Colombo Port's transhipment volumes dropped 6% in July, marking the third consecutive month of decline, as competition from India's newly operational Vizhinjam Port intensifies.
Colombo Port is experiencing a notable drop in transhipment cargo volumes, with a 6% year-on-year decline reported for July. This marks the third consecutive month of declining volumes, following a 5% drop in June, according to the latest data. The port handled 489,286 twenty-foot equivalent units (TEUs) in July, reflecting the steepest decline observed this year.
The number of container ships calling at Colombo also decreased by 18% to 277 in the same period. Despite these setbacks, Colombo Port recorded a 9.6% rise in transshipment cargo during the first half of 2024, with double-digit growth reported from January to April, primarily due toy Red Sea-linked vessel diversions due to conflict in the middle east.
The increasing competition, particularly from India’s newly operational Vizhinjam International Seaport, is beginning to impact Colombo's dominance in the region. Vizhinjam Port, managed by the Adani Group, commenced limited-scale operations in July and is offering substantially lower vessel-related charges. For instance, a 30,000 gross registered tonnage vessel requiring a 24-hour berth stay incurs approximately $10,000 in charges at Vizhinjam, compared to around $21,000 at Colombo. Maersk has already started shifting some transhipment calls for Indian cargo from Colombo to Vizhinjam.
The increased competition has also seen Indian ports like DP World Cochin and Chennai Port recording significant transhipment growth. DP World Cochin more than doubled its container transhipments from April to July 2024, handling 70,701 TEUs compared to 29,358 TEUs in the same period last year. Chennai Port's transhipment volumes also surged to 35,417 TEUs from the usual 6,848 TEUs.
The battle for transshipment market share in the Indian Ocean is intensifying, with Colombo struggling to maintain its position as the primary hub for the subcontinent trade. The port's capacity constraints have forced many regular and ad-hoc liner customers to reroute, benefitting competing ports. As new players emerge in the region, Colombo's strategic importance is increasingly challenged.
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