Market Trends of Sri Lanka Freight And Logistics Industry
Increase in Sea Freight Transport
The deep-water coastline close to Indian Ocean Shipping Lanes makes the Hambantota port add a unique geographical factor that most of its neighboring ports lack. It is helping it handle the world's largest container ships and supertankers.
With a strong base of air and sea freight transport segments, Sri Lanka's freight and logistics market has been expanding its business. Colombo Port of Sri Lanka alone can handle around 20 million TEUs per annum, registers a throughput of more than 8 million TEUs per annum, and has been serving 33 major shipping lines.
The timely completion of the ambitious Colombo Port Expansion Project would increase the container handling capacity to 12 million TEUs per year and become one of the largest container ports in the world. In April 2023, Sri Lanka launched the project to build the largest commercial and logistics complex in South Asia at the Port of Colombo with an investment of USD 392 million.
The investment in the project is expected to bring much-needed foreign investment into Sri Lanka. The construction of the complex is expected to be completed by the end of 2025. Moreover, the project will also improve the operational efficiency of the Port of Colombo and introduce leading-edge technology and innovation.
Moreover, in August 2023, Chinese state-owned firm China Merchants Group (CMG) announced that it planned to construct a logistics complex in Sri Lanka with a USD 392 million investment. Hence, growing investments in the Port of Colombo are expected to drive the sea freight transport segment during the study period.
Improving Export Performance
As reported by WTO, in 2022, goods with a value of around 13.11 billion U.S. dollars were exported from Sri Lanka. Merchandise exports in the first half of 2022 increased by 12.4% compared to the same period in 2021, which included major product divisions other than teas, spices, and concentrates.
Apparel and textile exports increased by 19.73% in the period from January 2022 to June to USD 2,967.39 million compared to the same period in 2021. Excluding ready-made clothing accessories (-8.7%), yarns (-21.38%), and textile flooring (-3.28%), exports of other sub-categories of the clothing and textiles sector increased. From January to June 2022, export earnings from coconuts and coconut-based products increased by 12% to USD 434.34 million.
Due to the improved export performance of liquid coconut milk, coconut cream, coco peat, mattress fiber, activated carbon, coconut oil, and coconuts, coconut-based exports increased for the period January to June 2022. Meanwhile, revenue from exports of electrical and electronic components (EEC) increased by 12.96% to USD 228.12 million in the period January to June 2022 compared to the corresponding period in 2021. Exports of insulated wire to the United States increased by 18.68%, i.e., USD 40.54 million for the period January-June 2022, compared to the same period last year.
Moreover, during the period from January to June 2022, exports of switches, circuit boards and panels, transformers, and other electrical and electronic products increased by 8.29%, 18.87%, and 9.14%, respectively, compared to the same period last year. Increased seafood export revenues from January to June 2022 increased by 33.64% compared to 2021 to USD 142.17 million due to improved performance in all sub-categories except lobster.
Frozen fish (20.97%), fresh fish (70.51%), and shrimp (86.04%). In addition, revenue from ornamental fish exports increased by 51.49% to USD 10.15 million in the period from January to June 2022. However, tea export earnings for the period January to June 2022 decreased by 11.25% compared to the corresponding period in 2021 to USD 577.38 million.
Export earnings of rubber and finished rubber products for January-June 2022 decreased by 0.64% compared to the same period in 2021 to USD 516.62 million. However, during the period January to June 2022, exports of pneumatic and reclaimed rubber tires and hoses increased by 8.45% compared to the same period in 2021. Hence, increasing exports from Sri Lanka is expected to drive market growth during the study period.
