Unlocking potential of logistics industry: Addressing challenges and leveraging opportunities

THE logistics sector is a critical determinant of a nation’s economic strength, influencing both microeconomic efficiency and macroeconomic growth by facilitating trade, enhancing supply chain resilience and ensuring the timely delivery of goods and services. In Sri Lanka, the aspiration to establish a prominent regional logistics hub linking international maritime and aviation routes highlights the direct correlation between logistics performance and national economic development. This ambition is especially relevant given the country’s strategic geographical location, which has historically attracted substantial investment and supported significant growth in air and sea connectivity as well as cargo-handling capacity

- By Chitral Jayawarna

Despite these inherent advantages, Sri Lanka’s logistics sector faces persistent challenges. The country ranked 74th out of 139 in the World Bank’s 2023 Logistics Performance Index, improved from its 92nd position in 2020 but still highlights structural issues within the logistics framework, particularly concerning the quality of trade and transport infrastructure. Such indicators signal the need for a comprehensive analysis to identify underlying bottlenecks and to leverage emerging opportunities for strategic improvement.

The logistics sector plays an essential role in supporting Sri Lanka’s trade, transport, and supply chain management systems. As of 2023, it contributes approximately 1.5% to the national GDP reflecting its importance to the economy.

Sri Lanka’s strategic location along major international shipping routes makes it a vital regional trade hub, particularly in South Asia. According to the Central Bank of Sri Lanka, freight traffic through the Port of Colombo reached around 7.7 million TEUs (Twenty-Foot Equivalent Units) in 2024 representing a 12.3 % increase from the previous year. The country’s road network spans over 100,000 km, with about 14,000 km of paved roads facilitating domestic distribution.

Rapid urbanisation and the rise of e-commerce have further boosted logistics demand, with the sector projected to grow at a compound annual growth rate (CAGR) of approximately 8% over the next five years. However, even with these positive indicators, infrastructure bottlenecks and regulatory barriers continue to constrain operational efficiency.