China Merchants exits Colombo logistics hub as concessions head to market

Sri Lanka's ports authority said on Monday that China Merchants Port Holdings would not go ahead with a 150,000 sq m logistics hub at Colombo¹. The project, the South Asia Commercial and Logistics Hub, was announced in 2023¹. China Merchants still operates a $500 million deep-water container terminal inside Colombo and manages the Hambantota port complex on the southern coast¹.

Within days, the United States announced a $17 million grant for Colombo's port software³. Trade press also reported that global terminal operators and carriers are lining up for fresh terminal concessions at the same port⁴.

For Indian importers and exporters, the cancelled hub is not the main event. It was a warehousing and consolidation facility, not a container berth^1, 2. The bigger signal is that a major Colombo container terminal's concession expires in 2029, and the port's documentation systems are being modernised^4, 3.

What China Merchants left behind

China Merchants was to hold 70% of the joint venture, with SLPA and Access Engineering on 15% each^1, 2. It agreed the stake in April 2023, the first major foreign investment announced after Sri Lanka's economy collapsed in April 2022¹. The hub was designed to offer LCL consolidation, stuffing and unstuffing and general warehousing, with total storage capacity of about 530,000 cubic metres⁵. Work was supposed to begin in 2023 and finish in 2025, but it was never built⁵.

The published project cost differs by outlet. AFP reported $392 million¹. Container News said about $280 million². The Maritime Executive said $350 million⁵. The statements reviewed do not reconcile the figures.

China Merchants and SLPA both cited commercial reasons. SLPA said the decision followed "an assessment of the prevailing external circumstances, commercial considerations and the interests of the respective shareholders"¹. China Merchants told Hong Kong's stock exchange that "terminating the project would be in the best interests of the parties"¹.

Sri Lankan reporting adds a land dispute. The government told Parliament that an agreement to allocate 10 acres at the port was among the issues behind the termination, the Daily FT reported⁶. The Maritime Executive, citing a January report in Ceylon Today, said the project had faced court challenges, land-use issues, timeline disagreements and regulatory hurdles⁵.

The money is going back. Shareholders will receive refunds of their equity contributions totalling about $29.8 million, subject to regulatory requirements and operating expenses². China Merchants said SLPA agreed to pay $22 million to its private partners to settle the termination⁵. Access Engineering expects to recover about Rs 1.45 billion of the Rs 1.76 billion it invested⁶.

SLPA will now develop the hub as a public-private partnership through competitive bidding, subject to the necessary approvals². It has not announced a tender date in the statements reviewed.

The terminal next door is up for rebid

The larger prize for carriers is South Asia Gateway Terminals, whose 30-year concession ends in 2029⁴. John Keells Holdings holds 42%, Maersk's APM Terminals 33%, SLPA 15% and Evergreen 10%⁴. The terminal has three berths on 940 metres of quay and capacity for 2 million teu a year⁴.

Colombo policymakers are not considering another extension, according to The Loadstar. "There are clear signals that SLPA will go in for a fresh tendering attempt," one source told the publication⁴. Sources said most major liners were keen, with indications that Maersk will bid alongside another European carrier⁴. An earlier plan to team up with an Asian carrier was understood to have run into EU regulatory clearance risk⁴. The report did not say whether John Keells or APM Terminals will bid.

Volumes explain the interest. Colombo handled 4.4 million teu in the first half of 2026, up 12% on the year⁴. SAGT itself handled 1.8 million teu in fiscal 2025-26, down 11%, as Middle East service suspensions cut calls⁴.

The pattern is regional. Oman's transport ministry has notified Salalah Port Service Company, in which APM Terminals holds 30%, that the concession will not be extended past 1 November 2028⁷. APM Terminals said it "remains a central party" to the terminal's structure and operational management, and that "the final agreement is under conclusion"⁷. Oman has not said whether it will tender the concession⁷. Salalah moved 4.3 million teu in 2025, up from 3.3 million teu a year earlier⁷.

What changes for Indian shippers

India supplies the bulk of the cargo volume behind Colombo's growth, according to The Maritime Executive⁵. That cargo reaches Colombo on feeder ships that connect to mainline berths, so berth windows and terminal systems there help set connection times.

On charges, none of the statements reviewed announced a change to terminal handling charges^1, 2, 4. Commercial terms will be settled in tenders that have not yet been called^2, 4.

On documentation, the $17 million US grant covers the Maritime Single Window and the Port Community System³. The stated aim is to connect SLPA, Sri Lanka Customs, shipping lines, terminal operators and other agencies, and to speed cargo clearance³. The announcement describes back-end integration. It does not set new filing deadlines or data fields for cargo routed through Colombo³.

On disruption, the main evidence of instability is already visible. SAGT's 11% volume fall came from service suspensions during the Middle East crisis⁴. But the port is also adding capacity. Adani Ports said the Colombo West International Terminal doubled its capacity to 3.2 million teu with phase two. The $750 million terminal had handled 2 million teu within 18 months of phase one operations, the company said⁴.

On Indian alternatives, Vizhinjam began direct EXIM operations in August 2026, according to the port company⁸. It sits about 10 nautical miles from the main east-west route⁸. The port is expected, when fully commissioned, to be capable of handling about 50% of the container transshipment India now routes through Dubai, Colombo and Singapore⁹. That is a projection, not current traffic. The sources reviewed do not give a current split of Indian transshipment between Colombo and Indian ports.

What to watch, and when

Nothing here changes a booking next week. The dates that matter come later.

• The SLPA tender notice for the logistics hub, and the approvals SLPA says the PPP needs².
• Any SLPA decision on SAGT before 2029, and whether John Keells, APM Terminals or Evergreen contest or join the rebid⁴.
• Colombo's throughput against the 13 million teu volume it targets for 2028⁵.
• Vizhinjam's direct EXIM volumes as they build over the next year⁸.