24 June 2020, 09:44
Sri Lanka offers a compelling case for businesses contending with new realities and examining supply chain diversification in the specialty tire business.
As the COVID-19 pandemic evolves, its ripple effects continue to be felt far and wide across numerous sectors. One consequence of the crisis is the complexities of the global supply chain coming into the spotlight. Businesses rely on global outsourcing and unprecedented disruptions and choked supply chains are forcing organizations to confront new realities to mitigate similar interruptions in the future.
For global players in the specialty tire industry, re-examining the strength of their supply chains and looking to mitigate crises, Sri Lanka offers an enticing possibility.
Conveniently located along the Belt and Road Initiative as well as the Afro-Asia transport corridor, Sri Lanka has lured merchants and travellers for centuries. The Colombo Port is listed as the eleventh best connected in the world and is ranked as first in South Asia and 22nd in the world by volume. It is the best-connected port for feeder services connecting Asia, Africa and the Middle East for mainliners serving Europe, USA, and the Fareast. All major international shipping lines use the port of Colombo for trans-shipment and related services, making Colombo Port the best in Asia for logistics distribution and connectivity.
Moreover, Colombo is also the only South Asian port adjacent to the main East-West shipping route that is equipped to provide services for Ultra Large Container Carriers (ULCC) that can carry up to 23,000TEU. Sri Lankan ports connect continents with speed and links the two major hubs of Singapore and Dubai in equal time of sailing and airtime.
In addition to its geographical placement, the country is the world’s sixth-largest natural rubber producer with Sri Lankan rubber well known to be of superlative quality in comparison to other countries. Mr Prabhash Subasinghe, Managing Director of GRI and Chairman of Sri Lanka Export Development Board, notes that the rubber products sector has been classified as one of the most important industrial sectors in the country.
“The Government of Sri Lanka has formulated a master plan for the rubber sector to identify new areas for plantation growth and ensure the sustainability of a natural rubber-based manufacturing base. Sri Lanka is well placed to ensure quality, logistical ease and supply chain security for natural rubber products such as specialty tires,” commented Mr Subasinghe.
This access to raw material is also backed by considerable technology, research and development capabilities as Sri Lanka has been a favoured production destination for some of the most well-known global industrial tire brands for many years. There is a continuous upgrading of Research & Development (R&D) capabilities and increased investment in universities to support R&D work on specialty tires and other natural rubber-based products. There is also a dedicated nano-technology institute in place (SLINTEC) to provide industry solutions using nanotechnologies.
A very high literacy rate of 92%, skilled and ever-expanding labour pool as well as favourable duty structures for Europe and the United States also offer added advantages to Sri Lanka. It is also highly unlikely for Sri Lanka to face any form of Countervailing Duties or Anti-Dumping duties from anywhere in the world. Currently the country enjoys sound political and economic stability and security. The Government was swift, proactive and successful in handling the COVID-19 situation in Sri Lanka.
“While price and choice are prerequisites for supply chain management, the current crisis has highlighted the need for prudence when considering supply chain diversification. One’s supply chain should be prepared to adapt efficiently to tide over crisis situations. For businesses looking at specialty tire and rubber supply chain diversification, Sri Lanka makes unbeatable arguments for quality, flexibility, ease of business and agility while demonstrating long-term industry excellence and expertise,” noted Mr. Prabhash Subasinghe.
Source: GRI