Impediments to Logistics Performance

Topics: Sri Lanka, Colombo, International trade Pages: 7 (2183 words) Published: November 27, 2011

Unit Title : International Trade Policy & Practice

Unit number : MTL 504

Assignment number : 2

Submission date : 16th October 2011

Student declaration
I certify that the attached assignment is my own work. Material drawn from other sources has been acknowledged according to unit-specific requirements for referencing.

………….………16th October 2011 ….
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This report critically examines impediments in 5 key areas taken into consideration in assessing the logistics performance of Sri Lanka and methods of overcoming the same as mentioned in the recent survey in determining the Logistics Performance Index (LPI) of various countries worldwide. Executive Summary

The LPI is a comprehensive index created to help countries identify the challenges and opportunities they face in trade logistics performance. The World Bank conducts the LPI survey every two years. The key document for this is the the second edition of Connecting to Compete:Trade Logistics in the Global Economy,which was first published 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 Lanka’s Logistics Performance Index is 2.29 and ranked 137. In spite of prevailed security condition in the first decade 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 Related Infrastructure
The Pathfinder Foundation says that Sri Lanka’s LPI ranking also reflects logistics-related problems with road and rail infrastructure, including congested road access to the Port of Colombo and poor trucking and rail services; costs of both trucking and rail exceed those of Bangladesh and India. The railway sector accounts for only about 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 through the Colombo port. The Pathfinder Foundation says that the government can encourage this by providing free zones and customs procedures that enable the efficient provision of services. “Failure to do this can make Colombo vulnerable to losing market share to Indian ports that are being upgraded; particularly as pure transshipment cargo is foot-loose

Sri Lanka needs to advance its export competitiveness by developing its logistics, and plugging into Asian supply chains is of vital importance. Especially with the significant opportunities that lie with Sri Lanka’s close proximity to the South Indian markets of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu, Sri Lanka needs to become open to such international supply chains. Even if she can’t actually attract the companies to set up large plants here on the island, the country 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 assembly of finished products - that would be the paradigm shift. Overcoming the impediments the area of trade related infrastructure will play a pivotal role in the increase of the LPI ranking of Sri Lanka. This can be catogorized as physical infrastructure requirements and business processes. The following areas should be considered in priority for this purpose ; 1. Trading through Electronic Documents

2. Introduce online payment of Customs Levy
3. Development of Road/Rail/Canal transport
4. Upgrade Handling Equipments in the Port and increase handling capacity 5. Development of areas within...
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