Shippers’ Council defends freight rule against calls for review
The Sri Lanka Shippers’ Council (SLSC) yesterday mounted a defence of the nation’s state-mandated all-inclusive freight regulation, as the government signals willingness to review the regulation.The SLSC claimed that Sri Lanka’s direct state intervention to protect the importers and exporters is now a model being studied for implementation in several other countries.At a contentious press briefing held in Colombo, SLSC Chairman Sean Van Dort stated that the 2014 regulation, which mandates a single, all-inclusive freight cost, has been a critical safeguard against the predatory charges by the shipping service providers.
He claimed that after Sri Lanka became the first country to implement such a law, Bangladesh has since followed suit.“We are the first country to introduce this piece of legislation. There are today other countries studying this piece of legislation, to come into the all-inclusive framework,” Van Dort declared, positioning the policy as a globally relevant solution to undisciplined industry practices.The regulation prohibits the service providers from separately charging the local importers and exporters for land-based costs like terminal handling charges (THC) when they are not the contracting party for the freight.
The council argues this has eliminated a host of non-negotiable, surprise charges that eroded the competitiveness of the local businesses.Sri Lanka’s approach of legally mandating an all-inclusive freight structure remains a distinct and direct form of market intervention. Other nations, while sharing the goal of protecting their traders, have opted for different regulatory tools that focus on ensuring the transparency and fairness of individual charges or fostering a competitive market, without legally defining the composition of the freight rate itself.Comparing the pre-2014 practice of levying separate charges to exploitation, Van Dort made a fiery analogy. “Just because prostitution is allowed in some countries doesn’t mean that it can be allowed in Sri Lanka. THC was a prostitution.
They were charging charges that we are not liable to pay,” he said. “When the industry does not discipline itself and rapes the country’s people, it is the duty of the government to come and protect the people.” Van Dort praised the political will behind the landmark decision, crediting former President Mahinda Rajapaksa for having “the backbone” to introduce the gazette and former Finance Minister Ravi Karunanayake for resisting the “pressures of corruption” to stand by the regulation. He referred to those lobbying against the regulation as “parasites that depend indirectly from shipping”, who emerge every time a government changes.Elaborating on the real-world impact, Joint Apparel Association Forum (JAAF) Secretary-General Yohan Lawrence explained how the importers were previously trapped.
He described a scenario where a local company importing fabric on a cost, insurance and freight basis, where freight is paid by the foreign seller, would be cornered upon the vessel’s arrival.“The service provider then says, ‘Yes, freight is paid but you have to pay THC, you have to pay washing, you have to pay this.’ There was a list of 44 charges, which the importer here has to pay and he has no choice because in order to get the delivery order, he has to make those payments,” Lawrence explained. He noted that the gazette corrected this by mandating that all such costs must be billed to the party who paid the freight.However, the unified front of shippers was complemented by a call for deeper structural reforms. Free Trade Zone Manufacturers Association Chairman Dhammika Fernando argued that to become truly trade competitive, the regulation must be paired with market liberalisation.
“If this country’s shipping is liberalised, there will be fair competition and the importers, exporters and manufacturers would benefit,” Fernando urged, suggesting that the current resistance to liberalisation comes from the protected local agents, who cannot face open competition and thus try to “rip off the exporters and importers”. He called for a focus on operational efficiency, transparent billing and stakeholder consultations rather than “anti-competitive levies”.The briefing underscored the deep divide within the industry, with the shippers crediting the all-inclusive regulation as essential protection, while the service providers, including the freight forwarders and non-vessel operating common carriers (NVOCCs), continuing to lobby for its repeal, arguing it cripples their business models and deviates from the global norms. In particular, Sri Lanka’s all-inclusive freight law, while intended to protect the shippers, fundamentally undermines the viability of the NVOCC business model by treating them as if they were asset-owning carriers.
