By Winnie Wang , Senior Transport Specialist, World Bank
Logistics carry dreams. Back in 2007, when I applied to graduate schools in the United States, nothing could beat the excitement of handing over my applications to FedEx, clinging to the receipts with precious tracking numbers, and checking them a hundred times a day until I got confirmation that the packages had indeed arrived at my dream schools—all within the three business days they had promised.
A few months later, it was UPS that brought me the offer letter from MIT, transforming my destiny from a rural girl in China into a truly global citizen. I had never been on an airplane or anywhere out of my homeland before my flight to Cambridge, Massachusetts.
Two years ago in 2019, life brought me to the World Bank office in Sri Lanka, near the Port of Colombo, one of the 20 most well-connected ports in the world.
Watching a busy port at work can be endlessly fascinating. It still gives me a thrill to see the giant ships glide by, laden with containers carrying cargo from halfway across the world, including, recently, all our household goods, especially boxes upon boxes of my children’s favorite toys.
It’s logistics that made it all happen.
COVID-19 Rocks the Logistics Boat
As effective as logistics may seem at facilitating the transport of college applications and children’s toys, the COVID-19 pandemic has unveiled significant vulnerabilities in that sector.
In the initial weeks of the lockdown last year, I remember struggling to put together a meal with only rice and milk powder left in my kitchen. While most other residents of Colombo must have endured similar experiences, Sri Lanka’s farmers were left with no option but to throw away their fruits and vegetables since there was no safe and efficient way to store and transport them. Meanwhile, consumers in the city had to wait for several days before they could buy fresh produce and pay a much higher price when they were finally able to do so. It was a lose-lose situation for everyone—consumers, producers, and the myriad others in the supply chain.
COVID-19 had underscored how fragmented Sri Lanka’s domestic supply chains were—particularly those related to agricultural products—leading to inefficiencies throughout the logistics sector.
Initially, online delivery systems also crashed as the country had very limited experience with digital platforms and paperless transactions. However, they picked up quickly, and small and medium enterprises were quick to utilize social media and smartphone apps to deliver goods to customers.
Even so, the pandemic brought the fundamental challenges that confront Sri Lanka’s transportation network into stark relief. The vital sinews, which keep the island nation’s freight and cargo moving, were unduly dependent on road transport. Around 97 percent of the country’s domestic freight is transported by road—with half the trucks returning empty—causing unnecessary congestion in the road network and increasing transportation costs.
The pandemic also highlighted the inadequacies in the warehousing infrastructure. According to the National Export Strategy (NES), only 138 customs-bonded warehouses exist throughout Sri Lanka, with around 80 percent of them located in the Western Province.
Besides, cold storage facilities are insufficient for storing fisheries products, a key commodity, and no major facilities exist for the safe storage of perishables at important locations. This shortfall is likely to hinder the country’s planned expansion of agricultural exports.
At the broader level, Sri Lanka’s exports, particularly the key export commodities such as tea and garments, have been significantly impacted by the pandemic. For example, according to Sri Lanka Export Development Board data, garment exports recorded an 82 percent decline, falling from $333 million in April 2019 to just $58 million in April 2020.
In a recent survey by the Ceylon Chamber of Commerce, 63 percent of Sri Lanka’s firms exporting goods and services reported significant disruption in their overall business operations due to COVID-19.
Hitting the Road Ahead with Operational Efficiency
The Government of Sri Lanka is taking action to improve the country’s logistics system. In addition to providing financial support and adopting many other initiatives, digitalization has been recognized as a key priority to improve the efficiency of the logistics sector and ensure contactless transactions for long-term sustainability. For instance, a few years ago, the blueprint for a National Single Window system was prepared jointly with the Government of Sri Lanka to facilitate efficient and paperless trade.
The private industry is also taking initiatives to improve the efficiency of the country’s logistics sector. In 2019, a private firm launched the Smart Truck Initiative via the SyTrans platform, making it easier for industry to book and schedule trucks through a mobile app. The initiative can yield even greater benefits if scaled up nationwide.
COVID-19 has taught us a valuable lesson—a national logistics system that is efficient and resilient is more important now than ever, as this sector provides the backbone for a functioning economy.
Solutions such as digitalization, improved transport connectivity, multimodal transport operations, and better coordination between various stakeholders will go a long way in strengthening domestic supply chains and maximizing the benefits that the Port of Colombo and others can bring to the country.
Softlogic Life’s FY22 results grows to LKR 23 Bn GWP amidst tough macroeconomic challenges
Softlogic Life recorded a superior full year performance in a crisis-affected business landscape, posting Gross Written Premium (GWP) of Rs. 23,083 million for the year ended 31 December 2022 with an increase in top-line growth of 15% compared to the corresponding period of last year. The Company has stood firmly with its policyholders in the face of the tough macroeconomic conditions, paying claims of Rs 8,264 million for the period.
During the period in review, Softlogic Life’s market share is at 16.87%, in comparison to 16.08% as of 31 December 2021. The market share increase continues to rank Softlogic Life as the second-largest in the life insurance market, overtaking much older players to establish strong growth momentum. Compared to the estimated Industry GWP growth, which was 9.6% during 2022, Softlogic Life recorded GWP growth of 15%.
The company reported a 10-year Compound Annual Growth Rate (CAGR) of 28% of GWP, while the industry 10-year GWP CAGR growth was at 14%. Softlogic Life also notes that its contribution to increasing insurance penetration in the country has increased during the period in review with 133,872 policies issued, insuring more than 1.5 million Sri Lankan lives.
Profit after tax (PAT) for the period in review rose to Rs. 2,683 million, an increase of 27% YoY. Profit before tax (PBT) grew by 36% compared to last year at growth of Rs. 1,065 million. The company’s operating expense ratio remained at 22% irrespective of the inflation hike during 2022 as a result of prudent and efficient expense management initiatives adopted. Furthermore, Softlogic Life maintained a healthy Capital Adequacy Ratio (CAR) of 287%, well above the regulatory CAR requirement of 120%.
The company recorded impressive Return on Equity of 25% and Earning per share of LKR 7.15 after providing one off provision for impairment. Recurring Earning per share for the year 2022 increased to LKR 12.85 from LKR 5.61 per share.
Commenting on the financial performance of the Company, Ashok Pathirage, Chairman of Softlogic Life Insurance PLC, stated, “Despite numerous challenges in a tough business landscape, we have performed well to maintain our position as the second-largest life insurance company in Sri Lanka, growing our market share further to 16.87% by the end of 2022. These accomplishments were facilitated by the strategies we deployed and the strong execution of those strategies that have enabled the Company to sustain momentum in spite of the prevailing macro challenges.”
Since its inception, Softlogic Life has been striving to improve the quality of life of Sri Lankans through relevant disruptive innovations and digitalization. Industry-first innovations such as one-day automated claims settlement, hospitalization claim settlement, 100% digitalized sales platform, automatic policy issuance and mobile based micro products has helped the company to deliver a superior customer experience, which has been instrumental in enhancing its competitive position.
Foreign investors bullish and local counterparts bearish at CSE; year-to-date net foreign inflows hit Rs. 2 billion
By Hiran H. Senewiratne
Foreigners remained bullish on Sri Lanka’s listed equities as year-to-date net foreign inflows crossed the Rs. 2 billion mark, while local investors appeared bearish at the CSE yesterday.
JKH was the major driver for foreign inflows to reach more than Rs two billion, without any specific reason, since last week, market analysts said. However, shares fell in mid-day trade over the need for further positivity on the International Monetary Fund loan being secured, an analyst said.
Both indices moved downwards. The ASPI fell by 125.28 points, while the most liquid S&P SL20 fell 43.82 points. Turnover stood at Rs 2.2 billion with four crossings. Those crossings reported in Lanka Tiles, which crossed 1.2 million shares to the tune of Rs 54 million, its shares traded at Rs 45, JKH 300,000 shares crossed for Rs 43.65 million, its shares traded at Rs 145.50, HNB 468,000 shares crossed to the tune of Rs 43.3 million, its shares traded at Rs. 92.50 and Chevron Lubricants 200,000 shares crossed for Rs 24.1 million, its shares fetched Rs 107.
In the retail market, seven companies that mainly contributed to the turnover were, JKH Rs 721 million (4.9 million shares traded), Aitken Spence Rs 302 million (two million shares traded), Expolanka Holdings Rs 126 million (664,000 shares traded), Softlogic Capital PLC Rs 91 million (5.6 million shares traded), Browns Investments Rs 82.1 million (13.5 million shares traded), Softlogic Life Insurance Rs 63.3 million (512,000 shares traded) and Tokyo Cement (Non- Voting) Rs 49.1 million (1.45 million shares traded). During the day 56.2 million share volumes changed hands in 14000 transactions.
“The overall market was pulled down because the market ran on banking shares in the past sessions, but news on domestic debt restructuring moved the market into the red yesterday, an analyst said.
Any domestic debt restructuring will be part of a negotiation process with creditors, which will take place after a program with the International Monetary Fund is in place, Central Bank Governor Dr. Nandalal Weerasinghe said.
First, financial assurances from bi-lateral creditors have to be received to qualify for the IMF program.
It is said high net worth and institutional investor participation was noted in Expolanka Holdings, JKH and Sampath Bank. Mixed interest was observed in Aitken Spence, Sri Lanka Telecom and Lanka IOC, while retail interest was noted in Browns Investments, LOLC Finance and Ex-Pack Corrugated Cartons.
It said the Capital Goods sector was the top contributor to the market turnover (due to JKH and Aitken Spence), while the sector index gained 0.19 per cent. The share price of JKH gained 75 cents to reach Rs. 145.50. The share price of Aitken Spence closed flat at Rs. 150.
The Transportation sector was the second highest contributor to the market turnover (due to Expolanka Holdings), while the sector index increased by 1.02 per cent. The share price of Expolanka Holdings increased by Rs. 2 to Rs. 194.
Yesterday, the Central Bank announced the US dollar buying rate as Rs 359.99 and selling rate as Rs 370.18.
Japanese State Minister of Foreign Affairs visits Port of Colombo
Japanese State Minister of Foreign Affairs TAKEI Shunsuke visited the Port of Colombo to learn about the ongoing developments in the Port of Colombo. The visit took place on 03rd February 2023. During the visit the Japanese State Minister of Foreign Affairs also met with the Chairman of Sri Lanka Ports Authority (SLPA) – Keith D. Bernard and other higher officials at the main control tower of the Port.
The Chairman of SLPA explained to the Japanese state minister of foreign affairs of the progress of the developments of the East Container Terminal (ECT), the West Container Terminal and the North Port Development Project. The SLPA Chairman thanked the Japanese Government and the people of Japan for the invaluable support extended by them for development of Port sector in Sri Lanka, particularly towards the Jaya Container Terminal and the developments at the Port of Trincomalee.
The high level Japanese delegation at the Port of Colombo also comprised MIZUKOSHI Hideaki – Japanese Ambassador to Sri Lanka, TUTSUMI Tarou – Director, Southwest Asian Division, ANDO Toshiaki – Executive Assistant to the state minister of foreign affairs, TOKITA Yuji – director, second country assistance planning department, IWASE Kichiro – assistant to minister /director-general Southeast and Southwest Asian Affairs Department, MATSUYAMA Miina – third secretary, Embassy of Japan in India, KATSUKI Kotaro – Minister Embassy of Japan in Sri Lanka and OZAKI Takeshi, first secretary – Embassy of Japan in Sri Lanka.
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