Freight Hike and Middle East Crisis Squeeze Sri Lankan Exports 📈

The apparel & textiles sector and broader export economy face "catastrophic" risks due to soaring logistics costs and geopolitical volatility. • Surge in Freight Costs Sea Freight: Rates up by US$ 1,000 – US$ 1,500 per container. UK shipments doubled to US$ 2,500. Air Freight: US-bound cargo spiked from US$ 3.85 to US$ 6.50/kg. Imports: Costs from China and India rose by 75% and 40% respectively. • Apparel Sector Performance Export Value (Feb 2026): US$ 361.2 Mn (down 11.46% YoY). Regional Slumps: EU down 19.48%; US down 3.53%; UK down 5.67%. Jan-Feb 2026 overall performance dropped by 6.91% YoY. • Key Challenges Shipping Interruptions: Major lines suspended Gulf bookings; cargo being offloaded at alternative ports at exporters’ cost. Margin Squeeze: Global brands are pressuring suppliers to absorb rising freight costs. Economic Risks: EDB warns of a 5%-8% export contraction in March 2026. • Critical Recommendations ICT/BPM and manufacturing need prioritized fuel access, especially for SMEs. Renewable Energy: Urgent call for solar and wind adoption to lower grid costs; current tariffs remain uncompetitive vs. regional peers like India.