APL Logistics, the logistics arm of Neptune Orient Lines (NOL), plans to establish a regional consolidation hub for South Asia in Sri Lanka by the second half of this year.

The announcement came after the signing of an agreement with the Board of Investment of Sri Lanka on APL Logistics’ investment within the Katunayake Export Processing Zone (EPZ).

APL Logistics Lanka, wholly-owned by APL Logistics, has been granted a lease on the land and premises located in the EPZ.

APL Logistics said it will now focus on the reconstruction of the existing facility on the site into a new state-of-the-art facility. It will offer 100,000 sq feet of bonded warehousing space, container freight stations and other logistics-related businesses.

“Sri Lanka has been rapidly growing in importance as a regional sourcing base for global retail customers. With the set-up of APL Logistics’ regional consolidation hub here, we are well-positioned to scale up our operations and meet growing customer demand for reliable regional supply chain solutions in South Asia,” said Beat Simon, APL Logistics president.

The new facility in Colombo will complement APL Logistics’ existing cargo hubs in North and Southeast Asia. It will connect with as many as 18 container freight stations located within APL Logistics’ South Asia network.

Last month, Singapore’s NOL confirmed that it is selling APL Logistics for $1.2bn to Japan’s Kintetsu World Express (KWE).

The sale of APL Logistics would allow NOL to strengthen its financial position and pay down its debts.