The Port of Colombo, once hailed as South Asia’s premier transshipment hub, has reported a worrying 6.3% decline in transshipment volumes in the first quarter of 2025, handling only 1.53 million TEUs (twenty-foot equivalent units). As regional competition intensifies, this downturn highlights both the operational bottlenecks and strategic missteps that Sri Lanka must urgently address if it is to maintain its global shipping relevance.
In a world increasingly dependent on seamless supply chains, Colombo’s slip is not just a local issue — it could impact Sri Lanka’s broader economic recovery and investment potential.
What’s Behind the Dip?
A closer look reveals a combination of factors behind the declining volumes. One major culprit: operational congestion driven by increased Customs inspections, creating delays that ripple through port efficiency. January alone saw a 4.8% year-on-year volume drop, signaling early trouble for 2025.
The performance across terminals paints a mixed picture:
The Colombo International Container Terminal (CICT), widely regarded as the port’s most modern deep-water terminal, saw an alarming 10.9% decrease.
The Jaya Container Terminal (JCT) and East Container Terminal (ECT) together posted a 13.7% decline.
In contrast, the South Asia Gateway Terminal (SAGT) bucked the trend, registering a 21.6% surge in handled volumes — suggesting that operational management differences across terminals are playing a major role.
This inconsistency underlines a key issue: Colombo lacks unified operational excellence across its terminals, making it vulnerable to losing transshipment traffic to more agile ports like Mundra and Dubai.
Why It Matters for Sri Lanka’s Economy
The Port of Colombo is not just another piece of infrastructure — it is a critical artery for the national economy:
Over 70% of its container volume is transshipment cargo (cargo not destined for Sri Lanka but passing through), making efficiency vital.
Shipping revenue and port-related logistics are major foreign exchange earners.
Global shipping lines require reliability; any delays or inefficiencies encourage them to reroute to alternative hubs.
In an era where regional players are expanding aggressively — India’s ports with massive state investments, and Dubai’s Jebel Ali offering cutting-edge digitalization — Colombo’s current slide threatens to erode its hard-won maritime standing.
Moreover, foreign investors closely watch logistics performance metrics when making investment decisions in Sri Lanka’s broader economy. A struggling port sends the wrong signal.
Strategic Expansions: Can They Turn the Tide?
There is some hope on the horizon. The Sri Lanka Ports Authority (SLPA) and private stakeholders are actively pursuing expansion plans:
The West Container Terminal (WCT) is slated to begin operations soon, providing much-needed additional capacity.
The East Container Terminal (ECT) is scheduled for full operational status by the end of 2025.
The government has earmarked Rs. 2.5 billion to improve both short-term and long-term port operations.
These projects are critical, but capacity alone won’t solve Colombo’s problems. Efficiency, technological adoption (such as digital customs clearance and real-time cargo tracking), and customer service are now equally important.
Sri Lanka must also urgently tackle bureaucratic red tape. Customs and port authorities must embrace a mindset of partnership with shipping lines, not policing, to ensure seamless cargo flow.
A New Mindset for Maritime Success
To restore Colombo Port’s competitiveness, Sri Lanka needs a bold reimagining of its maritime strategy:
Digitization of Customs and cargo handling to cut unnecessary inspections and paperwork.
Public-private collaboration to drive port management efficiency, drawing lessons from SAGT’s recent success.
Integrated marketing campaigns to promote Colombo’s location advantage and upcoming capacity to major shipping lines.
Flexible pricing models and incentives to retain loyal customers.
The world is not waiting. Regional competitors are hungry and moving fast. Colombo can no longer afford a slow, traditional approach to maritime trade.
Outlook: A Critical Juncture – Colombo Port Q1
The first quarter figures should not be seen merely as a bump in the road. They are a warning sign that the Port of Colombo is at a critical juncture. Without decisive reform and innovation, Sri Lanka risks falling behind in the global logistics race.
Yet if properly addressed, the dip in transshipment volumes could become a catalyst for real, positive change. With strategic expansion, digitization, and renewed operational discipline, Colombo Port still has the potential to emerge stronger — and with it, Sri Lanka’s prospects for economic resilience and growth.
The world is watching. It’s time for Colombo to step up.
