Impediments to Logistics Performance

MASTER IN disdain ADMINISTRATION INTERNATIONAL TRADE AND LOGISTICS 2011 Unit Title multinational sell Policy & Practice Unit number MTL 504 Assignment number 2 Submission date 16th October 2011 Student declaration I admit that the attached assignment is my own work. Material drawn from other sources has been admit jibe to unit-specific requirements for referencing. . 16th October 2011 . Name/Signature of studentDate IntroductionThis report critic in every last(predicate)y examines impediments in 5 key aras taken into consideration in assessing the logistics murder of Sri Lanka and methods of overcoming the same as mentioned in the new-fashioned survey in determine the Logistics Performance tycoon (LPI) of various countries worldwide. Executive Summary The LPI is a oecumenical index created to help countries identify the challenges and opportunities they face in pile logistics procedure. The earthly concern curse conducts the LPI survey every two years.The key docu ment for this is the the second edition of Connecting to CompeteTrade Logistics in the Global Economy,which was graduation publish in November 2007. The Logistics Performance Index was based on a survey of operators on the ground worldwide global freight forwarders and express carriers who provided feedback on the logistics friendliness of the countries in which they operate and those with which they trade. Sri Lankas Logistics Performance Index is 2. 29 and ranked 137. In spite of prevailed security condition in the first ecade of this millennium Sri Lanka was able to lay a good foundation for implementing trade facilitation measure over the years. Typology of Sri Lanka according to Impediments to Logistics Performance Table Trade relate Infrastructure The Pathfinder Foundation says that Sri Lankas LPI ranking in any case reflects logistics-related problems with driveway and lead root, including congested road access to the air of Colombo and measly trucking and rail se rvices costs of two trucking and rail exceed those of Bangladesh and India.The railway sector accounts for only ab extinct one percent of freight movements in Sri Lanka, and is characterized by a large cost structure. In addition, the report says that the logistics sector has been slow to provide value added services for transshipment by means of the Colombo port. The Pathfinder Foundation says that the government grass encourage this by providing free zones and employments duty procedures that enable the efficient provision of services. Failure to do this heap make Colombo vulnerable to losing market share to Indian ports that are being upgraded particularly as pure transshipment cargo is foot-loose Sri Lanka demand to advance its export competitiveness by fuck offing its logistics, and plugging into Asian provide chains is of vital importance. Especially with the significant opportunities that lie with Sri Lankas closely proximity to the southwesterly Indian markets o f Andhra Pradesh, Karnataka, Kerala and Tamil Nadu, Sri Lanka needs to become receptive to such international supply chains.Even if she cant really attract the companies to set up large plants here on the island, the domain can be a part of a model, where some components could be manufactured here and shipped across to bigger plants in other countries for the aggregation of finished products that would be the paradigm shift. Overcoming the impediments the athletic field of trade related infrastructure will play a pivotal role in the summation of the LPI ranking of Sri Lanka. This can be catogorized as physical infrastructure requirements and strain processes. The following areas should be considered in priority for this purpose 1.Trading by with(predicate) Electronic Documents 2. Introduce online payment of tradition Levy 3. Development of lane/Rail/Canal transport 4. Upgrade Handling Equipments in the Port and increase handling capacity 5. Development of areas deep d own close region to the airport and sea port look and Supply of Logistics Services As Logistics is the backbone of trading of goods the fictitious character of trade will depend upon the quality of logistics services available in an economy. in that location are many factors which come upon this. These can be broadly categorised into three areas as citizenry , Process and systems and Physical Infrastructure.Although this can be as well as inter related with other areas of determinants of the LPI this is an encompassing factor covering all the areas as Quality is a philosophy which embodies all the functions of the determinants of the LPI. In order to set and say standards and guidelines in the area all industry related organizations should be monitored by one body which will see to the fact that all these groupings are governed in a way that it will maintain the highest quality standards amongst its members and all stakeholders in the industry are touch on in one of these o rganizations to arrest compliance.These brass sections are as follows * SLAFFA (Sri Lanka Freight forwarders connective) * SLACA ( Sri Lanka Air line cargo Association) * SLLPA (Sri Lanka Logistics Providers Association) * CASA (Ceylon Association of Ship Agents) * ACT (Assiciation of Container Transporters) There should be strong recommendations for companies involved in Logistics services to be a member of their respective grouping and also hold a minimum number of professionally trained mental faculty from these bodies.This will also facilitate the quality service provision through these skilled employees in this sector. A nonher important area is to recognize give performing logistics providers by way of introduction of an awards scheme to motivate the companies involved in the industry and to take the industry standards into new heights which in turn will benefit the customers in the long run. There can be benefits obtained also by Interlinking domestic freight forwarder s ystems with supranational Freight forwarders or their agents to provide better info flow to the customers in order to slash their shipments through the entire supply chain. Core Customs Modernization This can be identified as the main area of consideration for improvement in affecting the LPI ranking. As mentioned at the base of this report the last LPI survey was at the peak of the Sri Lankan war against terrorism. This meant mingy security measures in the acres and strict surveillance on all goods that entered the country.According to the LPI, Sri Lankas performance is particularly weak in headroom by border control agencies (particularly impost), logistical competence and ability to track and trace consignments. There has been slow progress in implementing customs reform. Sri Lanka has make less progress than other countries in South Asia, such as Bangladesh and India. There is a strong case for attaching high priority to customs reform, including full use of the ASYCUDA system and development of a computerized system of stake management.Lack of progress in this area place our exporters in a disadvantageous position from competing in time-sensitive markets, thereby undermining the growth and employment prospects of the country. There are many areas to be considered in the process of customs modernization in Sri Lanka which includes the following * Round the clock & 365 days work. * Change strength to understand that the customs is not only regulator but also trade facilitator. * Online cargo clearing. * Abolish age old regulations. * Introduce pre reach clearance. * Release goods against guarantees. Post clearance audit method. * Re introduction of parkland dividing line Customs decided implementing green channel for 10% out of identified 75 top importers ( sunlight times 04th Sept 2011) * Restrict customs activities to main areas such as Border Control / tariff functions & Inspection. * WTO Guide Lines should be adopted * Take positive s teps to root out corruption * Introduce an effective review and appeal procedure Methods such as honey oil Channel and Risk Management should be introduced in order to reduce the clearance time wasted as a result of 100% examination at present. Today all 28,000 TEUs in a month are examined of which 18,000 TEUs are examined at Rank Container net alone. But it was noted that while authorities intend on exploitation an automated system, the industry pointed out that while there are a number of dynamics involved in the assessment of the products a manual check would prove to be a better procedure though. Sunday times Integration of Border Management Sri Lankas rank in Trading Across the Border is 65 out of 183 which is above the South Asian average but on a lower floor OECD Average.Regional Facilitation and Transit Drawbacks in Connection with the Logistics Performance of Sri Lanka Sri Lankan shipping officials have questioned the validity of a recent valet margin ranking on lo gistics that set(p) the island even below landlocked Uganda, despite Colombos position as a container transshipment hub. The criticism came at a videoconference discussion connecting audiences in Bangladesh, India, Pakistan, Nepal, Sri Lanka, and Washington on trade logistics in the global economy to discuss the findings of the study.Rohan Masakorala, former chairman of the Sri Lanka Shippers Council, raised doubts about(predicate) the study and LPI index and questioned whether the research had got it wrongly. The studys credibility is at stake and such findings can seriously damage the country. It was mentioned that Sri Lankan businesses were concerned about misleading representation in such studies as it could affect foreign investment which the island needed to develop the economy. The valet de chambre Bank study called the Logistics Performance Index (LPI) 2007 ranked Sri Lanka at 92 out of 150 countries with a low overall piss of 2. 0 out of five, even below India, Pakist an and Bangladesh. Singapore was ranked No 1 while Uganda scored 2. 49, more than Sri Lanka, whose Colombo port is south Asias hub for container transshipment. The LPI consists of both perception and objective measures and evaluates performance along the logistics supply chain within a country, the demesne Bank said. An USAID study last year had placed the island ahead of other south Asian states like India, Pakistan and Bangladesh.An alternative clue to be included in the survey was to ask perverters of Sri Lankan exports what their impression is who buy apparel from different Asian countries The Sri Lankan shippers council and freight forwarders association were also not consulted in the survey. The following news article from The Daily News with braggart(a) Shipping Personality Mr Rohan Masakorala also gives many insights into this Sri Lanka has been ranked 137th in the universe of discourse Bank released Logistic Performance Index (LPI) for 2009.The country secured the 9 2nd place according to LPI 2007. The LPI has not given a true picture of the countrys capability and the list and the criteria, and Sri Lanka has been pushed from 92 to 137, it is unfair as the country has an efficient air and ocean shipping sector, Sri Lanka Shippers Council former Chairman and Asian Shippers Council secretary General Rohan Masakorala told Daily News Business. The index was arrived at by considering the strengths in rail, road, ocean shipping and air systems in a country. The realness Bank team is looking at the overall picture. However, the Shippers Council or the freight forwarders have not been consulted for these LPI interviews this time as well. They are doing a fundamental erroneousness by placing sea, air, road, rail and inland waterways in one basket, ignoring the strengths of different countries and territories, he said. Courtesy Daily News Another suggestion given in the abovementioned article is that The LPI gives a wrong signal to investors and buyer s.It could have been agreed upon if the World Bank had a chart separating sea, air, and road and rail rankings and then trust the four against the overall performance with other criteria such as customs practices. Then at least one would see each countrys SWOT (strength, weakness, opportunities and threat). It is not proper to compare a landlocked country and a maritime nation. This is one reason to be unfavourable of the position of Sri Lankas Ranking in the LPI. Furthermore the LPI is one among many proportional rankings globally.Converting the LPI to a ranking out of 100 places Sri Lanka would rank at 88 (137/155). We could compare this with other related rankings as follows Ranking Type Organization Ranking Comparative ranking out of 100 Logistics Performance Index 2009 The World Bank 137 out of 155 88 Doing Business 2011 The World Bank 102 out of 188 56 Best Container Ports in the world Containerization International Magazine Year Book 2009 27 out of all World Ports Within t he top 2% Conclusion By analyzing the logistics related performance of Sri Lanka through various trade statistics it can be identified that Sri Lanka as a whole had a comparatively bad year repayable to the prevailing situation in the country at the time. Reference slant 1. Connecting to Compete Trade Logistics in the Global Economy 2010. The World Bank Publications 2. Export growth The challenge of poor logistics Article of e research by the Pathfinder Foundation, Daily News 21st June 2011 3.Doing Business 2011 study Business Regulation in 183 Economies, a Co Publication of The World Bank and International Financial Corporation. 4. Sri Lanka Ports Authority official website 5. Sunday multiplication 4th September 2011, Business Section Customs to Open Green Channel for 75 Companies 6. Daily News 9th February 2011, Performance Index gives wrong signal to investors Rohan Masakorala 7. Daily News 4th August 2011, ACFA wants Green Channel examination reintroduction 8.