OPERATIONAL REVIEW

Container terminals continue to play a pivotal role in enabling global trade, economic development and supply chain resilience. Sri Lanka’s strategic positioning in the Indian Ocean, which directly spans the East–West Main Sea Route (ESMR), provides the country with a distinct competitive advantage as a regional transshipment hub. This geographic strength allows vessels to access South Asia, the Middle East, and East Asia with minimal deviation, thereby reinforcing the Port of Colombo’s (PoC) long-standing role in global maritime connectivity.

During the calendar year 2025, the Port of Colombo demonstrated strong performance amidst a dynamic global operating environment. The port handled 8.3 million TEUs, the highest volume in its history, representing 6.5% year-on-year growth, with 84% of total volume attributed to transshipment cargo. This transshipment-heavy profile continued to insulate the port’s performance from residual domestic economic challenges, placing greater emphasis on global trade flows, geopolitical developments, and regional import-export dynamics.

The prolonged Red Sea crisis, which began in 2023 and continued throughout 2025, disrupted global shipping routes, forcing vessels to reroute via the Cape of Good Hope and extending voyage times by up to two weeks. While Colombo’s strategic proximity to the East–West Main Sea Route enabled the port to capture diverted cargo flows, the geopolitical landscape grew increasingly complex during the reporting period. Notably, the blockade of the Strait of Hormuz, triggered by the outbreak of the Iran–US conflict in February 2026, introduced a new geopolitical tension and economic instability disrupting shipping services and cargo volumes leading to vessel by-passes and reduced throughput. Against this backdrop, the port faced rising fuel prices and increasing operating costs, despite maintaining operational continuity as an essential service.

Operational Review

Enhancing trade connectivity while advancing sustainable port operations

The South Asian region, led by India, remains a key driver of maritime trade growth. India posted an economic growth of approximately 7.4% in FY2025/26, maintaining its position as one of the fastest-growing major economies. Significant investments in port infrastructure, including the commissioning of new deepdraft transshipment hubs such as Vizhinjam, reflect India’s ambition to expand its direct connectivity. Importantly, regional trade growth has proven complementary rather than competitive to Colombo’s hub-and-spoke model, with Colombo continuing to capture significant Indian transshipment volumes.

Operational Review

Steady progress in gate automation infrastructure, powered by Optical Character Recognition (OCR) technology.

Capacity expansion at the Port of Colombo saw significant progress during the year with commencement of operations at the Colombo West International Terminal (CWIT). The ongoing developments for the completion of CWIT and the East Container Terminal (ECT) will add further capacity to PoC. Looking ahead, plans are also underway to rebuild the existing breakwater for the development of West Container Terminal 2 (WCT2). These developments are expected to bring the Port’s overall capacity to about 15 million TEU. Within this evolving landscape, South Asia Gateway Terminals (SAGT) remains strategically positioned to support deep-draft terminals as a feeding terminal and reinforces Colombo’s role as a regional transshipment hub.

Against this backdrop, SAGT handled 1.8 million TEUs in the financial year 2025/26, representing a 11% decrease compared to the previous year. This reduction can be attributed to the onset of the Strait of Hormuz crisis in the latter part of the year in review. The crisis impacted throughput influenced by the suspension of a key Gulf centric service with related shifting of volume flows within the PoC terminals. Further, added capacity in the Port aided the increase in overall volumes and influenced a slight redistribution of volumes among the terminals through consequent service upsizing. During the latter part of the financial year, SAGT undertook a comprehensive quay crane rail replacement project, which required operating on a reduced two-berth configuration from October 2025 to March 2026. While this constrained berth availability in the short term, the project significantly strengthens the terminal’s infrastructure, enhancing long-term reliability, safety and container handling capability. Despite these constraints, SAGT continued to operate well above its original design capacity of 1.1 million TEUs, underlining the terminal’s operational efficiency, planning discipline, and workforce capability.

The Company’s ability to sustain high throughput under constrained conditions reflects the effectiveness of its operational systems and its continuous focus on optimisation.

In line with global port industry trends, digitalisation and automation remained central to SAGT’s operational strategy during the reporting period. Infrastructure development for gate and quayside automation progressed steadily, supported by the implementation of Optical Character Recognition (OCR) technology by the second quarter of 2026. OCR will enable fully automated gate operations and partially automated quayside processes by accurately capturing container numbers, damage status, vehicle information, reducing manual intervention, enhancing data accuracy and also improving safety.

SAGT has also advanced the implementation of a Vehicle Booking System (VBS) for trucks, which will allow the terminal to spread gate transactions evenly throughout the day by assigning time slots. The system, which is supported by a dedicated mobile application for truck drivers, is expected to significantly reduce congestion, improve truck turnaround times, empty trips and enhance overall gate efficiency across the port ecosystem. Addition to that, four new STS cranes that will have remote operation capability will be commissioned by the end of 2027.

Operational excellence initiatives were further strengthened through the organisation-wide rollout of LEAN management principles, supported by structured training delivered under the guidance of the APM Terminals LEAN Academy. 32% of total employees completed LEAN Level 01 training during the year, establishing a shared foundation in continuous improvement. Numerous Kaizen initiatives and “Just Do It” improvements were implemented across functions, which embeds a culture of problem-solving, efficiency and safety at every level of the organisation.

Decarbonisation remains a core strategic priority for SAGT as the maritime industry transitions towards a lower-carbon future. During the year, SAGT made tangible progress in reducing its environmental footprint through investment in cleaner technologies, operational efficiency and renewable energy.

In FY2024/25, 28 of SAGT’s 31 Rubber-Tyred Gantry (RTG) cranes had been converted to hybrid technology, achieving approximately 50% reductions in diesel consumption per move compared to conventional RTGs. This transition has resulted in significant fuel savings and contributed meaningfully to reductions in Scope 1 emissions.

SAGT’s 460 kW rooftop solar array became fully operational during the year, generating an average of 44,000 kWh per month and supplying approximately 5% of the terminal’s electricity requirements, excluding quay crane consumption. Additional renewable energy opportunities, including solar installations on gatehouse rooftops, are being evaluated to further increase on-site renewable generation.

During the year, the Company also added electric equipment to its fleet, purchasing two electric forklifts and an electric inspection vehicle for its HSE team. These initiatives, together with improved energy management, resulted in year-on-year reductions in total energy consumption and an 10% reduction in total carbon footprint despite sustained high operational intensity.

Looking ahead, SAGT is well positioned to benefit from regional trade growth, increased capacity at the Port of Colombo, as well as its own strategic investments in infrastructure, technology, sustainability and people. While short-term volume fluctuations are expected during periods of industry and port-level capacity realignment, SAGT’s long-term fundamentals remain strong. Through disciplined execution, continuous improvement and a clear commitment to sustainability and operational excellence, SAGT will continue to play a vital role in supporting the Port of Colombo’s evolution as a leading global transshipment hub.