Embracing digital platforms in shipping, logistics industry is a competitive tool for trade

• Sri Lanka falls behind in many targets of digitalisation
• Fails to implement targets of Trade Facilitation Agreement
• National single window – a long way away 

In the year 2022, the International Maritime Organisation (IMO) requested the mandatory implementation of the ‘Maritime Single Window’ system across all the ports in the world by January 1, 2024. This pivotal shift, mandated under the Convention on Facilitation of International Maritime Traffic, compels governments to adopt a unified digital platform for exchanging information with ships during their port calls.

Many developing countries have failed to do so, including Sri Lanka, which is considered a major transshipment hub. In 2017, the industry called for the ‘port community system’ to be expedited under the National Export Strategy (NES) but to date the port community system has not yet been implemented, which was the steppingstone for a maritime single window. 

This is one among many reforms not carried out for years recommended by the NES adapted by the government. The country has failed in many aspects in keeping pace with the Trade Facilitation Agreement (TFA), which is known as the Bali Agreement of 2013 and is listed as a least performing country among the developing nations signed into the TFA reforms. 

Call for shipping and freight digitalisation

It is understood that the private terminals in the Port of Colombo are geared to link with a single window but the policymakers at state level are yet to accelerate the project; the reason pointed out by the trade is that as the management changes in the government, the processes, focus and priorities change and the Sri Lanka Ports Authority as the regulator, owner and operator,  fails to deliver  reforms on time,  which is detrimental to the Port of Colombo’s overall growth  and competition.

That ports, which adapt maritime single window, will see it as a great competition tool to service the shipping industry clients and the international supply chains to function efficiently. The export industry of Sri Lanka has been calling for years, if not decades, to bring in digitalisation to ports and customs, the Inland Revenue Department and related key institutions. But little has been achieved. 

Tackling corruption, reducing transaction costs and establishing supply chain security are among a few key areas that digitalisation will help a nation that is struggling to expand exports and   attract investment with a current economic crisis.

During the last few years, it is observed that a surge in digitalisation and digital transformation in the shipping and freight-related industry is reshaping the industry across the world and the way business is done in countries are changing rapidly, where competition and trade growth are taken seriously by the governments as more technological solutions are coming with the development of artificial intelligence into digital solutions. It is a fact that the ocean freight sector and border control stand at a pivotal juncture as a frontrunner in digital solutions for international trade.

Statistics on a global scale underscore the critical need for a shift towards digital documentation and payment platforms, a transition that some industry professionals have already embraced in developed countries. Yet, the journey is far from complete for developing nations and remains on the sidelines according to reports published. 
Deterred by policy and consistency and focus on the sector, many in the logistics industry suffer from escalating costs and corruption. To avoid criticism, concerns over data security, user adaptability, national level legal impediments and the costs of implementation are some other areas of concern put forward by countries that are delaying the reforms. These are convenient excuses to keep the door of corruption open. 
The reports (IMO) reveal a striking figure: 75 percent of survey respondents encounter operational bottlenecks frequently, with documentation issues being a significant hurdle, which escalates costs and delays.

National single window – a mistake in priority of digitalisation

The transition to digital ways of working is not just about overcoming current challenges but also about future-proofing the industry. The transformation of the ocean freight industry into a digitally advanced sector is not a solitary journey. It demands a collective effort, where understanding, adaptation and collaboration are key across institutions but lip servicing on national single window without fixing the institutional reforms is a mistake that will lead to confusion to say the least. 

What the country needs is a centralised ministry and a department to overlook/implement cross industry institutional reforms first. As an example, a single window be established for all port functions (IMO maritime window) and another for Customs functions and so on and so forth. Then link all institutions step by step through an interface into a national platform. The United Nations has shown in the past that success is more likely, if such functions come under the head of state, where targets are achieved and cross functional ministries are coordinated and monitored independently.

(The writer, an economist by profession with well over 30 years of experience in the shipping, international trade and logistics industry, is the founder of Shippers Academy International)