Importance, challenges and opportunities of ship chandling industry in Sri Lanka

 The ability to provide competitive, reliable ship supplies makes Sri Lanka an attractive stopover for vessels, helping the nation improve its foreign revenue generation even during difficult times

As Sri Lanka’s ports continue to serve vessels traversing key East-West shipping routes, their importance in the maritime supply chain grows. Sri Lanka’s strategic location and its key ports – Colombo, Galle, Trincomalee and Hambantota, position the country as a crucial player in global shipping. As the industry navigates economic challenges locally and works to attract new talent, it remains a steadfast contributor to the nation’s economy, even in the face of adversity

What is ship chandling?

Sri Lanka’s ship chandling industry, while not widely known outside maritime circles, plays a vital role in contributing to the country’s economy. This industry provides crucial services to ships calling Sri Lankan waters, including provisions, fuel, spare parts and safety equipment. A ship chandler refers to a supplier who ensures that ships are adequately stocked to manage long sea voyages. Sri Lanka, an island nation strategically positioned along major international shipping routes, has emerged as a pivotal hub for ship chandling. 

Despite challenging global and local crises, including the COVID-19 pandemic and the country’s economic downturn, Sri Lanka has remained a resilient and indispensable ship chandling services provider. The industry contributes significantly to foreign exchange earnings, creates jobs and plays a crucial role in supporting global maritime trade.

In this article, we explore how Sri Lanka’s ship chandling industry generates essential foreign revenue, creates direct and indirect job opportunities and continues to serve global clients despite the country’s economic struggles. We will also discuss the challenges faced by the industry, such as high import barriers, a reluctance by the younger generation to join the industry and price sensitivity in the market. Moreover, we will highlight the importance of key ports such as Colombo, Galle, Trincomalee and Hambantota for the growth of this industry, as well as future opportunities if the State assists in promoting Sri Lanka’s geographically blessed location to become a key service provider on the East-West maritime route.

 Services provided by ship chandlers in Sri Lanka

Sri Lankan ship chandlers offer a wide range of services to vessels calling local ports, including but not limited to the following:

Provisions: Ship chandlers supply food, water and other provisions essential for the crew’s sustenance during long voyages. These include fresh produce, canned goods, beverages and even luxury goods for large, elite vessels.

Fuel and lubricants: Fuel bunkering is a critical service provided at Sri Lankan ports. Ship chandlers ensure that the ships are stocked with the fuel and lubricants required for their journey.

Spare parts and vessel maintenance supplies: From spare parts to repair materials, ship chandlers offer all the necessary tools and supplies for vessel maintenance and repairs while at sea.

Safety and navigation equipment: Safety gear such as life jackets, fire extinguishers and medical supplies are crucial for ship operations. Ship chandlers provide these, ensuring vessels comply with international maritime safety standards.

Crew welfare services: In addition, ship chandlers supply leisure goods and communication equipment for the crew and arrange services such as medical checkups.

Strategic location and economic growth: Driving foreign exchange revenue

As Sri Lanka’s ports continue to serve vessels traversing key East-West shipping routes, their importance in the maritime supply chain grows. Sri Lanka’s strategic location and its key ports – Colombo, Galle, Trincomalee and Hambantota, position the country as a crucial player in global shipping. As the industry navigates economic challenges locally and works to attract new talent, it remains a steadfast contributor to the nation’s economy, even in the face of adversity.

Sri Lanka’s economy relies heavily on foreign exchange earnings to maintain a healthy balance of payments. While industries like tourism and tea exports are often considered as major foreign exchange earners, the ship chandling industry quietly plays a significant role in bringing much-needed foreign revenue to the country.

Each year, thousands of ships pass through the East-West maritime route around Sri Lanka, connecting the Far East with the Middle East and Europe. These ships rely on local ship chandlers to provide essential supplies such as food, water, fuel, spare parts and safety equipment, ensuring that their operations run smoothly while at sea.

As an export service, the ship chandling industry brings in foreign currency directly from the shipping companies that require these supplies. For a country like Sri Lanka, which has faced severe economic difficulties including a foreign exchange crisis, this income is crucial. The ability to provide competitive, reliable ship supplies makes Sri Lanka an attractive stopover for vessels, helping the nation improve its foreign revenue generation even during difficult times.

The Sri Lankan Government has recognised the importance of the maritime sector and has implemented policies to support the growth of ship chandling industry. Significant investments in infrastructure at the Hambantota and Trincomalee ports have boosted their capacity to handle larger vessels, making them more attractive to international shipping companies.

  Creating direct and indirect job opportunities

The ship chandling industry is not just a source of foreign revenue, it is also a versatile employer. It creates a range of direct jobs such as procurement specialists, logistics coordinators, delivery personnel and administrative staff. The complexity and logistical challenges in serving ships require a skilled workforce that can operate efficiently within tight timelines. Ship chandlers must ensure that the supplies are delivered promptly, as delays can disrupt a vessel’s schedule and result in financial penalties.

The ship chandling industry plays a vital role in Sri Lanka’s economy as a critical enabler of maritime operations, while significantly contributing to local economic development. This industry not only caters to the needs of ships at Sri Lankan ports, but also promotes local products such as vegetables and fruits, showcasing the country’s agricultural richness on an international stage.

Additionally, the ship chandling industry generates an array of indirect jobs in related industries, including transportation, warehousing and supply chain management. Truck drivers, port workers and local suppliers of essential goods such as food, fuel and spare parts can greatly benefit from the increased demand driven by ship chandling activities.

This multiplier effect extends its benefits to a broader employment base, particularly in coastal regions with active ports such as Galle, Trincomalee and Hambantota. These ports act as hubs for economic activity, enabling job creation and supporting livelihoods in the surrounding communities, further strengthening Sri Lanka’s economic framework.

During the COVID-19 pandemic, while many sectors in Sri Lanka suffered disruptions and job losses, the ship chandling industry continued to provide essential services to global clients. Ships still needed supplies, and Sri Lankan ship chandlers promptly adapted to the restrictions to meet the demand while adhering to health and safety protocols. This continuity not only preserved jobs but also demonstrated the resilience of the industry in the face of unprecedented global challenges. The ship chandling industry proved remarkably resilient, continuing to serve both local and international shipping clients despite adversities.

Ship chandlers in Sri Lanka are unsung heroes that displayed immense dedication by maintaining operations during these tough times. Given stringent travel restrictions, limited imports and supply chain disruptions, providing the necessary supplies to ships was a daunting task. Nevertheless, local ship chandlers rose to the occasion, sourcing products locally wherever possible and worked around the restrictions to ensure that vessels were adequately supplied. This dedication safeguarded the continuity of maritime trade, which is essential to the global economy. Despite the challenging environment, Sri Lankan ship chandlers maintained a reputation for reliability, helping to solidify the country’s standing as a pivotal maritime hub.

 Navigating maritime challenges

The ship chandling industry in Sri Lanka operates within a dynamic and competitive environment but faces several challenges that hinder its growth and operational efficiency. Key issues challenging the industry include a price-sensitive market, import restrictions on luxury and semi-luxury goods, the reluctance of the younger generation to enter the industry, and the need for regulatory and infrastructural improvements.

A price-sensitive market 

One of the key challenges facing the ship chandelling industry in Sri Lanka is the highly price-sensitive nature of the market. Shipping companies operate on tight margins, and thereby are always looking for the best prices for supplies. This price sensitivity makes it difficult for ship chandlers to maintain fair profitability across the industry while also ensuring high-quality goods and services.

Import restrictions

The situation is further complicated by import barriers. Sri Lanka relies on imports for many of the goods required by ships, including spare parts, machinery and certain provisions. However, given the country’s economic challenges, import restrictions and high tariffs have been imposed on a variety of goods. This has made it more expensive for ship chandlers to procure necessary items, forcing them to pass on the costs to their clients, which may drive business away to competitors in other countries.

Furthermore, foreign currency shortages have made it difficult for local ship chandlers to source essential imported goods, creating delays and reducing their ability to meet client needs. Navigating these challenges requires strategic sourcing, innovative problem-solving, and a focus on maintaining strong relationships with local and international suppliers.

The reluctance of the younger generations to join the industry

Another significant challenge is attracting the younger generation to join the industry. There is a growing reluctance among young people to join this industry, largely due to the perception that it is an old-fashioned, physically demanding field with limited upward career mobility.

This mindset has been created partly by the lack of awareness about the industry’s vital role in global trade and the broad range of opportunities it offers. Ship chandling involves a variety of skills, from logistics management and procurement to customer service and international business development. However, the demanding nature of the job, especially in terms of working long hours and meeting the shipping industry’s stringent demands, has led to a shortage of young professionals entering the sector.

To ensure the sustainability of the industry, it is crucial for stakeholders to change this perception by promoting the sector’s significance and the potential for career growth. Offering training programs, highlighting success stories and creating pathways for professional development could help attract more young talent to this field. 

 Enhancing compliance and upgrading facilities: A path to modernisation

The ship chandling industry also faces challenges related to compliance and regulatory frameworks. Certain outdated regulations and processes need to be re-evaluated and updated to align with the evolving requirements of the industry. Streamlining compliance mechanisms can reduce inefficiencies and improve the overall ease of doing business for ship chandlers.

Additionally, there is a pressing need for facility upgrades to support the industry. Modernising port infrastructure, enhancing warehousing capabilities and ensuring seamless logistics support are critical to address current limitations and prepare the industry for future demands.

 Key maritime ports in Sri Lanka: Colombo, Galle, Trincomalee and Hambantota

While the Port of Colombo is the country’s busiest and well-known, Sri Lanka’s other key ports—Galle, Trincomalee and Hambantota—play vital roles in supporting the ship chandling industry. Each of these ports offer unique advantages that cater to the growing demands of the global maritime trade.

Galle Port: The Port of Galle, located on the southern coast of Sri Lanka, is one of the country’s oldest harbours. Its historical importance as a maritime hub dates back centuries, and it continues to serve as a critical port for smaller vessels, yachts and fishing boats.

For ship chandlers, Galle provides opportunities to serve ships engaged in coastal shipping and vessels navigating regional routes. The port’s proximity to tourist destinations also means that yachts and luxury boats often dock at Galle, creating demand for high-end provisions and specialised marine services. Ship chandlers operating here provide usual supplies such as food, water and fuel, as well as luxury goods tailored specifically for high-end clients.

Galle’s relatively calm waters and historical reputation have positioned it as an essential refuelling and resupply stop for vessels in the region. As the port modernises its facilities, its importance to the ship chandling industry will continue to grow, particularly in catering to niche maritime markets.

Trincomalee Port: The Port of Trincomalee, located on the northeast coast of Sri Lanka, is the country’s deepest natural harbour and one of the largest in the world. Its deep waters and spacious facilities make it an ideal stop for large vessels, including oil tankers, bulk carriers and naval ships.

Ship chandlers in Trincomalee have a distinct advantage due to the port’s ability to accommodate large vessels that may not easily dock at other ports. In addition to the standard provisions, ship chandlers operating here often supply specialised goods such as engineering-related equipment, machinery and fuel for any vessel calling to Sri Lankan Waters.

Furthermore, Trincomalee’s proximity to India and other South Asian nations makes it a convenient port for vessels traversing the Bay of Bengal and the Indian Ocean. As global trade in the region continues to rise, Trincomalee will increasingly serve as a critical point for ship supply and maintenance.

Hambantota Port: The Port of Hambantota, situated on the southern coast, is Sri Lanka’s newest major maritime hub, developed to capitalise on the Island’s strategic location along the East-West shipping route. Opened in 2010, Hambantota has rapidly gained prominence due to its proximity to one of the world’s busiest sea lanes, through which a significant portion of global oil and container traffic passes.

Hambantota’s modern infrastructure and expansive facilities make it a key player in the ship chandling industry. Unlike the Port of Colombo, which is more congested, the Port of Hambantota offers ample space for ship repairs, storage and supply services. Ship chandlers in Hambantota cater to a wide range of vessels, from container ships to bulk carriers, providing essential supplies like fuel, water and spare parts.

Moreover, Hambantota’s role as a logistics and transshipment hub is rapidly expanding. The port’s ability to handle large volumes of maritime traffic, coupled with government initiatives to position it as a key player in global shipping, means that ship chandlers operating in Hambantota are poised to benefit from an increasing number of vessels passing through the region.

 Leveraging future opportunities

The ship chandling industry in Sri Lanka is a resilient and vital part of the country’s maritime sector, contributing significantly to foreign revenue generation and local employment. Despite many challenges facing the industry, ship chandlers continue to serve global clients effectively.

Sri Lanka’s strategic location and its key ports – Colombo, Galle, Trincomalee and Hambantota – position the country as a prominent player in global shipping. As the industry navigates economic challenges and works to attract new talent, it remains a steadfast contributor to the nation’s economy, even in the face of adversity.

By understanding and addressing the industry’s challenges, the State too can further promote the country’s strategically and geographically invaluable location for ship chandling through its embassies globally. This will certainly boost ship chandling as a primary industry to provide essential services to the world’s maritime trade.

(The writer is the CEO/Director of Ocean Maritime Ceylon. With a proven track record as a business transformation strategist, Kumudu specialises in guiding organisations toward sustainable growth and innovation.)