SL could become a strategic alternative hub in the East
While the ongoing conflicts in the gulf and Middle-East, particularly the US/Israel-Iran war, are significantly affecting global shipping routes and bunker costs, shipping companies are forced to take increases coinciding with the situation. On a positive note, it is beneficial for carriers, as rates were plunging due to oversupply of demand until recent times. All carriers are now forced to divert from the Suez Canal to the Cape of Good Hope. Longer delivery times and costs are inevitable citing the situation.
Cargo ships are rerouted around Africa, adding 10 to 14 days to voyages and raising fuel expenses by approximately US$ 1 million per vessel as a result of a longer transit. Despite the current crisis and related disruptions, freight rates are not expected to reach pre-COVID peaks, but will likely increase between $ 1000 to $ 2000 per 40-foot container through the third quarter of 2026 in key trade lanes of Europe and the US. A positive regional development is the potential for Sri Lanka to become a strategic alternative hub, leveraging infrastructure improvements, says Nilud Fernando, a professional in international shipping and logistics.
He told the Sunday Times Business: “The current shipping crisis is significantly accelerating demand for ad-hoc vessel calls as carriers reroute cargo around the Cape of Good Hope. Recently, several major carriers have reached out to the Port of Colombo to secure terminal slots. Sri Lanka’s port is positioned to become one of the world’s busiest, particularly in the wake of the 2023 Red Sea crisis. While the long-term outlook depends on planned capacity expansions, the signs are promising: recently opened terminals are ramping up throughput, and the completion of Colombo West phase two has been moved forward to late 2026. However, challenges remain. High demand could lead to congestion that impacts domestic exporters, and rising global oil prices may offset the macroeconomic benefits to the local economy.”
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