Given Sri Lanka’s reliance on effective border agency operations, with trade being a significant component of its economic growth, the recent delays in cargo clearance have disrupted the flow of goods, increased costs, and affected its competitiveness in global trade.
Apart from the immediate impact of cost escalation, these delays also create supply chain disruptions, throttle foreign investment, erode trade competitiveness due to congestion at ports, and lead to losses in Government revenue.
This situation, which leads to prolonged delays in cargo handling and clearance, not only poses an impediment to Sri Lanka’s economic recovery efforts, but drives up overall trade expenses as well, ultimately impacting the end consumer.
Minimal impact on food imports?
Customs House Agents’ and Traders’ Association President and Association of Clearing and Forwarding Agents Vice President Tuan Ghouse Arfin told The Sunday Morning that as of Wednesday (29 January), 2,050 containers were being delayed at all three port container terminals since the previous day.
“Usually we get 700-800 containers of food products. These are products that have to be checked for quality and tested by the food inspector, the Sri Lanka Standards Institution (SLSI), etc.,” he said, explaining that many entities were involved in ensuring that statutory requirements were followed.
Meanwhile, Essential Food Commodities Importers’ and Traders’ Association (EFCITA) Spokesperson Nihal Seneviratne pointed out that the impact of the container delay was minimal for food items, since food items had priority when it came to Customs clearance.
“While there is some impact on food imports from the delays, it is not significant. Food items anyway receive priority and are released, so there is no notable concern unlike for other products.
“More than from Customs, the delay for food items comes from the other Government authorities involved in the process, such as the SLSI, plant quarantine, food inspectors, etc.,” he stressed. “This is why if Customs operates 24/7, SLSI officials should do the same, since this is where the issue arises.”
Additional delays were also created when products arrived from the port to Rank Container Terminals (RCT) given the delay in issuing passes, he noted.
Similarly, EFCITA President G. Illamanathan said that perishable cargo was always given priority, which meant that food items typically faced no delays, although there were sometimes delays in dry cargo.
“We had some issues with delays the previous week, because we had a transport problem given a scarcity of lorries due to a request for SLSI certificates. However, they have found a solution to this to immediately unload the goods and release the lorries.”
Economic toll
When goods remain held up in the clearance process, the accumulating demurrage and other storage costs lead to increased expenses for business. With resulting thinner margins, businesses pass on these costs to consumers in the form of higher prices, with the increased price of local retail goods contributing to the cost of living.
Explaining the Customs delay, Arfin noted: “A committee was appointed to decide whether cargo has to be screened and sent to stores, etc. However, Customs does not want to do that; they want to check all containers, which may lead to examination expenses, such as for unloading and reloading, which will take time.
“You have to spend money when you open containers; loading and unloading expenses, examination expenses, Grayline charges, etc. will add up to about Rs. 50,000, Rs. 100,000, or Rs. 125,000 depending on the product. This is the problem we are facing now.”
The actual number of containers cleared by Customs has been consistently lower due to reduced attendance by clearance agents and lorry drivers. Despite efforts to expedite the process, significant backlogs remain.
Similarly, Ceylon Freight Forwarders Association (CEYFFA) General Secretary Inam Caffoor noted: “With the current Customs examination, even importers with clean records have been inspected. Since Sri Lanka does not have the facility to accommodate the inspection at the examination yard, it creates a backlog.”
He attributed this to an intention to collect more revenue, which nevertheless created a ripple effect in terms of delays, demurrage, and detention of containers and lorries.
While he acknowledged the Government moves to resolve the issue, he pointed out that “the management of Customs has to work as per the instruction given by the President” in order to effect a resolution.
Meanwhile, speaking to The Sunday Morning, University of Peradeniya Department of Economics and Statistics Prof. J.M.A. Jayawickreme observed that since Sri Lanka’s economy was heavily dependent on imports of not only consumer goods, but also investment and intermediate goods, cargo clearance delays created serious issues due to disruption of production as well as supply to the domestic market.
“Customs is extremely important for economic activities, especially since we are a trading economy that exports as well as imports goods. Almost all imports and exports take place under Customs surveillance and delays are a serious issue in terms of production, which means exports, as well as imports.
“Operating within a modern day economy and supply chain network, whatever we import needs to go to production immediately and whatever we export should reach the destination at the required time.”
Addressing consumer impact, he noted that Customs delays meant that goods would not reach the market at the right time to meet demand.
“From consumption to production and export, all economic activities are heavily dependent on foreign trade and Customs. If Customs cannot deliver its services efficiently, it will ruin the economy.”
Attempts at resolution
Amidst growing concerns over congestion at Colombo Port terminals, Sri Lanka Customs announced a special programme aimed at resolving container clearance delays at the Colombo Port following directives from President Anura Kumara Dissanayake.
According to Sri Lanka Customs Media Spokesman and Additional Director General Seevali Arukgoda, the reasons for the recent congestion were primarily the reduced examination yard capacity, in addition to the lack of coordination among agencies involved, leading to delays and logistical issues.
Nevertheless, speaking to The Sunday Morning on Wednesday (29), Arukgoda said that while congestion persisted, it was gradually easing.
“Through the Cabinet subcommittee that was appointed, under the leadership of Minister Bimal Rathnayake, we are taking action gradually, discussing with relevant agencies to ensure simultaneous contribution, timely arrival of clearing agents, etc. With this coordination, we are seeing the congestion gradually easing.”
Further, with the advent of the Chinese New Year, Customs anticipates a clearing of the backlog of containers.
“About two weeks before the Chinese New Year (commencing on 29 January), factories close for about a month. Therefore, going forward, we will experience a reduction in containers imported from China, which will be a blessing in disguise, allowing us to clear the current backlog.
“With the additional yard that will be given on 31 January nearing completion, it will increase the capacity for clearing containers. Moreover, we are in discussions to adopt several temporary additional yards soon.”
Accordingly, he noted that the gradual implementation of recent measures were demonstrating slight improvements to the situation. “In two weeks this situation will be resolved,” he asserted.