Colombo Port to double capacity to 15 m TEUs by end-2026, but risks losing geographic edge: CBSL

• Geographic location no longer enough to compete in the region as rivals accelerate expansion
• Volume in 10 months to Oct. 2025 was highest in history

The Colombo Port is expected to double throughput capacity to 15 million Twenty-foot Equivalent Units (TEUs) by the end of 2026, but Sri Lanka’s ports can no longer rely on geography alone to sustain Colombo’s role as South Asia’s leading transhipment hub, with competing regional ports recording rapid growth through targeted investments and policy-driven reforms, the Central Bank of Sri Lanka (CBSL) cautioned.

“Mere reliance on geographical advantage may no longer be sufficient for Sri Lankan ports in maintaining their position as a leading transhipment hub in the region,” the CBSL said in its latest infrastructure report.

It noted that this trend has emerged as a direct challenge to Sri Lanka’s transhipment operations, requiring ports to take proactive steps to protect competitiveness.

While terminal capacity expansions are already underway, the CBSL stressed that capacity alone will not be enough. 

“Complementary efforts, such as infrastructure modernisation, enhancing operational efficiency through digitalisation, adopting automation technologies, and strengthening multimodal connectivity, remain equally important,” it said. 

The report added that Colombo’s position would also depend on closer engagement with global shipping networks. 

“Fostering strategic partnerships with global shipping alliances, streamlining regulatory processes, and expanding value-added logistics and maritime services will be crucial in positioning Colombo as the preferred transhipment gateway in South Asia,” the CBSL said.

Private sector participation was highlighted as a key requirement to meet these challenges. 

The CBSL said: “Private sector-led investments are essential in the port sector in order to ease liquidity constraints, attract international knowhow and expertise, and to face increased global competition.” 

It added that the ports sector could be “strategically utilised as a key contributor in the trajectory of long-term economic growth of the country,” with positive spillover effects across a range of economic activities.

Despite rising regional competition, the CBSL reported strong operational performance. “The strong performance in the port sector in 2024 was further strengthened during the 10 months ending October 2025, recording the highest level of container handling volumes in history,” it said.

Total container volumes handled by the Colombo Port rose 7.1% year-on-year (YoY) to 6.92 million TEUs in the first 10 months of 2025, supported by a strong expansion in domestic container traffic, even as transhipment activity continued to account for the bulk of throughput and remain central to Colombo’s regional hub role.

Transhipment container volumes increased 5.1% YoY to 5.52 million TEUs during the January-October period, up from 5.25 million TEUs a year earlier. Despite the more moderate pace of growth, transhipment continued to dominate port activity, accounting for close to four-fifths of total container throughput.

The report explained that shipping route diversions away from the Red Sea in early 2024 initially boosted transhipment volumes at the Port of Colombo. 

However, it noted that from May 2024 onwards, congestion emerged at the Port of Colombo as accumulated transhipments strained port capacity, leading to a slowdown in this momentum.

Conditions improved later in the year, with the CBSL stating: “A turnaround was observed in the third quarter of the year as congestion eased and port operations gradually normalised, resulting in a positive performance during the second half of the year.”

Although the number of ship arrivals declined in 2024 due to the increased deployment of larger vessels, activity recovered in 2025. 

The CBSL said that while a YoY decline was recorded in the initial months of 2025 due to a high base effect, the added capacity from the commencement of Colombo West International Terminal (CWIT) operations supported a rebound in activity since May 2025. The first phase of the CWIT commenced operations in late February 2025.

The CBSL also highlighted Hambantota Port’s growing role. 

“Reflecting the growing role in Sri Lanka’s maritime trade, the Hambantota Port commenced container handling operations in 2024 and showed significant growth during the January to October 2025 period,” it said. 

On vehicle handling, the report noted: “Vehicle handling at Hambantota Port, which recorded a decline in 2024, recorded positive performance during January to October 2025, largely supported by the increase in domestic vehicle handling volumes after the relaxation of restrictions on vehicle imports.”

Looking ahead, the CBSL said major port development projects continued through 2025. 

“With the completion of the Colombo East Container Terminal and the CWIT, the Port of Colombo is expected to nearly double its throughput capacity to 15 million TEUs by the end of 2026,” it said, while noting that projects at Galle, Kankesanthurai, and Trincomalee remained integral to strengthening Sri Lanka’s maritime competitiveness in an increasingly contested regional landscape.