A supply chain is a sequence of processes and flows that aim at meeting customer requirements. Other than manufacturers and suppliers, the supply chain also includes transporters, warehouses, retailers, and consumers. It usually covers the areas of new product development, marketing, operations, distributions, finance, and customer service. These dots are connected through the threads of logistics.
Even though the importance of logistics cannot be explained, the relevance of logistics activities needs to be updated with the changes in global trade. This can be affected through changes in customers demands and product characteristics. Changes in production philosophy and processes will also lead to changes in logistics. Most supply chains in today’s world tend to be globalized. This happens as a result of global competition and the rapid changes in market environments. Addressing the need for improvement, governments around the world have focused on expanding their infrastructure facilities supporting their logistics sectors to fit in with these rapid changes.
During the past years, world economic and political power has shifted towards emerging economies. For example, China has become the main economic power in the world. Going back to the beginning of the 21st century, the Chinese Maritime Silk Road was able to build and improve trade activities between Western Europe and East Asia, allowing the intervening countries (The Silk Pearls) to identify their trade potential. This was also one of the initial reasons that highlighted the efficiency of trade done via the Indian ocean.
As the third-largest water body of the world, the Indian ocean continues to feed Asia’s largest economies. It contains some of the most strategic sea lines that have added value to the countries surrounding it. The waters are also a platform for many political initiatives resulting in the world’s major powers deploying their military forces in the Indian ocean. While everything is happening at once, the sea area continues to stay ahead of the trading game.
Sri Lanka is a strategic location present in the middle of the Indian Ocean. It is also one of China’s Silk Pearls since its geographical location provides massive support for trading activities. Most of the maritime trade routes are set around Sri Lanka. The southern tip of the island is considered to be critical since the disturbance that may arise by any ship passing through that region will have a huge impact on the international maritime trade.
Sri Lanka has positioned itself as the logistical hub of South Asia. The country has achieved this status by the help of the location that it is blessed with, its investments on infrastructure, and its favourable regulatory environment. The natural harbour of Trincomalee which is located in the North East Coast of Sri Lanka was the main reason for many foreign invasions in the country’s past. Even though the island’s vision of becoming a maritime hub was pulled back due to security concerns until 2009, the trading performance of the country blew after the political disputes were settled and opportunities were made available for investments.
The Colombo port is the only deepwater port in South Asia and the only port situated between Singapore and Dubai that can retain new versions of large vessels. Sri Lanka is also the regional leader in handling mega-ships and terminal capacity. The South Terminal of the Colombo port has a capacity of 2.4 million Twenty-foot equivalent units (TEU) in terms of equipment and manpower.
In 2018, the port was able to handle 7.2 million TEUs. In terms of logistics, the port has initiated projects to increase its LPI ranking. It looks forward to providing more warehouse facilities to its customers. It also plans on increasing its land from 4.5 acres to 5.5 acres. A logistics centre is also to be constructed within the mentioned land context to promote the efficiency of the port’s logistics.
The infrastructure supporting a country’s logistics base does not limit to the coast. Logistics is a wider concept that is applicable almost everywhere. Having a reliable road network is highly important when enhancing the productivity of the logistics sector. In Sri Lanka, the road network is responsible for 95% of all passenger traffic and 98% of freight. The current national highways of Sri Lanka account to 12.290 km. In 2017, a loan of 125 million USD was taken from the world bank to extend the road section between Ja-Ela and Chilaw. The motive of this project was to make transport easier and safer. A new four-way elevated highway was built and presented to the public this year. This highway connects Athurugurya with the Kalani bridge which further extends to the Port city and Orugodawatta junction. Sri Lanka also has South Asia’s highest road density.
Taking off from the land, the logistics base of Sri Lankan airports are also found reliable and continues to improve further. Sri Lanka has 2 international airports and 18 domestic airports. The main passenger and cargo activities are handled by the Bandaranaike International Airport (BIA).
BIA is designed for 6 million passengers and 250,000 tonnes of cargo annually. In 2016, BIA handled over 7 million passengers. The ground handling operations of cargo is an important aspect that requires a reliable logistics base. Ensuring that the cargo is ready for carriage through the build-up, storage, polythene wrapping, import retrieval, and customer delivery are some of the activities done through ground handling services.
The Sri Lankan cargo terminals can handle all commodities of cargo. They also major in carefully handling risky cargo such as temperature-sensitive perishables. The logistics covering the air freight operations at BIA guarantees safe and secure movements to and from Sri Lanka as these facilities comply with international standards and certifications. (1)
Supply chains around the world compete when it comes to being relevant while delivering an outstanding service. According to logistics 4.0, Warehousing has been identified as one of the foremost valued-components of a supply chain. Warehouse based functions have been transforming during the past years. Sri Lankan warehousing facilities tend to be mostly labour intensive resulting in a decrease in performance at times when facing a labour shortage. Smart logistic components targeting the improvement of labour-intensive warehouse systems have come into being. Therefore, the Sri Lankan logistics sector is looking forward to digitizing the warehouse facilities to improve productivity while minimizing human intervention.
When handling cargo, Sri Lanka requires re-engineered clearance systems and procedures that are relevant to cross border movements of cargo. The use of new communication tools with cutting edge functionalities would be the key point of improving Sri Lankan cargo handling. These operations are currently carried out only within the port bases, This limitation has led Sri Lanka to lose a lot of business. Therefore, the expansion of the cargo handling area is highly required.