Sri Lanka loses status as South Asia’s de-consolidation hub after customs clampdown

Sri Lanka
By Editor_1
Until recently, Sri Lanka functioned as a key logistics centre where bulk consignments from global e-commerce giants were brought in, de-consolidated in Colombo, and then redistributed to markets such as India -advantis.world

COLOMBO – Sri Lanka has lost its position as a regional de-consolidation hub for online retail platforms in South Asia following recent restrictions imposed by Customs, an opposition legislator has revealed.

Until recently, Sri Lanka functioned as a key logistics centre where bulk consignments from global e-commerce giants were brought in, de-consolidated in Colombo, and then redistributed to markets such as India. The process reduced shipping costs and gave Colombo a competitive advantage in regional logistics.

However, Sri Lanka Customs has introduced new rules requiring duties to be levied on individual items ordered online, ending the bulk clearing system based on weight. As a result, online platforms have stopped routing daily shipments through Colombo.

“Even though Sri Lanka remains a good consolidation centre, the logistics operation has completely stopped,” opposition legislator Ravi Karunanayake, who has expertise in logistics, told the Committee on Public Finance. He explained that earlier, consolidated shipments arrived directly in Colombo, where goods destined for Sri Lankan consumers were separated, while the rest were dispatched to Indian cities such as New Delhi, Chennai, and Trivandrum.

Customs officials, however, stressed that the new procedures apply only to goods consigned to Sri Lankan customers and do not affect transit or transshipment cargo. “Only those coming to Sri Lanka are under the new customs procedure,” one official clarified.

Karunanayake countered that by diverting shipments elsewhere for de-consolidation, Sri Lanka was now losing revenue and opportunities to strengthen its position as a logistics hub. “Please look at how things are done in Singapore, Hong Kong, and Thailand,” he urged.

The clampdown has had a direct impact on consumers as well. What once cost nearly nothing in shipping from platforms like AliExpress now costs around Rs 18,000 to bring in even a small item, such as a replacement laptop key cap.

Media reports previously indicated that AliExpress halted low-cost shipping to both Sri Lanka and Pakistan following the restrictions, though it remains unclear whether Pakistan-bound shipments were also processed through Colombo. In contrast, free or low-cost shipping is still available to Bangladesh, which maintains a more liberal trade policy and has been strengthening its manufacturing base despite lacking Sri Lanka’s locational advantage.

The loss of the de-consolidation trade underscores long-standing concerns from analysts that excessive protectionism, driven by lobbying from local industries, continues to undermine Sri Lanka’s potential as a logistics hub. A government committee has been appointed to review de minimis-style imports, but industry observers say this alone will not revive Colombo’s lost status without new procedures to facilitate cargo clearing.

–ENCL/EN

Editor_1
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