In a bold move set to reshape the maritime landscape, Sri Lanka is advancing plans to expand the Colombo Port with two significant projects: the West Container Terminal II (WCT II) and the North Port, aiming for operational readiness by 2030 and 2035, respectively. While the government views this as a strategic step to bolster the nation’s position as a premier transshipment hub, the initiative has ignited a wave of concern among industry stakeholders, who fear a potential oversupply in port capacity.
A Vision for Expansion
Deputy Ports Minister Janitha Kodituwakku announced that comprehensive feasibility studies for both WCT II and the North Port have been completed. The government plans to invite Expressions of Interest (EOIs) exclusively from the world’s top 10 shipping lines, underscoring its intent to collaborate with leading global players. Detailed designs for the WCT II breakwater are already underway, with construction included in the forthcoming EOI. Minister Kodituwakku highlighted that the Sri Lanka Ports Authority (SLPA) often allocates substantial funds for breakwater construction, a significant expenditure compared to terminal building.
Industry Apprehensions
Despite the government’s enthusiasm, industry experts are sounding alarms over the timing and scale of these expansions. Rohan Masakorala, Founder and CEO of Shippers’ Academy, argues that initiating EOIs for these projects is premature. He emphasizes the need to first complete the East Container Terminal (ECT) and commence operations at the Adani-led West Container International Terminal (WCIT) before embarking on new ventures. Masakorala advocates for a demand-driven approach, cautioning that expanding capacity without corresponding demand could lead to underutilization and financial strain.
The apprehension is not unfounded. Projections indicate that by the end of 2026, Colombo Port’s throughput capacity could surge to approximately 14 million TEUs, factoring in the full operation of ECT and WCIT, alongside existing terminals like Jaya Container Terminal (JCT), South Asia Gateway Terminals (SAGT), and Colombo International Container Terminals (CICT). Additionally, the Hambantota Port is expected to contribute a terminal capacity of 2 million TEUs by the same period. This anticipated capacity increase starkly contrasts with the Asian Development Bank’s 2019 study, which forecasted a demand of around 8.8 million TEUs per annum for Colombo Port. Such a disparity raises concerns about a potential oversupply, leading to intensified competition and possible price wars among terminal operators.
Balancing Growth and Sustainability
The government’s proactive stance stems from past experiences where delays, such as those encountered in the ECT project, hindered growth opportunities. By initiating these projects now, authorities aim to prevent future bottlenecks and ensure that infrastructure keeps pace with anticipated demand. However, the challenge lies in aligning expansion plans with realistic market projections to avoid underutilized assets and financial inefficiencies.
Looking Ahead
As Sri Lanka charts its course towards becoming a maritime powerhouse, the dialogue between government ambitions and industry insights remains crucial. Striking a balance between timely infrastructure development and market demand will be key to ensuring that Colombo Port’s expansion translates into sustainable economic growth, reinforcing its status as a vital node in global shipping routes.
The coming months will be pivotal as stakeholders navigate these complex waters, aiming to harmonize visionary projects with pragmatic industry realities.
