Financial Times

Getting the logistics right
A timely seminar organised by the Chartered Institute of Logistics and Transport to discuss policy and advocate required changes with the advent of a new government revealed some startling facts and figures about the state of our transport system.

The bus transport system is said to be a Rs 30 billion a year industry with the turnover of certain cluster bus companies being about a billion rupees a month, exceeding that of certain conglomerates listed on the stock exchange.

Government spending on transport has been coming down while private household spending on transport is going up. This means that as the government withdraws support to the state transport system we end up paying more to private operators despite the poor quality of service.

It was revealed that the government collects more taxes from the transport sector than what is spent on it. The road and rail transport system have deteriorated markedly in the last 20 years.

And despite all the talk about the island's superb location, halfway between Asia and Europe and almost astride the main East-West trade route across the Indian Ocean, and of Sri Lanka being a hub, we have hardly exploited nature's gift.

The new government's combination of shipping and aviation under one ministry, for the first time in recent memory, is definitely a sensible move and came in for praise at the CILT seminar. The previous bifurcation of the two portfolios, under successive governments, was stupid and resulted in inter-ministerial wrangling and turf wars, which in turn led to delays in decision making and lost opportunities, all detrimental to economic development.

The shipping and aviation portfolios are usually combined in most parts of the world with even land transport being added in some countries. Such a combination serves for unified policy making and implementation.

We need both long term solutions to emerging bottlenecks and opportunities to exploit our advantages and short term, more immediate practical measures to get things moving without waiting for long-gestation infrastructure projects. Costs of shipping goods through the island should be brought more in line with that of competing hubs like Dubai and Singapore and the provision of key services and supplies such as catering, ground handling and fuel, where there is an effective monopoly, opened up for competition.

It was suggested at the seminar that the role of customs be changed from that of checking trade in goods to that of trade facilitators as in Dubai. Our geographic advantage alone is not enough. We need to aggressively market it and promote it with the right approach and incentives. A good example of under-utilised state assets is the prime land owned by the railway and certain warehouses of the ports authority which can easily be put to commercial use to raise sorely needed revenue.

And it would be unrealistic to blame the railway for a poor service if fares, which have not been raised for years despite sharp increases in costs, are not increased.

Over and above all the efforts to draw up grandiose plans and modernise infrastructure, is the importance of effective regulation. The horrors of weak regulation can be seen on a daily basis on our roads, particularly in the conduct of private bus operators.

There certainly is a need for a clearly articulated policy with regard to transport and logistics, particularly a consistent one that does not change with every change in the ruling party. But as the example of shipping shows, a written policy alone won't do.

The national shipping policy has been gathering dust for years. Implementation is important. For that what is required is political will. If not we risk being left behind despite the geographic advantage.

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