Colombo to rebuild logistics hub plan after $280m project scrapped

Sri Lanka Ports Authority (SLPA) has scrapped a US$280 million logistics hub venture at the Port of Colombo and will rebuild the project from scratch under a Public–Private Partnership, awarded through competitive bidding.

The decision kills the South Asia Commercial and Logistics Hub, a joint venture formed in 2023 with China Merchants Port Holdings Company Limited and Access Engineering PLC. In its place, SLPA wants an integrated hub that does more than move containers — a facility that pulls in private capital, widens the port's service range and earns long-term revenue from land that today underperforms.

The numbers tell the story of what was lost and what is now up for grabs.

What happened to the original project?

The South Asia Commercial and Logistics Hub was designed as a roughly US$280 million development covering around 150,000 square metres of modern logistics space at Colombo. Three shareholders sat at the table: China Merchants Port Holdings, SLPA itself, and Access Engineering PLC.

That venture is now dead. After assessing what SLPA describes only as "external circumstances, commercial considerations and shareholder interests," the parties decided not to proceed. No further detail on the trigger has been given.

The wind-down comes with a price tag of its own. Shareholders will receive refunds of their equity contributions, totalling approximately US$29.8 million — subject to applicable regulatory requirements and operational expenses. In other words, the partners are getting their seed money back, minus whatever it costs to shut the thing down.

What does the change mean for shippers and carriers?

Colombo lives on transshipment. It is the funnel through which Indian subcontinent cargo connects to deep-sea networks, and its volumes have grown on that single function. The aborted project was meant to add the layer that pure transshipment ports often lack: warehousing, distribution, value-added services.

The new plan keeps that ambition but changes who builds it. Instead of a hand-picked trio, SLPA will run a competitive bidding process, subject to the necessary approvals. That opens the door to a wider field of terminal operators, logistics developers and investors — and, in theory, to better terms for the port.

For carriers and forwarders, the practical question is timing. A 150,000-square-metre-class facility does not appear quickly, and Colombo has now lost roughly two years since the 2023 venture was formed. Regional competitors have not stood still. Every year without expanded logistics capacity is a year in which value-added cargo can route through Singapore, Jebel Ali or Indian ports building their own hub credentials.

For the port's landlord, though, the calculus is different. SLPA expects the PPP route to attract private-sector investment, improve the use of port land and infrastructure, and generate what it calls sustainable long-term revenue. The authority also frames the project as a play to strengthen Colombo's position as a leading maritime and logistics hub in South Asia — a positioning statement, but one grounded in the port's genuine transshipment weight.

An open field, an open timetable

The competitive process has no published timeline yet, and SLPA's statement notes the plan remains subject to approvals. Bidders will want clarity on land terms, service scope and the regulatory path before committing capital on the scale the previous project contemplated.

What is clear is the direction. Colombo is not abandoning its logistics hub ambition — it is changing the mechanism, from a closed joint venture to an open tender. For operators watching South Asia's transshipment economics, the next signal to watch will be the bid documents: their scope, their deadlines and the terms that decide whether the second attempt succeeds where the US$280 million first attempt did not.