Sri Lanka’s strategic location among the main marine and air navigation routes within the South Asian region makes the country a lucrative destination for entrepot and logistic development.
The country’s close proximity to emerging markets, and it’s already developed air and seaports in Colombo and Hambantota makes it an important logistics hub in the region providing entrepot and transhipment services to leading shipping lines and exporters.
During the last five years, the World Shipping Council has consecutively ranked Sri Lanka’s Colombo Port among Top 50 World Container Ports above other South Asia ports based on the volume of the containers handled.
Sri Lankan logistics services contribute 2.5% of gross domestic product, which represents around USD 2 billion. Logistics services include container trucking, warehousing, ports and shipping, but exclude domestic transport of passengers, fisheries and interregional domestic cargo transportation.
The total share of logistics in national exports is estimated at 7%. The industry provides full-time direct employment to over 40,000–50,000 people. Around 70% of registered service providers are of local origin while the rest are multinational. Currently, there are 130 shipping agencies and 120 freight forwarders in associations, and 500+ companies registered with the Merchant Shipping Secretariat (MSS), which also includes clearing agents.
In addition to the expansion of its seaports, the country also has the highest road density in South Asia, with 173.9 km of roads per 100 square km of land, connecting all major seaports and airports. The country also has 22 international and domestic airports, with five international airports situated in Batticaloa, Colombo, Hambantota, and Jaffna.
In its ambitious plan for the future, the country is aiming at becoming a multimodal logistics hub providing integrated services and facilities by developing a physical, telecommunication, and information technology infrastructure between the air and seaport facilities in Sri Lanka.
For the last ten years, the Port of Colombo reported a steady growth of 4.5% in container traffic and transhipment volume accounted for more than 75% of the total container quantity.
There are three types of trans-shipment methods practised in Sri Lanka:
Sri Lanka is the main transhipment hub for the Indian subcontinent, mainly to Indian Peninsular and other South Asian Countries, mainly to take the best advantage out of the free trade agreements between South Asian countries (SAFTA), Sri Lanka and Singapore, and the country’s participation in the Generalized System of Preferences (GSP).
Colombo Port focuses on container trans-shipment largely for the textile industry while Magampura International Port in Hambantota provides services mainly for vehicle transhipment (roll-on/roll-off operations). Japanese, Korean and Indian carmakers use this port for trans-shipping vehicles built in India, Thailand, Japan and China to markets in Africa, the Middle East, Europe and the Americas.
Sri Lanka’s growing reputation as a marine engineering hub in the South Asian region and our growing capacity in offshore engineering has also added to the country’s reputation as an emerging logistics hub providing a complete suite of logistic services.
At present, Sri Lanka provides other auxiliary maintenance and replenishing services including dry and wet dock repairs, crew changes, supplying and replenishing victuals and water. Apart from Sri Lanka’s reputation as a low-cost supply base and the recently introduced special tariff reductions for transhipment facilities, the country also offers unique aspects in relation to its position and size.