South Asia Gateway Terminals (SAGT), a subsidiary of John Keells Holdings (JKH), reported container throughput exceeding two million container boxes of twenty-foot equivalent units each (TEUs) in 2024, double the terminal’s original design capacity of 1.1 million container boxes. Chief Executive Romesh David attributed the achievement to technology and workforce development investments.
SAGT stated that contributions from internal and external service providers were critical to reaching the throughput target. The Sri Lanka Ports Authority’s marine divisions and external trucking and lashing services played key roles. Based on TEU’s productivity metric per yard hectare, the terminal’s throughput ranks it among global leaders.
SAGT plans to implement additional technology-driven measures to enhance operational efficiency, such as a vehicle booking system to improve truck turnaround times and reduce congestion within the port. Through a mobile application, the system will enable shippers, consignees, truck drivers, and other port users to schedule and track container movements. SAGT plans to install Optical Character Recognition (OCR) technology at the gates and quayside. The technology will automate container inspections, record their exterior condition, and monitor the condition of seals, enabling faster processing.
SAGT had previously handled over two million TEUs in 2018 and 2019, but economic challenges and the COVID-19 pandemic impacted subsequent volumes. The increase in 2024 coincided with higher vessel activity at Colombo Port, driven by increased shipping traffic through the Red Sea and other regional developments.
In its 2023/24 annual report, JKH reported that SAGT’s TEU volume increased by 7% to 1.82 million, up from 1.70 million in 2022/23, driven by transshipment volumes, while domestic import volumes declined. The overall volume growth at the Colombo Port also contributed to SAGT’s performance. Transshipment volumes grew strongly in the year’s fourth quarter as vessel movements increased due to the regional crisis.
While SAGT’s volumes grew, a shift in the volume mix affected profitability, with lower contributions from domestic import volumes. Ancillary revenues also declined from prior peak levels. Additionally, the appreciation of the Sri Lankan Rupee by an average of 11% impacted revenue and costs. SAGT recognized a deferred tax credit of Rs1.20 billion in 2023/24 following a deferred tax charge of Rs1.35 billion in 2022/23 related to changes in income tax rates.
During the year, SAGT upgraded its terminal operating system to optimize gate and yard operations. It also introduced a digital safety management system to centralize reporting and tracking safety-related tasks, including incident reporting and risk assessments. SAGT is automating gate operations to increase efficiency and reduce the risks associated with manual container inspections.
JKH is concurrently developing the West Container Terminal (WCT-1) at the Colombo Port. According to its 2023/24 annual report, construction of the first phase of WCT -1 is progressing. The first phase will include 800 meters of quay length, and JKH expects it to be operational in the fourth quarter of 2024/25. The terminal will be capable of servicing two large vessels simultaneously.
WCT-1 will be a deep-water terminal with a total quay length of 1,400 meters and an alongside depth of 20 meters. The terminal will have an annual handling capacity of approximately 3.2 million TEUs upon full completion. The first phase accommodates higher throughput volumes, while the remaining sections are scheduled for completion by mid-2026. The lease period for WCT -1 is 35 years.
Colombo Port experienced an overall increase in container volumes during 2024, supported by strong transshipment demand and increased regional shipping traffic. The port’s strategic location and capacity enhancements contributed to its ability to handle additional volumes during elevated vessel activity.
SAGT has continued to focus on leveraging technology to streamline operations. In addition to the planned OCR technology and vehicle booking system, ongoing upgrades aim to improve container processing times and optimize yard utilization to address capacity constraints and improve efficiency amid growing demand for terminal services.
SAGT’s operational performance remains closely tied to external market conditions, including global shipping trends and regional geopolitical developments. Its investments in infrastructure and technology position it to adapt to changing demand patterns and maintain its competitiveness in the worldwide shipping industry.
Implementing automation and digital tools is expected to enhance efficiency and reduce operational bottlenecks. These measures are part of a broader strategy to maintain productivity levels and align with global standards in container terminal operations.
According to JKH’s September 2024 quarter results, group revenue for the quarter stood at Rs76.96 billion, reflecting a 20% increase compared to the corresponding period in the previous year. Cumulative group revenue for the year’s first half reached Rs146.61 billion, marking a 15% increase from the same period in 2023/24. Group earnings before interest expense, tax, depreciation, and amortization (EBITDA) for the quarter declined by 4% to Rs8.09 billion due to pre-opening costs for the Cinnamon Life hotel project. Group EBITDA increased by 8% to Rs9.28 billion, excluding these costs.
The transportation industry group recorded an EBITDA of Rs1.98 billion in the second quarter, representing a 17% increase over the prior year. Growth in volumes and an improved mix contributed to SAGT’s profitability during the quarter. Transshipment and domestic volumes increased, while Lanka Marine Services (LMS) benefited from higher demand driven by Red Sea disruptions and improved margins. These factors underscore the group’s ability to leverage market opportunities while navigating external challenges.
SAGT’s performance in 2024 reflects broader trends in Sri Lanka’s ports and shipping sector. The sector has seen increased activity in response to regional developments and growing transshipment demand. Continued investments in capacity expansion and technology will only enhance long-term growth and operational resilience.