Overview
This paper analyzes the condition of Sri Lankas supply chain and then discusses the pros
and cons of setting Colombo, its capital city, as Sri Lankas logistics hub by using CAGE
distance framework.
Introduction of Sri Lankas Supply Chain Condition
Sri Lanka, a lesser developing country with $5,700 GDP per capita ranking 145th in the
world, is an island located in Southern Asia. Its strategic location near major Indian Ocean
sea lanes stimulates the government to promote and enhance Sri Lanka as a regional
logistics hub with a reputation for reliability, integrity and high standards.
However, currently the logistics infrastructure in Sri Lanka is not good enough and the
transport costs in most sectors of its economy are fairly high. Sri Lanka is relatively a
small country in its region. The terrain is mostly plain, with some mountains in
south-central interior. As a result, an amazing 99% of the countrys freight is handled by
roadway. But the safety and efficiency are still waiting to be improved. What makes things
even worse is that there is little inter-modal transportation available in Sri Lanka, which
impedes the country being a truly efficient hub.
The low-efficiency logistics network creates significant problems to several industries. As
a nation specialized in agribusiness, for instance, more than 30% of the agricultural
products go to waste before reaching the consumer. This highlights the importance of
having a reliable hub and making greater investment in the infrastructure.
But the lasting violence between the government and Liberation Tigers of Tamil Eelam
(LTTE) significantly impeded the economic development of Sri Lanka. Fortunately, by
