commodity prices in the international market, conducive external trade policiestogether with strong institutional support and the favourable impact of the flexible exchange ratepolicy maintained by the Central Bank. Increase in earnings from exports of tea (20.5 per cent),textiles and garments (3.0 per cent), petroleum products (51.4 per cent) and spices (28.1 per cent),mainly contributed to the improved export performance during the year. Earnings from textiles andgarments exports, which accounted for around 44 per cent of total exports, surpassed US dollars 5billion for the first time in history. However, in spite of the notable performance in some sectors,export earnings from coconuts (-4.9 per cent), gems, diamonds and jewelry (-6.0 per cent) andleather, travel goods and footwear (-4.4 per cent) declined during 2017. The USA remained thesingle largest buyer of Sri Lanka’s exports in 2017, accounting for 25.6 per cent of total exports,followed by the UK (9.1 per cent), India (6.1 per cent), Germany (4.8 per cent) and Italy (4.6 percent). In line with the increase in earnings from exports, the overall export volume index increasedby 7.6 per cent, while the export price index, in US dollar terms, increased by 2.4 per cent.


The growth rate of services related activities, which accounted for over 56 per cent of real GDP, alsomoderated during 2017. The growth of services activities, which was recorded at 4.7 per cent in2016, decelerated to 3.2 per cent in 2017, particularly due to the contraction in public administrationand defence activities, and the slowdown in transportation activities. Accordingly, transportationactivities that contributed to over 10 per cent of GDP in 2017, grew marginally by 0.9 per cent.However, the growth in services activities was supported by the notable growth of 9.4 per cent infinancial services during 2017. Furthermore, wholesale and retail trade, and other personal serviceactivities, which grew at 3.8 per cent and 3.2 per cent, respectively, also contributed positivelytowards the growth of the services sector.

The female unemployment rate declined from 7.0 per cent in 2016 to 6.5 per cent in 2017, while themale unemployment rate remained unchanged at a lower level of 2.9 per cent. Further,unemployment among youth aged 15 to 24 years declined to 18.6 per cent in 2017, from 21.6 percent in the preceding year. Headline inflation remained broadly above the target during 2017, whilecore inflation stabilized at desired levels during the latter part of the year. Despite the tight monetarypolicy stance maintained by the Central Bank, the sharp acceleration in food inflation caused byweather related supply disruptions resulted in unanticipated upward movements in headline inflation.Revisions to Value Added Tax (VAT) and Nation Building Tax (NBT), and higher commodityprices in the global market also contributed to high levels of inflation. Accordingly, headlineinflation, as measured by the year-on-year change in both the National Consumer Price Index (NCPI,2013=100) and the Colombo Consumer Price Index (CCPI, 2013=100) experienced twin peaks,initially in the first quarter of 2017 and then in the last quarter.

The external value of the Srilankan rupee remained relatively stable in 2017 under a more marketbased exchange rate policy implemented by the central bank during the year. The depreciationpressure on the rupee, which prevailed particularly during the first two months of 2017, moderatedthereafter with increased foreign investment to the government securities market and the CSE, andthe increase in the conversion of export proceeds. The depreciation pressure on the rupee furthereased from May onwards with the receipt of the proceeds from the ISB, the foreign currency termfinancing facility and disbursements of two tranches of the IMF-EFF programme, which helpedimprove investor confidence. With these developments and measures taken to develop the foreignexchange market, the rupee remained broadly stable, depreciating by 2.0 per cent against the USdollar during the year. However, reflecting the movements in the cross currency exchange ratesagainst the US dollar, the rupee depreciated markedly against all other major currencies in 2017.

as a percentage of GDP, central government debt declined to 77.6 per cent by end 2017 from 78.8per cent recorded at end 2016. The reduction in the debt to GDP ratio in 2017 was mainly attributedto the deceleration in the growth of debt accumulation and the increase in the nominal GDP growth.

Headline inflation also reverted to mid single digit levels in the first quarter of 2018 with the declinein volatile food prices. The moderation in inflation in the first quarter of 2018 and the favourableinflation outlook as well as the continued negative output gap compelled the Central Bank to end itspolicy tightening bias and reduce the SLFR by 25 basis points on 4 April 2018.

(Source – Central Bank of Sri Lanka Annual Report)


OVERVIEW OF THE INDUSTRY

The country’s civil aviation sector registered overall positive growth in terms of passenger and cargohandling during 2017. Passenger movements at the Bandaranaike International Airport (BIA) grewby 5 per cent to 9.8 million, compared to 9.3 million in 2016. Further, the total cargo handling at theBIA increased by 4.7 per cent to 265,786 MT in 2017 in comparison to the previous year. However,the number of aircraft movements at the BIA increased only marginally by 0.3 per cent to 64,903during 2017, due to the closure of the runway for 8 hours per day for the runway overlay projectfrom 6 January 2017 to 6 April 2017. The Mattala Rajapaksa International Airport (MRIA) aircraftmovements increased by 6.9 per cent to 978 in 2017, in comparison to 915 in 2016.

The total passenger kilometers flown by Srilankan Airlines increased at a higher rate of 8.8 per centin 2017, compared to 0.8 per cent growth in 2016. Meanwhile, the container traffic (Twenty FootEquivalent Units - TEUs) and cargo handled by Srilankan ports grew by 8.3 per cent and 8.5 percent, respectively, in 2017, in comparison to respective growth rates of 10.6 per cent and 11.5 percent in 2016. Moreover, the freight ton kilometers transported by SLR increased by 3.5 per cent in2017, compared to 7.6 per cent growth in 2016. In the meantime, the freight ton kilometers flown bySrilankan Airlines grew by 9.8 per cent in 2017, in comparison to the same growth in 2016.Meanwhile, the growth of postal and courier activities moderated during the year, recording agrowth of 3.9 per cent in 2017, compared to the growth of 5.1 per cent in 2016.

Port sector activities continued to improve in 2017 due to increased commercial operations at theColombo International Container Terminal (CICT) and South Asia Gateway Terminal (SAGT),amidst the slowdown in activity at terminals owned by the Sri Lanka Ports Authority (SLPA). Totalcontainer handling at the Colombo port, which stood at 5.7 million twenty-foot equivalent containerunits (TEUs) in 2016, grew by 8.3 per cent to 6.2 million TEUs in 2017. Compared to 2016,container handling at the CICT and SAGT increased by 19.3 per cent and 10.9 per cent, respectively,in 2017. However, the terminals owned by the SLPA recorded a negative growth of 4.3 per cent interms of container handling during 2017 in comparison to 2016. Overall transshipment containerhandling registered a growth of 8.8 per cent during 2017, with the expansion in global merchandisetrade activities. Meanwhile, total cargo handling also increased to 93.9 million MT in 2017, which isan 8.5 per cent growth in comparison to 2016, supported by the performance of the SAGT andCICT. However, cargo handling at the SLPA terminals in Colombo declined for the thirdconsecutive year, recording a negative growth of 0.5 per cent in 2017. This was mainly due to thenon-availability of container terminals with deeper draught berths equipped with high profile ships-to-shore cranes at the Jaya Container Terminal (JCT). Hence, CICT at the Colombo South harbourattracted ships and volumes from both JCT and SAGT. Although port activities in Sri Lanka havesteadily grown due to the increase in the arrival of large ships, overall ship arrivals recorded adecline of 2.4 per cent in 2017.

Major development projects initiated with the aim of enhancing productivity and competitiveness ofport activities at the Colombo port as well as regional ports, such as Galle, Kankesanthurai andTrincomalee, continued during 2017. The SLPA is in the process of building the East ContainerTerminal (ECT) at the Colombo port with the assistance of the ADB. It will be the second-deepdraught container terminal in the South Harbour with an annual capacity of 2.4 million TEUs and a1,200m quay wall with 18m depth. Meanwhile, on 29 July 2017, the SLPA and the Governmententered into a concession agreement with China Merchants Port Holdings Company (CMPort) toimprove operational efficiency and future development activities of the Hambantota port. This agreement is expected to expand the revenue base, generate direct and indirect employment,improve the efficiency of the port management and its financial viability through the adoption of aviable business model. Accordingly, the CMPort has agreed to invest up to US dollars 1,120 millionin port and marine related activities at the Hambantota port. As per the agreement, port operations at


the Hambantota port will be carried out by two companies which are jointly owned by the CMPortand the SLPA, namely, Hambantota International Port Group (Pvt) Ltd. (HIPG) and HambantotaInternational Port Services Company (Pvt) Ltd. (HIPS). The SLPA effectively owns 15 per cent and50.7 per cent of the HIPG and HIPS, respectively. The agreement is for a 99-year period and theSLPA is entitled for royalty payments for container and break-bulk handling activities at theHambantota port.

Meanwhile, a novation agreement was signed with a consultancy company for the design works ofGalle Port Development Project – Phase I. During the initial phase, it is planned to construct thebreakwater with funds borrowed from the Japan International Cooperation Agency (JICA).Meanwhile, a multipurpose berth is expected to be developed at the Galle port under a Public PrivatePartnership (PPP) during the second phase of the project. Further, the construction work of theTrincomalee port continued with the aim of developing a rail transportation system, improvingwarehouse facilities and commencing night time navigation at the port. The SLPA has also decidedto develop the Kankesanthurai port as a regional port to serve the Northern and North CentralProvinces. The Cabinet of Ministers has approved to vest 15 acres of land to the SLPA for thedevelopment activities at the Kankesanthurai port.

Despite the declining trend in container and cargo handling at the SLPA owned terminals, thefinancial performance of the SLPA improved in 2017 mainly due to lower finance expenses. Thetotal revenue of the SLPA in 2017 increased by 2.2 per cent to Rs. 44 billion, while the operatingexpenditure decreased by 2.1 per cent to Rs. 28 billion in comparison to the previous year.Consequently, as per the unaudited provisional financial statement, the SLPA reported a profit of Rs.13.2 billion in 2017 before taxes, in comparison to the profit of Rs. 1 billion before taxes recorded in2016.

Export performance, which was affected adversely during the past two years, rebounded strongly in2017, recording the historically highest value for earnings. The strong growth in export earnings wasunderpinned by the restoration of the EU-GSP+ facility, recovery in external demand, expansion ininvestment in export related industries, increased commodity prices in the international market,conducive external trade policies together with strong institutional support and the flexible exchangerate policy maintained by the Central Bank. Accordingly, with the continuous double-digit growthregistered in the second half of the year, earnings from exports increased by 10.2 per cent to USdollars 11,360 million in 2017, from US dollars 10,310 million in 2016. Earnings from industrialexports mainly contributed to the increase in export earnings in 2017, followed by agriculturalexports.

Expenditure on imports rose considerably in 2017, compared to the marginal increase recorded in2016 and the contraction in 2015, reflecting the spill over effects of adverse weather conditions andfirming of international commodity prices. increase in import expenditure was mainly driven by theincrease in imports of intermediate goods. Expenditure on imports of intermediate goods, accountingfor about 55 per cent of total imports, amounted to US dollars 11,436 million, in 2017, reflecting ayear-on-year increase of 15.9 per cent.

(Source – Central Bank of Sri Lanka Annual Report)


INDUSTRY STATISTICS

UPLIFT (Tons) DISCHARGE(Tons) ExcludingTransshipment

TRANSSHIPMENT(Tons)

TTL (Tons)

2013 116,487.71 36,517.08 31,845.02 184,849.81

2014 126,271.24 40,596.43 32,789.02 199,656.69

2015 129,826.11 46,573.87 35,877.85 212,277.83

2016 138,952.77 60,842.11 39,840.37 239,635.25

2017 162,114.70 60,036.04 44,390.32 266,541.06

Airfreight volumes show a clear year on year growth in the past several years. In the year 2017, AirExports and Transshipments had a growth compared to 2016. Air Imports had a slight drop of -1.32% and in Transshipments shown 11.42% growth, while Air exports grew by 16.67% in the year2017. Air Export and Transshipments achieved the highest volumes compared to last 5 years.


As a whole, Ocean freight volumes shows a slight increase, mainly due to its Transshipment Ladenvolumes. A closer look at the 2017 numbers reveal a 6.07 % increase in laden import volumes and a3.13% increase in Export laden Volumes compared to 2016. Further the transshipment ladenVolumes increase is 9.60% above than 2016.

ACTIVITIES OF THE ASSOCIATION

The Association continued to maintain an active dialogue amongst its members and with all otherstakeholders associated with the industry, as well as Government and statutory bodies, particularly inrelation to maintaining professionalism and efficiency in the freight forwarding industry as a whole.

The Executive Committee commenced its activities following the 36th Annual General Meeting ofthe Association held on 6th July 2017, at the Hilton Colombo Residences. The Chief Guest for theoccasion was Dr. Parakrama Dissanayake, Chairman, Sri Lanka Ports Authority.

In addition to its ongoing projects and activities, the Executive Committee focused more onsustaining the Association’s position in matters concerning ocean freight and Customs, Air CargoVillage(ACV), airfreight charges, E-Air Way Bill submission, THC and DO charges, and conductedregular discussions with officials of the Sri Lanka Ports Authority (SLPA), Sri Lanka Customs(SLC), Airport & Aviation Services (SL) Ltd (AASL), Srilankan Airlines Cargo, Sri Lanka ExportDevelopment Board (SLEDB) and the Merchant Shipping Division of the Ministry of Ports &Aviation.


Ocean Freight Exports, Imports & Transshipments in TEU’s in Total 2017

The Executive Committee was also involved in several initiatives undertaken at National level suchas the Formulation of National Maritime Policy, National Export Strategy, National TradeFacilitation Forum and Entrepot Trade Facilitation, in addition to engaging in discussions with The

Ceylon Chamber of Commerce, Sri Lanka Shippers Council (SLSC) and Ceylon Association ofShipping Agents (CASA)Strengthening the self-regulatory regime introduced by the Association,regular training programs and seminars were conducted for the benefit and betterment of themembers. The Association closely liaised and coordinated with the Sri Lanka Customs on theintroduction of the E-Manifest system, by regularly updating the membership of the itsdevelopments. Sri Lankan Airlines training sessions were conducted for wharf staff and loaders ofmember companies.

The SLFFA Six-a-side Cricket Tournament was held on Saturday, 11th

November 2017, at the P.Saravanamuttu Stadium (The Oval), where 48 very enthusiastic teams from SLFFA membercompanies participated. SLFFA has identified the importance of assisting the Lady RidgewayHospital which is recognized as the largest children’s hospital in South Asia, therefore, with thefunds collected from the SLFFA Dance held in November 2016, SLFFA donated cleaningequipment for operating theatres and wards and installed a CCTV camera system. The total projectcost was Rs. 1.1 Million. SLFFA held its General Membership Meeting on the 26th of February atthe Chamber of Commerce, Colombo 2. The objective of the meeting was to share the key initiativesundertaken by SLFFA and also to provide a forum to the members to express their views andsuggestions regarding the factors which has a direct impact on our Industry.

As at the end of the financial period, SLFFA membership reached 110 members. The ExecutiveCommittee met on 11 occasions during the period under review to conduct its business. Theactivities of the Association were handled by the following sub-committees: (a) Airfreight and AirCargo Village, (b) Ocean Freight, Port, Customs and BOI, (c) Other Industry Related Matters, (d)Membership Affairs and Grievances, (e) Finance & Debtors Database, (f) Publicity, Social Affairs,Website and Newsletter, (g) CSR Project, (h) SLFFA Training and AITT, (i) Industry Statistics, and(j) matters relating to FIATA, FAPAA and SAFFA. These sub-committees were headed by membersof the Executive Committee and they obtained the support and other committee members who havevoluntarily joined the activities of the sub-committees.


INDUSTRY REGULATION, PORT, CUSTOMS & OCEAN FREIGHT

During the year under review SLFFA representatives met with the official of the Sri Lanka Customs(SLC), Sri Lanka Ports Authority (SLPA) and Ceylon Association of Ships’ Agents (CASA) on nu-merous occasions to address industry related issues.

Manifest Submission - One of the critical breakthroughs achieved by SLFFA was the reduction inthe deadline applicable for freight forwarders related to the import manifest submission. Subsequentto successful discussions held by SLFFA with Director General Customs and CASA, it was decidedthat shipping lines should report electronic manifest to Sri Lanka Customs 72 hours prior to vesselarrival. Forwarders and NVOCC would have a further 24 hours to submit the sub manifest. It wasfurther decided that SLC would maintain a 2 hour cut-off time for short hauls. Customs also agreedto reduce the penalties for late submissions of electronic manifest to a maximum of Rs. 25,000/-Forwarders/NVOCC and amend the relevant Gazette with all of the above stated decisions.

DO Fees, Miscellaneous Charges, Container Deposits – Meetings were held with CASA anddiscussed issues pertaining to high DO Fees, washing and other miscellaneous charges, containerdeposits and other related matters. Discussions are continuing to find practical solutions to theseissues.

Liberalization of Shipping - SLFFA conducted an online survey with membership and thereafter,proposals were formulated and submitted to the Ministry of Finance and Ministry of Ports &Shipping for consideration. A very significant outcome of the survey conducted was that, ifliberalization was essential for Sri Lanka to achieve the “Maritime Hub” status, it should consist ofclear-cut limitations and controls laid out by the Government for such liberalization to safeguard thelocal industry whilst benefiting from innovation and technology.

AIR FREIGHT & AIR CARGO VILLAGE (ACV)

Overall Air Cargo Operations at BIA - SLFFA & Shippers Council had a joint meeting withAirport & Aviation Services Ltd (AASL) and discussed matters to find solutions pertaining securitychecks of export air cargo, issue of entry passes at ACV, overall condition of warehouses/ facilities atACV & labor issues. With regard to the expansion of the cargo facility, AASL are making plans tobuild a new import terminal and will commence construction by late 2018. A very significantdevelopment was to form a special Committee on the recommendations of SLFFA, with allstakeholders involved to identify the problems/shortcomings and submit recommendations forsuitable solutions to AASL. The work of this committee is in progress.

Air Cargo Village(ACV) - In order to minimize pilferage at the ACV the installation of CCTVcameras was completed in Terminals 1 and 3 to cover the common areas of users. SLFFA is in theprocess of forming a committee of ACV users who will monitor and all activities and keep SLFFAupdated on any issues or concerns at ACV.

Issues With Ground Handling – SLFFA had discussions with Srilankan Cargo on matters withregard to security screening charges, cargo build up, slow progress in EAWB initiative & expandingcargo capacity. Discussions are continuing to seek practical solutions.

Cargo Account Settlement System (CASS) – One of the major achievements of SLFFA during theperiod was to effectively compress the IATA instigated implementation of CASS through Sri LankanAirlines. Many representations were initiated by SLFFA with IATA, Srilankan Airlines, EDB,Shippers Council, JAAF, Ministry of Aviation, Ministry of Finance, Civil Aviation Authority, etcresulting in indefinite postponement of the introduction of CASS in Sri Lanka.


Introduction of Handling Fee - SLFFA objected to an attempt by Srilankan Cargo to introduce ahandling fee since forwarders have their own staff for cargo build-up and handling and cannotabsorb any additional costs for same purpose.

Introduction of Fuel Surcharge Mechanism By Emirates Airlines - SLFFA objected to theattempt by Emirates Airlines to increase the fuel surcharge based on chargeable weight, instead ofthe gross weight as practiced and took up matter successfully with Civil Aviation Authority toprevent same.

E-Air Way Bill Initiative – SLFFA discussed with Srilankan Cargo on the very slow progressachieved with regard to the initiative launched by Sri Lankan Airlines as the National Career severalyears ago. SLFFA have repeatedly stressed the importance and advantages to all stakeholders in theair cargo industry and as a result, it was decided to form a special steering committee to review theprogress, stumbling blocks etc, whilst creating a Road Map to make rapid progress with the supportof all concerned. The committee is expected to commence work shortly.

E-Manifesting For Import Air Cargo – Initial testing of software systems for the implementationprocess has commenced between Customs and airlines. The forwarders role is yet to be announced.

OTHER INDUSTRY RELATED MATTERS

During the period under review, SLFFA addressed the following issues and constantly initiatedproactive action to address the following industry related matters;

Customs Facilitation – SLFFA actively participated in discussions conducted by the CeylonChamber of Commerce along with other industry stakeholders on the services provided by Customssuch as, 24/7 availability of Customs staff in the Port, online payment facility, electronic signature,duty payment gateway, etc. When Customs provided statistics on very low usage by the stakeholdersin the industry, SLFFA proposed to conduct an awareness programme in this regard after findingsolutions to certain practical issues pointed out at these discussions.

National Maritime Policy – SLFFA was represented in the Sub-Committee on Logistics andproposals have been submitted to the Ministry of Ports & Shipping for consideration. Discussionsare continuing.

National Export Strategy – SLFFA participated in discussions and was appointed as a member ofthe Advisory Committee on Logistics in this initiative chaired jointly by Export Development Board(EDB) and the World Trade Organization (WTO). SLFFA will be chairing the subcommittee “Topromote the image of Sri Lanka as a logistics hub in the world” which it chose to support out of the3 subcommittees on “To create an enabling and efficient business environment driven by technologycoordination.” and “To ensure the adequate facilities and availability of qualified labor force” It willbe a big boost to the competitiveness of small & medium enterprises (SMEs) to face local & globalchallenges & opportunities. Based on the initial suggestions provided by the stake holders, a policydocument is being prepared for implementation.

National Trade Facilitation Forum – The focus of discussions in which SLFFA participated werethe National Single Window Best Practices and the implementation of the National TradeFacilitation Agreement (NTFA) with the participation of the World Trade Organization (WTO).Based on the initial suggestions provided by the stake holders, they were evaluated and prioritized.Most of the border agencies were presented as a common platform. Discussions are continuing.

Entrepot Trade Facilitation – SLFFA has been involved in the ongoing meetings chaired by theExport Development Board(EDB) and satisfactory progress has been achieved to improve tradeprocesses. Discussions are continuing.


Corporate Tax Revision – Another significant achievement by SLFFA was lobbying by way of anappeal submitted to the Ministry of Finance which resulted in freight forwarders being eligible toapply the 14% tax rate as per the new Inland Revenue Act with effect from 1 st April 2018 instead ofthe 24% rate proposed by the Finance Minister in its budget proposals.

Smart Port System Implementation - SLPA recently introduced the Smart Port Systemimplementation which allows web based E-bookings, tracking systems, E-billing, Payment Gateway& warehouse management for customers. SLFFA is continuing to monitor its effectiveness andadvantages.

TRAINING & EDUCATION PROGRAMS

The Association has always been mindful of the developments taking place in the internationalfreight forwarding arena and continue to keep the Sri Lankan freight forwarding industry abreastwith the rest of the world. The Association is working towards raising standards within the industryand making the industry a dynamic and more professional trade sector. Thus, the Association hasplaced great emphasis on human resource development within the industry through internationaltraining programs.

For the 18th consecutive year, SLFFA conducted its annual DGR training program for the staff ofmember companies. The first being in March 2017 with 20 participants while the second sessionwas held in November 2017 with 30 participants and another in December with 17 participants frommember companies. Each Refresher course was conducted in 2 batches at the Jaic HiltonResidences. Therefore, we are pleased to record a total of 67 DG participants for the year underreview.

The DGR program was once again conducted by SLFFA’s own in-house trainer, Mr. JanakaSumithrarachchi, who received his initial and subsequent training directly from IATA Singapore. Theresponse from the membership for the DGR training programs has been very positive.

ACADEMY OF INTERNATIONAL TRADE & TRANSPORTATION (AITT)

The Sri Lanka Logistics & Freight Forwarders’ Association (SLFFA) in collaboration with itsexclusive tuition provider Achievers Lanka Business School had yet another successful year for theconduct of the renowned logistics qualifications.

The year 2017 took off with the commencement of new intakes for the Foundation Course inMultimodal Transport and Logistics and the Certificate Course in Logistic Services, FreightForwarding and Multimodal Transport drawing in participants from the industry as well as schoolleavers.

The year saw the passing out of 142 candidates who successfully completed the Foundation Course,total of 65 Students and Certificate Course total of 77 Students.

There was total 5 candidates who received their final certification from the FIATA body inSwitzerland for successful completion of the FIATA Diploma in Freight Forwarding. These Diplomaholders were also awarded the FIATA Air Cargo Certificate.

(Source – AITT/Achievers)


LIAISON WITH OTHER ORGANIZATIONS

The Sri Lanka Logistics & Freight Forwarders’ Association continued to work in close co-operationwith international agencies, governmental and private sector organizations, and other concernedorganizations. The Association continued its amiable relations with the Department of CivilAviation, the Department of Inland Revenue, the Department of Exchange Control, Airport andAviation Services Ltd, the Sri Lanka Ports Authority, Merchant Shipping Division of Ministry ofShipping, Export Development Board, Sri Lanka Shippers’ Council, the Ceylon Chamber ofCommerce in which SLFFA is represented in the Committee, the Board of Airline Representatives,Sri Lanka Air Cargo Association anreprd the Sri Lanka Customs.

The Association received the fullest co-operation and support from these organizations and wishes toplace on record its appreciation for the co-operation extended.

SRI LANKA SHIPPERS’ COUNCIL

The Association while being represented in the Sri Lanka Shippers’ Council, the apex body of theexporters and importers of Sri Lanka, worked very closely with the Shippers’ Council in settlingnumerous trade disputes among shippers and service providers.

The Association continues its representation on the national shippers organization, the Sri LankaShippers’ Council. During the year under review, with the assistance of the Shippers’ Council, theAssociation was able to settle and provide solutions to numerous trade complaints received frommembers and other import/export organizations.

CO-OPERATION WITH REGIONAL BODIES

SLFFA as the apex body representing the industry is a member of the regional freight forwardingbody, the Federation of Asia Pacific Air cargo Associations (FAPAA), and the international freightforwarding body, the International Federation of Freight Forwarders Associations (FIATA).

The Association continued to issue the FIATA Multi-modal Transport Bill of Lading to memberswho have obtained FIATA membership. In addition the Association received the support and co-operation of FIATA on various issues as well as advice and information on developments in theforwarding industry. During the period under review, SLFFA attended FIATA RAP Meeting &Regional Conference held in Thailand from 28 - 30th Jun 2017, FAPAA ECM / AGM - Nepal in July2017 and South Asia Maritime & Logistics Forum on September 6-8 2017 in Mumbai, India.

SLFFA WEB SITE (www.slffa.com)

The SLFFA web-site (www.slffa.com) is a great location to obtain information of the Associationand its activities. The home page is a gateway for updating members of the latest happenings in theindustry and the Association with easy and speedy access.

SLFFA is presently in the process of selecting a new web service provider by taking necessary stepsto redesign and revamp the current website in keeping up with the challenging and constantlychanging environment.


SOCIAL ACTIVITIES

The SLFFA Cricket Sixes – SLFFA once again concluded a very successful and entertainingCricket Sixes tournament which was held on Saturday, 11th November 2017, at the P.Saravanamuttu Stadium (The Oval), where 48 very enthusiastic teams from SLFFA membercompanies participated. This was the 5th instance where the Association organized this event whichhas now become a popular event in the SLFFA events calendar.

Salota International (Pvt) Ltd won the Championship Challenge Trophy (sponsored by ExpolankaFreight (Pvt) Ltd) while the runners-up were Dart Global Logistics (Pvt) Ltd.

The Main Sponsor for the event was Janashakthi PLC, while the co-sponsors were SrilankanAirlines and Mobitel. SLFFA is also extremely grateful to the Main Sponsor and Co-sponsor as wellas all other well wishers for their generous contributions to make this event a tremendous success.The Association wishes to place on record its appreciation to the members for their continuedsupport in SLFFA organized events and activities.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Continuing with its CSR initiatives, SLFFA donated cleaning equipment for operating theatres andwards and installed CCTV camera system to the Lady Ridgeway Hospital, Colombo. The totalproject cost estimated approximately Rs.1.1 Million and funds were allocated from the SLFFADance 2016 . This is an on-going CSR project SLFFA has with the LRH. On previous occasions,SLFFA donated 31 operating theatre doors to the Hospital from funds allocated from SLFFA Dance2012 and a total of 10 high quality patient trolleys along with the mattresses to the Hospital fromfunds allocated from SLFFA Dance 2014.


The Lady Ridgeway Hospital, established in 1895, is considered today as the largest specializedchildren’s hospital in the world with more than 1,100 beds. In addition, it serves approximately 3000outdoor patients daily. As we believe that the children are the future of a country, by lending ahelping hand to this project will support to build a healthy society to serve the generations to come.

SLFFA collected funds for this project through sponsorships collected at its biennial Dinner Danceheld in November 2016. The sponsors were; Main Sponsor – South Asia Gateway Terminals(SAGT), while the Co-Sponsors were Hayleys Advantis and SLFFA Cargo Services Ltd. Platinumsponsors were Expolanka Freight (Pvt) Ltd, Freight Links International (Pvt) Ltd, SpeedmarkTransportation Lanka (Pvt) Ltd, Aitken Spence Maritime Ltd and Qatar Airways Cargo.

SLFFA also wishes to place on record its gratitude to all Sponsors, SLFFA members and all othercontributors who assisted this project through their generous contributions and support.

SLFFA CARGO SERVICES LTD

SLFFA Cargo Services Ltd, a commercial venture initially established by 26 members of theAssociation, operates an import cargo terminal at the Bandaranaike International Airport. This is aunique operation managed by an independent management and Board.

The Gross Profit of the Company increased by 12% from Rs. 173.55 million in the previous year toRs. 194.6 million this year. The Net Profit of the Company increased sharply by 18% from Rs. fromRs. 70.43 million in the previous year to Rs. 83.04 million this year. This could be attributed to aconcerted effort made to draw new agents who are members of SLFFA & also combined the effortsmade to increase staff efficiency at all levels.

The total turnover of the company has increased sharply by 24% from Rs. 318.6 million in theprevious year to Rs. 395.2 million this year. The chargeable weight of delivered cargo has increasedby 14% from 14.38 M/kgs last year to 16.32 M/kgs this year. The total number of consignments hasincreased by 3.08% to 48,138 this year. The income from Cool Room cargo during the year hasdecreased by -6% to Rs. 12.7 million and the income from demurrage charges has increased by 20%to Rs. 84.2 million as compared with the previous year. Shareholders have transferred 66% of theircargo to SLFFA CS while SLFFA members transferred 31% and other 03%. This represents virtuallythe same proportion of the cargo transferred in the previous year.

Administration and establishment costs increased from Rs. 100.7 million in the previous year to Rs.111.1 million this year. This is mainly due to the increase in rent. The rent payable to AASL has ayear on year increase of 4% and this year, it represents 27.60% of administrative expenses. Therehad been only a marginal increase in the established cadre despite the substantial growth in cargovolumes over the last couple of years.

The interim dividend of 200% gross was declared and paid. The Board of Directors recommended afinal dividend of 200%.

The Company succeeded in maintaining efficiency levels in spite of a steady increase in the handlingof fast moving cargo. The staff turnaround for the year has increased to 46% compared with 43% inthe previous year. The turnaround was particularly from out-sourced staff of Cargo Assistants andLoader categories.


Efforts have continued to enable e-Manifesting facilities to be made available and to automateclearance of cargo from Terminal 2 itself. SLFFACS has provided Customs at Terminal 2 with therequired hardware & VPN facilities as a first step towards this goal.

SLFFA CS made budget proposals to liberalize the handling of import groupage consolidated seacargo including transshipment as well as multi-country consolidation cargo within and outside theport. Thus the Board of Directors are in earnest discussions with prospective partners to operatefully-fledged Cargo Handling Terminal (CHT).

This facility is expected to enhance the throughput of inbound and outbound logistics of ocean cargoin Sri Lanka. While accruing many benefits to the importers and exporters in the country, it isexpected to enhance significantly, the international competitiveness of local exports and enhance ourcountry’s position as a regional distribution and logistics hub. Significant progress was made with its partner CCN Singapore with regard to offering CargoCommunity Systems (CCS) services to the cargo community in Sri Lanka since the time SLFFACargo Services and CCN launched CCN’s flagship product, CCNhub in May 2013. Currently, thisindustry initiative spear-headed by SLFFA and Sri Lankan Cargo has progressed slowly but steadilywith over 20 leading freight forwarders and 5 leading airlines successfully executing e-AWBs. IATAhas also shown keen interest in guiding the industry with the participation of the Regional Head atprogress meetings.

The prospects look encouraging particularly at a time when the industry is moving towardsautomation in a paper-less environment and also the CCN being the only service provider currentlyin the market offering its reliable services through SLFFACS.

(Source – SLFFA CS Annual Report & Accounts 2016-2017)

SECRETARIAT

The SLFFA Secretariat continues to function from its location at the office of SLFFA CargoServices Ltd at No. 37D, Torrington Avenue, Colombo 07. The Association wishes to place onrecord its appreciation to SLFFA Cargo Services Ltd for allocating space at their premises toaccommodate the SLFFA Secretariat.

ACCOUNTS

M/s. BDO Partners audited the accounts of the Association during the period under review. Theaudited accounts for the period 1st April 2017 to 31st March 2018 are annexed to this report.

BY ORDER OF THE COMMITTEE

Sgd.ERANDI PONNAMPERUMAMANAGER


SRI LANKA LOGISTICS & FREIGHT FORWARDERS’ASSOCIATION

FINANCIAL STATEMENT FOR THE

YEAR ENDED 31ST MARCH, 2018


ANNUAL REPORT ACCOUNTS 2017/2018 - SLFFA Report 2017-18...SLFFA OFFICE BEARERS & EXECUTIVE COMMITTEE...

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