Sri Lanka’s export industry-especially the apparel and garment sector-is being burdened by Covid-era air freight rates that simply refuse to come down. While global trade patterns and fuel costs have largely normalized, exporters are still being forced to pay artificially high rates that were justified during a crisis, but are no longer reflective of today’s market conditions.
Pre-Covid Structure vs Today’s Reality
Before Covid-19, air freight rates were regulated and structured under IATA (International Air Transport Association), which ensured consistency and fairness across all carriers. Freight rates for key trade lanes-such as Colombo to Los Angeles or European hubs-were predictable, allowing apparel exporters and freight forwarders to plan cost structures with confidence.
For example, the standard rate for +500kg shipments to Los Angeles hovered around USD 4.00 per kilo. This was reasonable, considering the fuel cost, cargo demand, and aircraft availability at the time.
Post-Covid, IATA relinquished that control, handing pricing power entirely to the airlines. Initially, that made sense: capacity was tight, fuel prices were volatile, and airlines were absorbing massive losses due to grounded passenger fleets. Rates surged to USD 8.00–9.00 per kilo-more than double the pre-pandemic levels.
The Problem: Rates Haven’t Returned to Market-Justified Levels
Today, airlines have stabilized. Fuel prices are relatively consistent, belly cargo capacity has increased as passenger traffic rebounds, and forwarders are operating at normal volumes again. Yet, freight rates have not come down proportionately. Most routes still cost USD 7.00–7.50 per kilo-a clear indication that airlines are holding on to crisis-era pricing long after the crisis has passed.
This is not a market-driven correction. It is a deliberate withholding of fair pricing at the expense of exporters. Garment manufacturers, already facing cost pressures from raw material price fluctuations and shrinking margins, are absorbing unnecessary air logistics costs that eat directly into their bottom line.
Lack of Oversight Enables Market Abuse
The absence of a standardized rate structure allows airlines to offer preferential pricing to high-volume forwarders, creating an uneven playing field for small and mid-tier exporters. Freight forwarders are also aligning with specific carriers based on commercial benefits, making rate transparency nearly impossible. As a result, Sri Lankan exporters-particularly SMEs-are left with limited leverage and inflated logistics costs.
A Call for Balance, Not Subsidy
Exporters aren’t asking for subsidies or unrealistic pricing. The industry recognizes that operational costs have increased, and airlines are entitled to fair margins. But what’s happening now is far from fair-it’s price manipulation. Rates must be brought back to a level that reflects current fuel prices, route capacities, and market demand-with a reasonable profit margin, not a crisis-premium that no longer applies.
Government and IATA Must Step In
While the Sri Lankan government has opened discussions with carriers, without IATA re-engaging or enforcing transparency, airlines will continue to operate unchecked. The longer these elevated rates are allowed to persist, the more damage is done to our export competitiveness- especially in fast-moving, time-sensitive sectors like apparel.
Sri Lanka’s exporters deserve rate stability and fairness—not prolonged exploitation. It’s time the industry sees a correction that respects the market, supports growth, and allows Sri Lanka to compete globally without carrying the cost of yesterday’s crisis.
