System failure at the Ports: Outdated Customs algorithm causes massive delays, costing billions

• Immediate reforms critical to keep economy ticking

A nation held hostage by a broken Customs risk model

Sri Lanka imports nearly 500,000 containers annually, with volumes rising at an average of 10% year-on-year. Despite this heavy traffic and critical dependence on maritime trade, the country’s customs risk management system remains cripplingly outdated, driving unnecessary port delays, skyrocketing costs, and paralysing economic activity.

Customs is not just broken — it’s actively working against trade efficiency and national interest.

The price of dysfunction: Rs. 200 billion in economic losses

Containers that should clear in hours are now taking up to seven days, piling up at port terminals and incurring an estimated $ 600 million in demurrage fees annually. An additional $ 30 million is burned on container yard charges, while Customs’ 24/7 port infrastructure goes grossly underutilised due to limited examination and clearance hours.

The real tragedy? These costs are directly passed to businesses and ultimately, to consumers, inflating the prices of essential goods across the country.

High risk or high incompetence?

The ASYCUDA automated risk management system, designed to streamline cargo clearance, has instead devolved into a blunt instrument — mis-flagging even low-risk, compliant importers as red channel threats. In a recent episode, only 323 out of 600 containers eligible for release were cleared without examination, triggering massive congestion and nationwide delays.

Solar panels imported by state institutions and reputable firms with valid approvals from the Sustainable Energy Authority are still flagged for physical inspection — not due to risk, but systemic ignorance. Even approvals attached to declarations are ignored by a system that’s not just outdated, but willfully blind.

Customs Union overreach: A dangerous precedent

In a shocking development, the Customs Union bypassed internal processes and lodged a complaint with the Criminal Investigation Division against officers who released congestion-causing containers. No weapons or contraband were found, yet this heavy-handed move stifles necessary flexibility during operational crises.

Why punish efforts to fix a broken system?

Misaligned priorities: 22 investigation units, but no trust in data

If Customs genuinely trusts its automated system, why are 22 manual Investigation Units still operational, collectively targeting over 24,000 containers per year? These parallel investigations not only duplicate effort but raise concerns about vested interests benefiting from prolonged inspections.

There is growing suspicion — voiced openly within the trade community — that some Customs officers resist automation because manual intervention creates personal gain opportunities.

Time for action: Modernise or crumble

The Customs Department has already collected over Rs. 50 billion in computer fees from the trade — enough to fund a world-class, data-driven, scientific risk management system. And yet, no such system exists.

Tenders have finally been called to develop a new risk algorithm, but until it is implemented, temporary but effective measures must be restored:

n Reinstate the Screening Unit Committee to manage congestion.

n Immediately integrate importer compliance history into risk profiles.

n Mandate accountability and transparency in Customs Union decisions that bypass the Ministry of Finance and senior Customs administrators.

The road ahead

Sri Lanka faces a critical choice: cling to a legacy system that punishes compliance, breeds corruption, and chokes trade or embrace a 21st century Customs model — smart, fair, and fast.

The path is clear. What’s needed now is the political will and administrative courage to take it.

Let Sri Lanka’s ports work for the country — not against it.

(The writer is Former Chairman – Association of Clearing and Forwarding Agents of Sri Lanka Vice President – Customs House Agents and Traders Association.)