Red Sea attacks helps Colombo Port to shore up its transshipment volumes

Colombo Port is experiencing a surge in transshipment container volumes as it emerges as a transit point in the short term for major shipping lines to reroute their vessels around the Cape of Good Hope, a move opted to avoid disruption to shipments following the recent attacks on vessels in the Red Sea.

According to Sri Lanka Ports Authority (SLPA), with the problems in Red Sea, more ships are calling in Colombo.
“Instead of going to Suez Canal via Red Sea, they are taking the longer route around Africa, and they got to pass Colombo on this route. In fact, we have witnessed a growth in volumes,” Sri Lanka Port Authority (SLPA) Chairman Keith D. Bernard was quoted by Sri Lankan Media reports.

Container volumes handled by the SLPA-owned terminal has seen a growth of around 80 percent in recent days following the increased attacks on commercial vessels plying the Red Sea recently. Earlier, one particular terminal owned by SLPA did about 5000 TEUs per day and now it has gone up to about 8000 TEUs.

Before the diversions started on Red Sea in mid-December, the Port of Colombo reported a decline in transshipment volumes and overall container throughput  in both October and November last year.  During the 11-month period ending in November last year, the Port recorded marginal growth of 0.04 percent in container throughput reaching 6.3 million TEUs, as per official data.

Jan 10

The Port of Colombo is targeting around 7 million TEUs in container volumes this year after handling an estimated 6.9 million TEUS in 2023, up from 6.86 million TEUs in 2022. “Our capacity is about 8 million TEUs. With the new East Container Terminal coming into semi operations this year, we will have about 8.5 million TEUs in terms of capacity. So, we are looking at around 7 million TEUs for this year,” he said 

Although, Port of Colombo may be benefiting from the current crisis due to heightened uncertainty and volatility, some industry players opined that these recent gains are unlikely to be sustained in the long term. They cautioned that Port of Colombo may end up losing some transshipment volumes , if the current crisis on Red Sea is not settled. 

“You can cut up to two and half days, if you go directly south though Singapore, some shipping lines have opted to do that, but it’s very volatile. Towards the end of last year, the situation (on Red Sea) was reaching some kind of  settlement and they (main shipping lines)  were trying to go through the Suez Canal. 

“However, it changed again recently because there were couple of attacks. So, the shipping lines are operating on short term plans and haven’t restructured services on a long term basis. So, they may choose not to call Colombo this week, but an additional call could come in next week based on the available cargo, it’s a very volatile situation,” an industry player said.

Meanwhile, the freight rates and space crunches are continuing to rise, further intensified by the upcoming Chinese New Year. Many shipping lines have already announced 30 percent increase in freight rates with effect from 15 January of this month on top of 40-50 percent increase in freight rates seen so far. Moving forward, many shipping lines have announced another 1000 US dollars or 30 percent increase  for shipping goods in a 40-foot container from this month, industry stakeholders said.