News ≫ Sri Lankan Colombo container port to expand capacity; emerges as global hub

Sri Lankan Colombo container port to expand capacity; emerges as global hub

Apr 26, 2016
Facebook Twitter Google+ LinkedIn Email
Singapore (Platts): Sri Lanka’s Colombo container port is planning a major 33% expansion in capacity to 9.6 million TEU by the end of next year, from the current 7.2 million TEU, as it transforms into a major global transshipment hub, a senior port official said.

The East Container Terminal is being developed and bids to take a joint venture share in the project are expected to be invited soon under the public private partnership scheme, Tissa Wickramasinghe, general manager at Colombo International Container Terminals, or CICT, said in an interview on the sidelines of the TOC and Container Supply Chain Conference in Singapore last week.

CICT is Sri Lanka’s first deepwater container terminal and has a total handling capacity of 2.4 million TEU. In addition, there are two shallow water terminals at Colombo port, each 15 meters in depth with berthing capacity of 3.4 million TEU and 1.4 million TEU.

At ECT, around 400 meters of berths have already been built by Sri Lanka Ports Authority, or SLPA, and the balance 800 meters will be completed after the joint venture arrangement with a private entity is finalized, he said.

SLPA is expected to take a 51% stake in the joint venture, sources said.

Asian Development Bank has been appointed as the transaction adviser to invite bids for ECT.

Wickramasinghe said that China Merchant Holdings International, or CMHI, that played the pivotal role in developing CICT is likely to bid for the construction of ECT as well as when the bids for ECT are invited.

At a later stage, Sri Lanka also intends to develop the West Container Terminal but there is no timeline decided for its construction because one of the factors on which it will hinge is the concession agreement with the private partner that eventually develops ECT and will try to ensure that its business is not hurt by the immediate setting up of another terminal.

Sri Lanka envisages CICT, ECT and WCT to have similar berthing parameters of 1,200 meters with a capacity of annually handling around 2.4 million TEU of container ships each.


“The unique thing CICT has done is to put Colombo into the global map of trans-shipment ports handling ultra large or mega container carriers on the critical East-West shipping route,” Wickramasinghe said.

Under the hub-and-spoke container system, feeder ships deliver cargoes to a trans-shipment port where they are loaded into larger mother ships. Goods from India, Bangladesh and East Africa are now loaded in such mother ships at Colombo for their onward journey to the west. Around 700,000 TEU of the 2 million TEU of annual volumes generated from Bangladesh are delivered into Colombo, he said.

Mega carriers, which could not be completely filled at the onset of their journey at Chinese ports, pick up additional cargoes at Colombo.

Container ships of over 12,000 TEU capacity are considered mega carriers and Colombo is now handling ships of even 16,500 TEU, he said. Talks are on with some shipping companies to bring to the port even larger ships of around 18,000-19,200 TEU next year, he added.

Hong Kong-listed CMHI and SLPA that have 85% and 15% stake in the project, completed CICT in 28 months against the targeted 60 months and the deepwater terminal commenced operations in April 2014.

CICT, which entailed investments of around $560 million has 1,200 meters of container berths, a 20-meter deep access channel with two lane traffic and 18 meters depth alongside four berths. This is the single largest foreign direct investment ever made in Sri Lanka by any company of the world.

Addition of capacity and ability to berth larger ships has ensured that Colombo’s container traffic is rising at a time when other trans-shipment ports have borne the brunt of lesser cargo handling owning to the global economic recession. The Port of Colombo, including all three terminals saw a combined growth of 14% in volumes handled in 2014, 6% last year and almost 11% so far this year, Wickramasinghe said.

CICT alone last year handled 1.5 million TEU of container traffic, up from 650,000 TEU during April-December 2014, which was the terminal’s first year of operation. So far this year, the terminal has already handled 553,000 TEU of cargo, a year-on-year growth of 41% and is aiming to end the year at 1.8 million TEU, Wickramasinghe said.

CICT now has close to one-third share in the overall volumes handled by three terminals combined at Colombo port, he said.

Around 60%-70% of the volume handled by CICT moves in larger ships of over 12,000 TEU each, he added.

Wickramasinghe said that competitive tariffs of around $43/lift for every load or discharge from a 20-foot container also makes it attractive for liner companies to use trans-shipment services in Colombo, though actual tariffs could be even lower depending on the agreements with various shipping companies.

However, analysts said that Colombo has mainly benefited from India’s rules on cabotage that restrict foreign shipping companies from operating at its ports and has therefore prevented any global trans-shipment hub to come up along its vast coastline.

-Sameer C. Mohindru, -Edited by Irene Tang,

Latest News