Ships re-route to India as unrest slows Lanka port

Political protests, lack of fuel slow trucks available to transport containers SHIPPING COSTS A KEY DRIVER OF GLOBAL INFLATION: IMF

Sri Lanka's political turmoil is prompting some shipping lines to detour to Indian ports instead of calling at Colombo, one of the key supply-chain hubs in Asia.

Political protests and a lack of fuel have slowed the number of trucks available to transport containers of textiles and other goods between Colombo's terminals and supply chains, according to freight forwarders and analysts. That's created a growing backlog of boxes at the port that shipping companies want to avoid, they said.

Container shipping companies often make a stop at Colombo on Sri Lanka's west coast to pick up or offload cargo while sailing on routes from Asia to Europe. However, a steady flow of container volume has headed to India's ports in the past month, according to Christian Roeloffs, the founder of

The spike in shipping costs witnessed after the pandemic has been an important driver of inflation across the globe. The multi-fold increase in shipping costs contributes 1 to 1.5 per cent to the inflation rates around the world, said the International Monetary Fund.

logistics services platform Container xChange.

"Colombo has had to witness major cargo diversion

“We find that when shipping costs go up, you get inflationary impacts all around the world. And those impacts, if you were to compare the contribution to inflation that you get from these shipping cost increases, it's actually comparable to other global variables like oil prices and food prices,” said Yan Carriere-Swallow, senior economist in the IMF's

to Indian ports," said Roeloffs. "Given the foreign exchange crunch and fuel scarcity, the ports of

Asia and Pacific Department.

On an average, a country spends 7 -8 per cent of the value of all goods imported towards shipping costs. In some countries, it can go up to 20 per cent.

When the shipping costs go up, producers who are importing their inputs would see the prices in local currency increasing immediately.

Sri Lanka have seen a major setback in trade operations."

Officials disputed any major disruptions at port.

"The Colombo port is running smoothly," said Upul Jayatissa, managing director of Sri Lanka Ports Authority. "Trucking, deliveries all are normal."

The port issued a joint statement with container terminal operators and ship agents earlier in the week to reassure shipping companies that operations are being carried out without interruption. Trucks are being prioritised for fuel, although some imported cargoes face delays clearing customs due to the shortage of foreign currency, the statement said.

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