The Importers and Exporters are perturbed by the action of the Minister of
Ports and Shipping, to rescind the Gazette No. 2041/10 dated 17 th October, 2017, which was
initially introduced on 27 th October, 2013, and has benefited the Importers and exporters
immensely over the years.
This piece of legislature has helped importers and exporters from anti-competitive practices
which have been carried out by service providers for several years. The rescinding of the
Gazette has created a ripple effect, which will lead to Sri Lanka’s Imports and Exports becoming
more expensive due to unethical surcharging, thereby becoming uncompetitive and, in turn
leading to the loss of its market share in the Global Market.
During the pandemic, the exporters performed exceptionally well with month-on-month
increased earnings and helped the government to sustain the economy whilst other industries
faced challenges and changing trading practices. With the rescinding of Gazette No. 2041/10,
therein lies the question of whether foreign exchange will flow out of the country illegally due to
the possible introduction of zero freight again and surcharges levied on non-contractual parties
simply because there is no coverage of the same, through the law of the land.
By rescinding this Gazette, the Minister of Ports and Shipping has removed the protection of
free market competition while, also eliminating the international good practices where price-
fixing is not permitted.
The recent frequent changes made to shipping regulations in Sri Lanka through a few gazettes
have also raised ambiguity and concern among foreign trading partners who are sensitive to
policy inconsistencies. With exports being promoted as a solution to the current economic crisis,
this is detrimental to attracting potential buyers and to maintain existing clients.
Gazette No. 2041/10 re-confirmed four cardinal principles to protect both importers and
exporters from service providers who may charge exorbitant fees in addition to freight for the
carriage of goods.
The four principles of the Gazette that upheld free market values are: –
- Principle 1 – the cost of carriage of containers from origin to destination must be identified as all-inclusive freight without dividing them into land costs and freight components thereby all charges being negotiated commercially.
- Principle 2 – the service provider can only recover costs incurred from the use of the service to whom the service was provided, and not from a third party, with no such contractual liability safeguarding recipients of goods where freight is already arranged.
- Principle 3 – goods that landed at port could only indicate “Freight Pre-Paid” or “Freight Collect”. The concept of zero freight was not allowed.
- Principle 4 – in the case of imports to Sri Lanka the only charge permissible outside the freight was the Delivery Order (DO) fee. All other costs had to be calculated in the all- inclusive freight, clearly defining who pays which charges in international trade.
All freight charges can be charged within all-inclusive freight rate that gets compared holistically
with market rates, so the market forces determine the final price, as opposed to engaging in
non-negotiable surcharges.
Sri Lankan exporters have had a competitive advantage in shipping costs compared to other
countries due to this legislation, and removing the same, open them to unwarranted additional
costs which will make them more expensive to their peers.
Imports to Sri Lanka will become more expensive after the removal of the legislation, due to the
addition of unethical surcharges as in the past (44-line items were charged) and the breaking of
freight cost into many parts, which ultimately ends up being charged from non-contracting
parties. The result is the rise in inflation and cost of living in the country.
Gazette No. 1842/16 dated October 27 th , 2013 was further augmented by succeeding
governments introducing Gazette No. 2041/10 dated 17 th October, 2017 to strengthen the role of
the Director General of Merchant Shipping (DGMS), for the effective implementation of setting
only a Delivery Order fee outside the freight cost and to take stringent action against
perpetrators.
Sri Lanka Shippers’ Council wishes to reiterate that, globally accepted market-friendly legislation
should not be overlooked or rescinded without adequate reason, solely based on the urging and
requests of a few interested parties, connected to forwarding and shipping agencies with the
motive of profiteering through unethical surcharging at any cost, at the expense of all the
positives mentioned above. It is also vital to keep in mind that our country is facing an economic
crisis, and the impact of such steps, being critical for the revival and sustenance of the country’s
GDP, economy, and the improving of foreign exchange earnings.
The Sri Lanka Shippers’ Council requests the President of the Democratic Socialist Republic of
Sri Lanka and the Government to critically consider its representation and to reinstate the
Gazette No. 2041/10 dated 17 October 2017 of the Licensing of Shipping Agents, Freight
Forwarders, Non-Vessel Operating Common Carriers and Container Operators Act No. 10 of
1972, in the interest of importers, exporters, and the general public of Sri Lanka.