By Sean Van Dort, Logistics Sub-Committee Chairman – Garment Association Joint Forum
In shipping and logistics, persistence pays off. After 2 years of growing congestion and unprecedented increases in freight rates, signs are finally showing that the situation is improving. The majority of Asia’s largest ports are finally showing signs of easing congestion just before the holiday season.
These improvements could not have come at a better time given that ocean freight rates had trended upward since the second half of 2020. As of September 2021, rates had increased 292% year-on-year. 1.
While the consensus is that freight rates would not normalize until at least the end of 2022, it also seems unlikely that they will increase much more now, given that two of the largest container companies in the world have recently committed to freeze their spot rates and postpone any further increases in spot freight rates for containerized cargo. Barring other unforeseen disruptions, and supported by similar measures from other carriers, we may see further improvements in freight rates much sooner than originally anticipated.
Naturally, these developments have major positive implications for Sri Lankan exporters in general, and garment manufacturers, and their buyers in particular, as input costs begin to normalize and the pressure on bottom lines eases. In all areas.
Unprecedented challenges met with unparalleled agility
Prior to COVID, Sri Lanka was one of the most connected countries in South Asia, both in terms of shipping and air transport. Given Sri Lanka’s ideal geographic location and booming tourism industry at this time. This meant that on average Sri Lanka had an average of 200 ships per month, and 78 other flights and cargo operations entering and leaving the country on a weekly basis.
At the height of the pandemic and the closures, when the port experienced mooring congestion, the total number of passenger planes was reduced to zero, and ultimately to 1 ship, and then to none. While these numbers have since improved, in the meantime it was up to the Sri Lankan logistics industry to keep the country’s exporters afloat, ensuring that Sri Lankan manufactures reach buyers despite all the odds. challenges that arise.
The clothing sector – which accounts for nearly 40% of Sri Lanka’s exports, has had to take the lead in innovative solutions to the crisis. For the first time, air freight has been used over sea routes to import the majority of raw materials, or even to export orders that would have been delayed had we waited for the resolution of the maritime crisis.
With Sri Lanka entering its most intense phase of foreclosure and airport closures, the industry immediately turned to partnerships with specialist freighters until passenger and freight planes could resume. As the situation has improved significantly since then, Sri Lanka’s logistics sector has proven itself and we have proven our ability to tackle unprecedented challenges with exceptional agility. Our success in the face of such immense challenges is not accidental either.
Especially for clothing logistics: time is money
Sri Lanka’s trusted reputation as a global apparel leader is the result of several factors: our commitment to quality, our investments in our people and in technology. But the apparel industry doesn’t just deliver quality, it delivers on time.
Everyone understands that fashion and clothing are notoriously fast-paced pursuits. With clothing making up the vast majority of Sri Lankan exports, this means Sri Lankan clothing and logistics companies have had to collaborate in order to meet international demands. Therefore, clothing has played a major role in elevating Sri Lanka to its current position among the most nimble supply chains in Asia.
Given Sri Lanka’s ideal location, the island attracts supply ships from across the region, meaning Colombo is often the last port of call in Asia before ships embark to western ports. . Additionally, most buyers of Sri Lankan Apparel tend to have forward contracts already in place with major shipping lines, which means that wherever possible ships are legally obliged to call in Colombo. While providing immediate benefits to the garment sector, it also creates opportunities for other Sri Lankan exporters.
Since clothing adds less weight to ships compared to commodities, this is often the final item to be loaded as cargo, which means it can also be unloaded faster. These minor benefits add up to immense time savings on a large scale. The same goes for other Sri Lankan exports.
Internally, Sri Lanka’s logistics capabilities are unmatched and the industry can confidently guarantee that cargo can be moved from any point in the country and transported to an international port and ready for loading within 24 hours.