SL’s shipping economy faces challenges in vessel volumes due to Cyclone Ditwah
Sri Lanka’s shipping economy is likely to face significant challenges following the 2025 flood catastrophe. The country’s ports, particularly the Port of Colombo, plays a crucial role in the nation’s economy, and the recent floods have caused substantial damage to some infrastructure and disrupted daily operations due to continued adverse weather, says Nilud Fernando, a professional in international shipping and logistics.
Mr. Fernando told the Sunday Times Business:, “The country’s shipping economy is expected to face challenges in the short term, but with support and investment from the international community including financial assistance and technical expertise, the industry can recover and continue to play a vital role in the nation’s economic growth.”
The initial damages estimates place the economic cost at up to US$ 7 billion, which is approximately 7 per cent of the country’s GDP, exceeding the combined budget for healthcare and education. The aftermath includes over 86,000 damaged or destroyed houses, two-thirds of railway lines unusable, blocked major roads and bridges, destruction of industrial plants and machinery, and damage to agricultural lands and irrigation infrastructure, he added.
Mr. Fernando highlighted, “Given the current circumstances, we project that export volumes will be relatively low in the short term. However, we anticipate that Sri Lanka will recover and bounce back moving forward. It appears the country will need to rely on imports in the short term to supply essential goods until the situation normalises. As a result, we expect foreign exchange reserves to drain more quickly than projected, but this course of action is necessary.”
To mitigate the impact on the shipping economy, the government may need to implement short-to-long term measures such as, prioritising repairs to damaged infrastructure, including ports and transportation and logistics networks, implement measures to facilitate trade, such as streamlined customs procedures and reduced bureaucracy, provide financial assistance to affected businesses, including highly affected export companies and logistics providers, financial relief to agri-based exporters and prawn farming, especially tea, rubber, coconut fibre and seafood sectors and offer facilitation measures to help exporters in creating global buyer confidence, noted Mr. Fernando.
On a global shipping context, he also mentioned, while a ceasefire has been reached in the Israel–Gaza region, the situation remains fluid, and the long-term stability in the area is still uncertain. Carriers are continuing to monitor the overall security environment, as risks, including the durability of the ceasefire and potential security constraints along the Red Sea corridor, may still impact the safe and reliable passage of vessels.
Discussions on resuming the Suez Canal routing will begin once there is a clear visibility and sustained stability in the region. Currently there is no definitive timeline, but the projected resumption date once viable will be in the first or second quarter of 2026.
The revival of the Suez Canal is crucial for global trade, as it connects the East, America, Europe, Asia, and the Middle East. Resumption of the route will reduce voyage times, lower fuel consumption, and ease capacity pressure. “We also note that insurance companies are awaiting further assurance prior to signalling a green light for passage,” he added.
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