Government plans to commence work on two key projects in the Colombo Port, the West Container Terminal II and the North Port to be operational by 2030 and 2035 respectively have triggered concerns from the industry which believes it could cause a huge demand and supply imbalance and, the move is way ahead of its time.
The EOIs will be restricted to the top 10 shipping lines, as feasibility studies on both these works have already been completed. It was noted that the East Container Terminal (ECT) has taken so long to complete and as a result authorities believe it is imperative to commence work on these now. The ECT will commence with 50 per cent capacity. Deputy Ports Minister Janitha Kodituwakku said that they have already carried out the feasibility study on the North Port and the WCT II. Detailed drawings of the WCT II breakwater have already commenced, the deputy minister said, adding that construction of this will also be part of the EOI.
He noted that the Sri Lanka Ports Authority (SLPA) spends much financing on the construction of the breakwater which forms a large expense compared to the building a terminal. However, Shippers’ Academy Founder/CEO Rohan Masakorala said “it’s too early” to call for EOIs for these projects. In fact, he noted the industry’s expectations are for the completion of the ECT and commencement of Adani-run West Container International Terminal (WCIT). He observed that anyone taking over terminal operations will build the terminal alone and that these long-term plans need to be given time to be carried out and be based on the demand and supply.
Moreover, this new move has become a hot topic of concern within the industry as most within and outside the country are said to be querying about it. Other industry experts point out that surging ahead with increasing capacity ahead of time is likely to create a pricing war as the throughput capacity at the Colombo Port by the end of 2026 is likely to increase to approximately 14 million TEUs with the ECT and WCIT becoming fully operational, in addition to the JCT, SAGT and CICT that are fully operational.
Hambantota Port is also expected to generate a terminal capacity of 2 million TEUs by the same time. Based on the Asian Development Bank study that concluded in 2019 the demand for the Colombo Port is expected to be around 8.8 million TEUs per annum. As a result of the huge demand and supply imbalance, terminal operators are bound to wage a price war to enhance their share of the capacity utilisation, SLPA sources point out. This action of increasing capacity by calling for EOIs is expected to result in the gradual demise of the SLPA-managed ECT and the JCT, industry officials point out.
