Challenging times for Colombo Port: Volumes to US set to drop
Colombo is likely to feel the hit from future cargo volumes dropping to the US as it has already experienced a slip in the first quarter of this year as well.
In the first quarter of this year the Colombo Port experienced a 4 per cent volume drop as most of the Indian ports and particularly India’s Vizhinjam port had taken on some of the business coming to Colombo, Shipper’s Academy CEO Rohan Masakorala told The Sunday Times Business.
Colombo Port will continue to face a challenge on how to retain its growth, he noted adding that they as an industry have been warning for over a decade about the consequences of regional ports taking over the business of Colombo.
With the existing volatility in terms of trade Colombo will face a challenging year as it has already been making losses, he said adding that regional trade trends to the US is likely to create an impact on future port volumes.
Depending on the US consumer’s spending capacity the shipping sector believes there could be a possible drastic drop in traffic to the US that will contribute to significant drop in freight rates.
However, this drop in freight rates is expected to cushion some of the adverse tariff hikes from the US, some industry observers point out.
Transhipment volumes to India will determine whether the business to Colombo Port will sustain.
Freight rates have been on a decline since last year, but with more space likely to set in following the imposition of US tariffs it may come down further and with this issue “people may not be able to export to the US,” a top shipping official said.
“We are hoping against hope that it (volumes) might not dry out totally (to the US),” he pointed out. This will depend on whether the US buyers are willing to pay 50 per cent more for their goods or not and the disposable income of consumers.
Freight rates since 2024 to this year has seen a decline by about 40-50 per cent but rates are not at pre-COVID levels as yet.
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