Logistics

1. BRIDGE
June 2018 2nd
Edition
The Logistician cum Lawyer
Prathiba Mahanamahewa1
, Lalith Edirisinghe2*
1
Department of Commercial Law,
University of Colombo, Sri Lanka
Email: mahanamahewa@yahoo.com
Tel:0777399901
2
Faculty of Management Humanities and Social Sciences
CINEC Campus, Malabe, Sri Lanka
* Corresponding author
Email: lalith.edirisinghe@cinec.edu
Telephone: + 94 777 562 505

2. Introduction
Logistics, in general, is defined as the detailed organization and implementation of a complex
operation. Before it became a buzz word in business community the logistics originated in the
military as the indispensable activity of organizing the movement, equipment, and accommodation
of troops. However, today this word mainly signifies the commercial activity of transporting goods
to customers. On the other hand, a person who practises or studies law, a legal practitioner,
attorney, legal officer, legal adviser, legal representative, or a member of the bar is considered as
the lawyer. Therefore, from the outer perspectives one cannot realize a relationship between these
two key words. This article attempts to appraise the connection between the two aspects. Logistics
performance is strongly associated with the reliability of supply chains and the predictability of
service delivery available to producers and exporters (Edirisinghe & Muller, 2013)
Logistics refers to a series of services and activities, such as transportation, warehousing, and
brokerage, that help to move goods and establish supply chains across and within borders (Arvis,
et al., 2016). As the terms suggest international logistics, transportation and supply chain are full
of complicated series of processes. These activities are performed under different international
trading contexts and the law that applies in such conditions is always a puzzle. Therefore, the
distribution, transportation, and logistics industry is a tough environment governed by the laws of
distribution. Yet, companies also need to face economic crime or fraud which forces them to
navigate the regulatory minefield not only in their home country, but also in every single territory
in which they hold operations. The fact is that 45% of transportation and logistics companies have
experienced fraud in one form or another over the last two years. Although the damage is not
counted in human lives, it remains damaging in many ways and includes substantial financial costs,
as well as damaging employee morale, the vendor-supplier relationship, or the company’s
competitive edge (Earle, 2013). Logistics is the function responsible for the flow of materials from
suppliers into an organization, through operations within the organization and then out to
customers (Edirisinghe, 2017). Maritime and logistics performance are complimentary
phenomena. Improving logistics performance is at the core of the economic growth and
competitiveness agenda (Arvis, et al., 2016).

3. Cargo theft may occur not only in freight-forwarding and storage operations, but also during
transportation or in the process of loading and unloading. The risks of cargo theft have been
increased by extensive subcontracting and use of owner-drivers. On the other hand, the industry is
trying to reduce the risks of petty pilferage through sealed containers and track and trace systems.
Up to 73% of the companies operating in the distribution, logistics, and transportation industry
have been confronted with this type of fraud in one form or another (Earle, 2013). The global
logistics market, in terms of revenue, is set to expand from US$8.1 trillion in 2015 to US$15.5
trillion by 2023, registering a compound annual growth rate (CAGR) of 7.5% from 2015 to 2024.
By volume, the market is expected to clock in a 6.0% CAGR from 2016 to 2024
(www.transparencymarketresearch.com, 2018). With this kind of industry growth, the next few
years will see a giant leap in the need for qualified workers in this field (Hughes, 2015) . Most
logistics disputes are raised due to problems in practice and errors in operations and
documentation. It is therefore important for any logistics firm to have a logistics lawyer as he/she
would be the only one able to put the governance for the logistics operations in the firm in order
to avoid such problems. Furthermore, the logistics lawyer is the most suitable person to resolve
any disputes in logistics transactions (Hawawy, 2011).
The Role of Law in logistics
When the Icelandic volcano erupted in 2010, the reactive response of European transport ministries
and civil aviation authorities resulted in uncertainty and delays in restarting air traffic. There was
a failure to recognize in advance the potential threat presented by such ash clouds, along with
inflexible aviation protocols and the absence of any pre-existing agreement on safe ash levels.
Similarly, well-intentioned government initiatives such as air cargo screening can impede the
efficient flow of transport networks (Sarah, 2012). There are many supply chain and transport
concerns that have increased organizations’ risk profile. Therefore, legislation and regulation play
a key role in the dynamic supply chains. Controlling logistics costs allows companies to maintain
a competitive edge, since lower logistics costs translate into competitive external trade
(Edirisinghe & Jayathilake, 2014). Apart from the basic operational costs the legal aspects
sometimes create serious drawbacks when it is not handled by the competent law professionals.

4. In historical perspectives the word logistics commenced with the inception of military law in the
west for planning and distributing goods for various military targets, but law related to commercial
logistics existed in ancient Greece under “Lex Macatoria”. The word Logistics commercialised
and inserted to the business law branch under English common law at the end of the second world
war with the concept of Liza fare. Today the term law in logistics has been used by the general
public as a synonym for the process of documents related to transportation of goods from the
manufacturer to the end user of the product. However, in academia, the law in business logistics
means the process of planning, implementing, and controlling the efficient, effective flow and
storage of goods, services, and related information from the point of origin to the point of
consumption for conforming to customer requirements.
The logistics and transportation of goods by sea, air, rail and road is increasingly global and is
influenced by a legal method of national and international laws. This world of logistics and
transportation is highly competitive and lucrative for companies to remain in this competitive field
many clients of these companies have complaint to various authorities of mishandling and
negligence activities done by relevant parties to the transportation contracts and other types of
documents. There is a timely requirement for several companies involved in international
transportation and procurement process for proper guidance from lawyer’s expertise and research
this area of law. Companies could once rely on experts that specialised in specific fields like
maritime law or rail transportation law with their experience and skills could prevent many legal
suits against the company and their will and finally theses lawyers can save millions of dollars
which spend for litigation. Therefore, Employers in Import and export business always recruit
lawyers have completed their higher legal studies in logistics and transportation law Some
countries have promulgated laws on logistics with the intent of better defining the sector and its
operating environment (Arvis, et al., 2016).
How the knowledge in law can help logistics?
Thanks to globalization, lean processes, and the geographical concentration of production, among
other factors, supply chain and transport networks are more efficient than ever before. This
increasing sophistication and complexity, however, is accompanied by increasing risk (Sarah,
2012). The legal department of each company must be fully equipped with all the International

5. conventions and rules related to logistics and the domestic law because the company can save
millions of dollars unnecessary paying for the parties in breach of a contract. Therefore, any
documents prepared by the logistics department with simple mistakes and gaps in theses
transportation documents the companies may face severe legal consequences in courts. There are
several UN conventions and Hague rules as well as Multi model transportation law by UNESCO
related to contracts of international transportation of good by sea and air. Sri Lanka in 1982 directly
adopted The Hague rules to 1982 carriage of Goods by Sea act Sri Lanka. Attorneys possessed
with clear knowledge in laws related to Logistics and transportation can instruct the companies
involved in international export and import business about negotiating and bargaining of contracts,
necessary clauses related to contracts and terms and conditions, disputes resolution clause,
preparation and peruse documents related to international transportation etc. Therefore, logistics
education and training play a key role. In any country there exists certain popular higher education
stream. For example, in Sri Lanka, Engineering, Medicine, Accountancy, Information technology,
and Marketing are the most popular higher education streams (Edirisinghe, Zhihong and Shen,
2016). However, logistics is still not a buzz word in the society as far as Sri Lanka is concerned.
Global Logistics Performance
The globalization has increased the need for interconnectedness for the respective countries to
cross their borders (Edirisinghe, 2013). The Global Competitiveness Report considers twelve
variables for ranking that comprise institutions, infrastructure, macroeconomic framework, health
and primary education and higher education and training. Logistics performance both in
international trade and domestically is central to the economic growth and competitiveness of
countries, and the logistics sector is now recognized as one of the core pillars of economic
development (Arvis, et al., 2016). Thanks to globalization any country is now interdependent
rather than independent. In a global economy, no nation is self-sufficient thus many countries are
involved at various levels in trading and manufacturing and lead to produce more efficiently in
some sectors (Edirisinghe & Ratnayake, 2015). Global logistics entails trade-offs in facility
location, distribution networks, the routing and scheduling of deliveries by different modes of
travel (e.g., air, water, truck, rail), procurement, and the overall management of international
supply chains. In an increasingly global economy, then, logistics has become a very important
matter in the success or failure of an organization. It is an integral part of supply chain management

6. that involves not just operations management considerations, but production engineering and
regional science issues as well (Bookbinder, 2013). Although risks have increased, there are
concerns about the ability of organizations to address this new risk profile (Sarah, 2012). However,
the fact remains that the global integration in product, capital and labour markets has resulted in a
more efficient allocation of economic resources in terms of global utilization. For every business,
there are different logistics needs and diverse ways to evaluate operational success. A static
logistics strategy will cause serious harm to customer service and the bottom line. It’s detrimental
to not benchmark success or direction for improvement (PLS Logistics Services, nd). The results
of Connecting to Compete 2016 point to Germany as the best performing country, with an LPI
score of 4.23, and Syria as the lowest, with a score of 1.60 (Arvis, et al., 2016). Cargo logistics
assigns one or more out of five key transport modes namely, water, air, rail, road, and pipelines.
Shipping, the increasingly efficient and swift method of water transport, led to greatly reduced
transport costs, and supported a vast increase in international trade (Edirisinghe, 2016). The liner
shipping connectivity index illustrates trends in different countries (UNCTAD, 2017). The index,
uses five components: the number of ships deployed to and from each country’s seaports, their
combined container-carrying capacity, the number of companies that provide regular services, the
number of services and the size of the largest ship.
Logistics insights and the logistics review of Sri Lanka
Logistics performance depends on the availability to traders of reliable supply chains and
predictable service delivery. Global supply chains are becoming more complex, and the safety,
social, environmental, and other regulations affecting traders and operators are becoming more
demanding (Arvis, et al., 2016). Most enterprises have logistics and transportation risk
management protocols that can address localized disruptions. Global supply chain risks, however,
can have cascading and unintended consequences that no one organization can mitigate (Sarah,
2012). The World Bank’s Logistics Performance Indicator (LPI) analyses countries in six
components namely,
1. The efficiency of customs and border management clearance
2. The quality of trade and transport infrastructure
3. The ease of arranging competitively priced shipments

7. 4. The competence and quality of logistics services
5. The ability to track and trace consignments
6. The frequency with which shipments reach consignees within scheduled or expected
delivery times
From above key pillars, it is evidenced the enormous contribution of law under various
perspectives. A global shipment commenced because of an international trading activity. In
economic terms, shipping is a “Derived demand” of the international trading and not a direct
demand (Edirisinghe, et al., 2016 b). It passes two borders namely in the originating country and
in the destination country. It commonly uses multimodal transport system before reaches the
consignee. Shipping is the most popular mode for cargo transportation. It is acknowledged that
more than 90% of global trade is carried by sea (Edirisinghe, et al., 2015). From the business
perspectives, the shipping has a dispersed international nature (Edirisinghe & Zhihong, 2016 a) It
uses local and foreign infrastructure whether soft such as information technology or hard such as
ports and terminals. The system, that proved its potential as an increasingly efficient and swift
method of transport, led to greatly reduced transport costs, and supported a vast increase in
international trade (Edirisinghe, 2016). Most experts agree that the 2008 financial crisis coincided
with new trends in global trade, ending a phase when trade, and hence logistics, grew faster than
production (Arvis, et al., 2016).
For example, in the case of Boeing, the super-efficient 787 Dreamliner, 50 outside suppliers spread
around the world account for 65 percent of the value of the aircraft (Chegg study, nd). The 2016
survey confirms that the policy agenda is becoming more complex. The demand for
environmentally friendly logistics solutions, or green logistics, is gradually becoming a common
feature in most advanced logistics environments (Arvis, et al., 2016). Therefore, students’
aspiration will be limited to such sectors only. It may need a long term strategic vision by MET
institutes to systematically change the traditional trends. Many parents and school authorities may
not be aware of the opportunities available in the transport and logistics sector for Tertiary
Education in Sri Lanka (Edirisinghe, 2015). The maritime industry is already feeling the effects of
seafarer recruitment challenges even though grey clouds of unemployment are very much in the
existence particularly with respect to junior officers in the marine market place (Edirisinghe, et al.,
2016). It is evident from the market poor social awareness about the logistics industry that more
emphasis by the policy makers are essential. Sri Lanka should transform a separate statuary body

8. for logistics enhancing the necessary coordination between all border management agencies
particularly to ease bottlenecks in customs and other border agencies (Edirisinghe 2013). Logistics
support infrastructure development is a key driver in improved efficiency in supply chain. Sri
Lanka has made heavy emphasis on improving infrastructure to facilitate the hub concept
(Edirisinghe & Wijeratne, 2015). Port of Colombo presently handle about 72% of transhipment
containers from India. However, apart from the hard infrastructure the competence of workforce
and soft skills such as knowledge in legal aspects is logistics plays a critical role.
Laws related to logistics
Supply chains are complex, but their performance is largely dependent on country characteristics,
especially the soft and hard infrastructure and institutions that logistics requires to operate well,
such as imports, regulations, procedures, and behaviours (Arvis, et al., 2016). With the expansion
of electronic transactions and e-commerce around the globe the international carriage of goods
industry has developed into a multi model transportation system combination of sea, air, rail and
road in the last couple of years and benefited both the buyer and seller. In this context
transportation and logistics industry requires an understanding of UN conventions, Hague Rules,
Hague-Visby rules, Hamburg Rules, for transportation of Goods by sea. Warsaw Convention,
Montreal Convention and added protocols for carriage of Goods by Air and UNESCO multi model
law. In addition, all countries signed and ratified the above rules and conventions absorbed them
to their domestic laws, regulations. On the other hand, it is necessary to know the laws related to
marine and admiralty insurance and the relevant legal principles of supply chain management. The
principles of trade and transport facilitation have been formalized and adopted in several
international agreements under the aegis of United Nations bodies and specialized agencies (World
Customs Organization, WTO). Instruments such as the TIR Convention, the Kyoto Convention,
and more recently the WTO Trade Facilitation Agreement have been playing an important role in
motivating, guiding, and providing clear technical targets for projects in developing countries.
Other initiatives, not necessarily global, are also energizing the agenda (Arvis, et al., 2016)
Education in Logistics based Law

9. In the last decade, the logistics-based law was existed at primary stages because there was no
undergraduate or post-graduate degree specialized for logistic and transportation Law in Public or
International Universities. Currently, the Logistic and transportation law is only a subject in the
degree or post-graduate degree in Sri Lanka. The field of logistics encompasses customs
regulation, transportation insurance, documents related to carriage of goods by sea and air, military
contracting, administrative law for transportation, and other topics. In this context, logistics is a
branch of business law curriculum and many lawyers are unaware about this subject area of law.
This field won a huge attraction during the introduction of open economy in 1980s’and the early
2000 in Sri Lanka. As a result, from a layman’s perspective, but not necessarily from an academia
view point, every person mainly people involved in international trade considered the laws related
to logistics. This establishment of various government ministries and departments related to export
and import demanded for professionally qualified lawyers in this specialised area. This has resulted
in the growth of international transportation industry, which is now one of the largest export
revenue generates for Sri Lanka. Therefore, it is timely requirement to commence a law degree
and post graduate law degree based in Logistic law. The rationale for a law is that logistics
integrates many activities and may not be properly supported by a regulatory framework designed
for industrial or commercial enterprises. There is still limited international experience in this
respect. The World Bank has so far advised two countries, Greece and Morocco, in preparing a
regulatory framework for logistics (Arvis, et al., 2016). Therefore, education in logistics-based
law is undoubtedly a key driver in improved logistics performances.
What Do Transportation and Logistics Lawyers Do?
There is a big demand from the blue-chip companies and International shipping companies for
lawyers who expertized the area of international transportation and logistics for resolve the burning
issues raised by their client in the recent past. The following work is done by the logistic lawyers.
• Preparation of transportation contracts and the documents related to insurance for client
shippers
• Acting on behalf of clients in business negotiations with trucking and brokerage companies

10. • representing clients in international shipping matters, including border crossing issues,
customs, and freight forwarding
• keeping up with pending transportation legislation and advising clients on these matters
• representing international airport authorities in matters of everything from debt issuance to
rental car agreements to construction matters to aviation regulatory and compliance
matters.
• representing both trucker dealers and jet aircraft sales/broker companies in operations,
expansions, and acquisitions
• Update the clients in relation to amendment of laws and regulations including by-laws
related to logistics
Conclusions
This article emphasised the need for expanding the legal logistics education beyond the general
university curriculum. Multifaceted benefits for lawyers who are aware commercial laws and laws
related to logistics. Many logistics companies do not pay much attention to develop competencies
in law related to logistics and supply chain despite the potential risks associated in their business
in this area. Usually these companies designate this responsibility totally to consultancy firms
because it is a specialized area. As a result, the company’s learning curve does not improve in
logistics matters with a legal background even if the similar type of legal matters are frequent
occurrences. Although the legal matters are highly complicated and should be handled by the
qualified law professionals the respective staff in other departments such as marketing, operation
and customer services should be able to at least analyse a case and understand its legal background
to propose policy guidelines thus to avoid repetitions of that nature. This could also be considered
an effective capacity building effort in a company that provides the respective staff with required
skills to contribute in an effective manner.
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About authors
Dr. Prathiba Mahanamahewa is an Attorney-at-Law specializing in both
Business and Commercial Law areas. He holds a Ph.D, in Law from
University of Queensland, Australia. He is the founder Dean Law,
Kotelawala Defence University and Former Commissioner Sri Lanka
Securities and Exchange Commission and Director of Studies LL.M
program and reviewer in many local and international law Journals. .
Dr. Lalith Edirisinghe commenced his carrier in 1981 as a trainee Cadet Officer in
Merchant Navy under Ceylon Shipping Corporation. He holds a PhD, in
Transportation planning and Logistics Management. He is an Editor of the Research
for Transport and Logistics Industry and CINEC Academic Journal. and reviewer in
many international journals. He counts 37 years’ work experience in the fields of
maritime; Marketing, supply chain management in both government and private
sector organizations.