Port of Colombo Faces New Competition as Galathea Bay Threatens India-Linked Transshipment Business
The Port of Colombo has reached a record level of container throughput, but its growing dependence on Indian-linked transshipment cargo is creating a strategic vulnerability as India advances plans for the Galathea Bay International Container Transshipment Port on Great Nicobar Island.
The Port of Colombo handled a historic 8.29 million TEUs in 2025, its highest-ever annual throughput, according to the Sri Lanka Ports Authority. Transshipment accounted for about 81% of the port’s container volume, highlighting Colombo’s central role in regional container shipping and global maritime logistics.
The more important strategic question, however, is where that transshipment cargo comes from and where it is ultimately destined. Indian government data has previously stated that 45% of India’s transshipped cargo is handled through Colombo, underlining the port’s importance to India’s international container trade. Sri Lankan port data has also highlighted the significant connection between Colombo’s transshipment business and the Indian market.
That relationship has been one of Colombo’s greatest commercial advantages. It is also becoming one of its greatest strategic risks.
Galathea Bay Raises the Stakes for Colombo
India’s proposed International Container Transshipment Port at Galathea Bay, on Great Nicobar Island, is emerging as one of the most important new maritime infrastructure projects in the Indian Ocean.
The project is strategically located close to the major East-West shipping route and near the Malacca Strait. Indian government documents describe a deep-water facility designed to attract transshipment cargo currently handled by foreign hubs, while recent maritime industry reporting says the project remains on track, with construction plans expected to move forward in the coming years.
The Indian government has described the project as a multi-phase development with an initial capacity of around 4 million TEUs and an eventual capacity of 16 million TEUs. Official estimates have placed the overall project cost at roughly ₹41,000 crore to ₹43,796 crore, equivalent to roughly US$5 billion-plus depending on the exchange rate and project estimate used.
The strategic logic behind the project is straightforward: India wants to reduce its dependence on foreign transshipment hubs and retain more shipping, logistics, and maritime-service value within its own economy.
For Colombo, that is more significant than simply the arrival of another competing port.
Colombo Controls the Port, but not the Cargo
The fundamental vulnerability is simple. Sri Lanka controls the infrastructure at Colombo, but it does not control the cargo moving through it.
Shipping lines, cargo owners, freight forwarders and logistics companies ultimately decide how containers are routed through regional maritime networks. Those decisions can change when a new port offers competitive handling costs, efficient feeder connections, deep water, shorter routing options or stronger commercial incentives.
That means the potential challenge from Galathea Bay is unlikely to appear as an immediate loss of millions of containers overnight.
The more realistic risk is a gradual restructuring of shipping networks.
Once carriers begin establishing new feeder services, schedules, terminal relationships and logistics networks around an alternative transshipment hub, those arrangements can become commercially embedded. As a result, Colombo could face a slow erosion of its strategic centrality rather than a sudden collapse in throughput.
This is why the Galathea Bay project deserves attention well before its full capacity is reached.
The 45% Indian Cargo Connection Matters
India’s relationship with Colombo is at the centre of the issue.
Government sources have stated that Colombo handles around 45% of India’s transshipped cargo, while Sri Lankan port information has previously reported that a substantial share of Colombo’s transshipment activity is connected to the Indian market.
That makes India more than simply another customer of Colombo. Indian trade flows are an important foundation of the port’s regional transshipment ecosystem.
The strategic concern is therefore not that Colombo’s business will disappear when Galathea Bay becomes operational. Rather, the concern is that India could increasingly retain cargo that currently moves through overseas transshipment hubs.
India has already made the policy case for this approach. New Delhi has said that reducing reliance on foreign transshipment ports could generate foreign-exchange savings, improve logistics efficiency and support additional maritime activity including ship repair, bunkering, warehousing, crew services and other logistics businesses.
Colombo should Compete on more than Container Volume
The strategic response for Sri Lanka should not be limited to protecting existing transshipment volumes.
Colombo needs to become a broader maritime services and logistics hub.
That means strengthening vessel turnaround times, terminal productivity, digital port operations, competitive pricing and feeder connectivity while expanding related services such as bunkering, ship repair, marine supplies, warehousing, crew changes, insurance, finance, maritime technology and integrated logistics.
The commercial principle is straightforward: the more value a shipping line can obtain from Colombo beyond container transfer, the more difficult it becomes to shift business to another regional hub.
A successful future strategy would therefore be based on maritime value creation rather than container volume alone.
The 8.29 million TEU record is an important achievement, but record throughput in one year cannot by itself guarantee future competitiveness. Global shipping networks are constantly adjusted according to vessel size, trade patterns, port productivity, congestion, freight economics and carrier strategy.
In that environment, yesterday’s record cannot be treated as a guarantee of tomorrow’s market share.
The Adani Link could become a Commercial Advantage
Sri Lanka also has an important commercial relationship that could be used more strategically.
The Adani Group’s involvement in Colombo’s West Container Terminal gives the port a direct connection to one of India’s major private port and logistics companies. That relationship potentially gives Colombo greater insight into Indian cargo flows, terminal development, carrier strategies and the evolution of India’s maritime infrastructure.
The opportunity, however, should be treated as a commercial advantage rather than a substitute for national maritime policy.
Sri Lanka’s objective should be to use every available commercial relationship to understand how regional shipping networks are changing and how Colombo can remain integrated into them.
Galathea Bay could Broaden the Competitive Challenge
The potential competitive impact of Galathea Bay may also extend beyond Indian cargo.
Indian government planning has explicitly identified opportunities to attract transshipment cargo from India’s eastern coast, Bangladesh and Myanmar. That means the new facility could eventually compete for a broader pool of regional cargo rather than focusing exclusively on Indian shipments.
For Colombo, this creates a wider Indian Ocean competition involving major transshipment hubs and emerging regional gateways.
The strategic battle, therefore, is not simply Colombo versus Galathea Bay. It is a competition among ports to secure long-term positions within the shipping networks linking South Asia, Southeast Asia, the Middle East, Europe and Africa.
Colombo Still has a Window to Act
There is an important distinction between a future competitor and an immediate commercial threat.
Galathea Bay is still being developed, which gives Colombo time to strengthen its competitive position. Recent maritime industry reporting indicates that planning remains active, with phase-one construction expected to move forward during the latter part of the decade.
Earlier official Indian planning documents had targeted 2028 for phase-one commissioning, while more recent industry assessments have discussed construction beginning around that period. This means a 2030–2031 operating window should be viewed as a possible later projection rather than a firmly confirmed commissioning date.
For shipping lines, however, the timing is already relevant.
Carriers plan network structures years in advance. They assess port capacity, terminal productivity, feeder connectivity and long-term commercial costs before making major network decisions.
That is why Colombo should act before Galathea Bay starts handling containers at scale.
Colombo’s Strategic Question has Changed
The central question for Colombo is no longer simply how to handle more containers.
It is whether the port can become so efficient, connected and commercially valuable that shipping lines have compelling reasons to keep Colombo at the centre of their Indian Ocean networks.
Sri Lanka should therefore develop a measurable Colombo Maritime Competitiveness Strategy 2035, focused on vessel turnaround, terminal productivity, transshipment growth, pricing competitiveness, digitalisation, feeder connectivity and maritime services.
The broader strategic goal should be to make Colombo more than a place where containers are transferred between ships.
It should become a maritime services, logistics and shipping hub for the Indian Ocean.
That would give Sri Lanka a stronger defence against emerging competition while allowing the port to benefit from India’s continued trade growth rather than simply depending on India’s cargo flows.
Galathea Bay is not yet a completed competitor. But it is a strategic warning.
The question Colombo should be asking today is not, “How much Indian cargo could we lose?”
It should be asking, “What will make a shipping line choose Colombo even when another major transshipment hub is available?”
That is the question Sri Lanka has time to answer, but the window for action is already open.
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