The new container ports in the Middle East region are leading the growth stakes at the moment
The past decade has seen several new port developments in the Middle East including Hamad (Qatar), Khalifa (Abu Dhabi), Sohar (Oman), Duqm (Oman), King Abdullah Port (KAP - Saudi Arabia), plus the development of a number of new cargo handling facilities in Umm Qasr (Iraq). These ports are reshaping traditional liner shipping patterns and supply chains in the region.
The new players, along with continuing upgrades at established facilities such as Jebel Ali, Khor Fakkan, Salalah and Jeddah, have ensured that the region has remained among the most buoyant in the world when it comes to
container handling activity and investment levels.
Out in front
In 2018, Hamad and KAP were among the fastest growing box ports in the world, with increases of almost 100% and 36%, respectively.
Hamad has achieved unprecedented success on the back of Qatar being blocked from trading with several of its Middle East neighbours, including Saudi Arabia and the UAE.
The blockade started in 2017 and it meant that Qatar’s established trading gateways, via all-water transhipment over Jebel Ali and/or loading/discharge at Dammam and then trucking over the land border with Saudi Arabia, were no
longer usable. Initially, importers/exporters used feeder services to/from Sohar and Salalah in Oman.
“This was only ever going to be a temporary solution,” explained Neville Bissett, CEO of QTerminals which operates phase one at the port of Hamad. “Now, the country’s importers and exporters have developed new supply chains, and everything they need is being routed directly through Hamad port.”
The executive stressed that the modern facilities at the new port of Hamad had contributed to the changes and that Qatar-based shippers and consignees, together with ocean carriers, were becoming familiar with a new and more efficient business model
Here to stay
“I do not see a huge return to previous supply chains when the trading embargo and economic sanctions end,” Bissett told WorldCargo News. “While it is difficult to gauge what might happen, our research has suggested that there may only be a 15-20% correction.”
He also thinks it highly unlikely that ocean carriers will return to “whole scale hub-and-spoke networks over Jebel Ali”. “We [Hamad] are now processing nine mainline services a week, and for them to revert to a Jebel Ali transhipment operation would prove very expensive. They have put together tight itineraries that work and involve dropping cargo at Hamad as their last port of call in the upper Gulf before heading back out. It has also given us a small volume of transhipment cargo.
“When it comes to Qatar, at Hamad port, we have many opportunities that can be developed. For instance, Hamad may have a larger role as a relay centre for upper Gulf ports.”
In H1 2019, Hamad handled 661,331 containers, up just over 2% on H1 2018, while the import of materials for construction projects leapt by 24%. The 218,330t of cargo compared with 177,000t in the same period of last year.
The strong growth in traffic volumes over the past two years, coupled with QTerminals growing experience and ambitious expansion plans, means a huge development plan is in place in Hamad. Meanwhile, the company is also looking at overseas projects (see box story, p15).
CSP ready to launch
The port of Khalifa is also in the midst of a massive expansion programme that will see an estimated 5M-5.5M TEU of additional handling capacity phased into operation by the end of 2023. In April, Cosco Shipping Ports (CSP) opened its new 2.5M TEU capacity terminal, and affiliate China Cosco Shipping Co has already routed several of its largest 21,000 TEU capacity ships via the facility. The shipping line intends using the terminal as it main hub in the Middle
East/Indian Ocean region, and traffic volumes are expected to ramp up very quickly.
Commenting on the carrier’s move, Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports Co (ADPC), said: “The recent arrival of the [China Cosco’s] vessels solar and pisces is a milestone for Abu Dhabi Ports and its partner CSP. Not only does it demonstrate our growth as a hub port in the region, but also our position at the heart of China Cosco’s network in the Middle East.
“The container industry is constantly looking for ways to improve efficiency, and the use of mega vessels and modern port infrastructure to cut costs and cargo delivery times are critical. At Khalifa, we have ensured that the largest vessels of today can be handled, and that we can easily adapt to those of tomorrow.”
A lot of eyes will be on the terminal to see how it performs in this regard. CSP has built the terminal using automation technology from ZPMC, including the ASC automation system. The project is an important measure of ZPMC’s development in this key area.
Meanwhile, work progresses on a similar sized facility for Terminal Investment Ltd (TIL)/ MSC. A year ago, the shipping, logistics and terminal operations group signed a 30-year buildand-operate concession with ADPC. It entails the group investing over US$1B in a complex that, when completed, will be capable of processing up to 3M TEU a year.
Like China Cosco, MSC plans to use its new facility as a principal hub for the region. Already, the carrier has started to switch cargo from Jebel Ali to Khalifa, and this will increase as the facility is developed and additional equipment is phased into operation.
Free Zone focus
Elsewhere in the region, the Sohar Port & Free Zone, which opened in 2003, continues to expand. Major developments currently in place include:
● South Port development plan - the addition of at least 250 acres of land for cargo processing activities.
● Completion of the food cluster - the Sohar Food Zone features maritime facilities able to handle Panamax-class bulk carriers, while processing plants to refine sugar and produce flour are being built, and a soya bean crusher is
planned. Sohar intends becoming a leading and secure food distribution centre for the Middle East region.
● Finishing and then renting out to clients 120-ha of land near Terminal D. It is envisaged that this will be mainly occupied by logistics companies.
● The installation of new equipment at Oman International Container Terminal, which is operated by Hutchison Ports. Two super post-Panamax STS cranes and eight RTGs are on order at ZPMC and are expected to be delivered within the next 12 months. The equipment will be controlled remotely.
The port’s management is also committed to more effectively integrating its core cargo handling activities with those businesses active in the free zone.
“We are looking at creating more cross-industry opportunities,” said Mark Geilenkirchen, CEO of Sohar Port & Free Zone. “As the port authority, we are uniquely placed to enable connections between the various companies at the port.” He explained that a new department had been set up to advise and help industries exploit opportunities, increase their margins, and function in a more environmentally friendly way.
Geilenkirchen is adamant that such an approach should generate more cargo for the port while adding to the scope of services it can offer its clients. Ultimately, it will improve the port’s competitiveness as both a regional gateway and re-export centre. Critically, Sohar is located outside the Strait of Hormuz.
Closer to the cargo
Jebel Ali, which is the largest port in the Middle East, is most at risk from the ‘new kids on the block’. In particular, the new developments at Khalifa will result in China Cosco and MSC, and potentially their partners in the Ocean and 2M world alliances, shifting large volumes of traffic.
It is one of the reasons for DP World, which owns Jebel Ali, strengthening its relationship with beneficial cargo owners, and organising integrated cluster developments that offer a wider range of services. This year has seen developments in two of the port’s most important cargo sectors, automotive and petrochemicals.
Mohammed Al Muallem, CEO and managing director, DP World, UAE Region, explained: “The automotive and spare parts sector are core segments that are leading drivers of economic diversification in the country. We are committed to helping the industry reach its full potential, and the integrated multimodal hub we have created with Jebel Ali Port and our Parks and Zones, which include Jafza, Dubai Auto Zone (DAZ) and National Industries Park (NIP), is designed to accommodate door-to-door logistics services.
“These services provide our clients with access to over 3.5 billion customers, with export opportunities in over 150 countries, which include some of the most dynamic emerging economies. We strive to always serve the demand chains in the world today by delivering the best value at the lowest cost.”
Both Jebel Ali Port and NIP feature multi-tier parking facilities with capacities of over 12,000 EU (car equivalent units), while Jebel Ali Port itself holds over 27,000 CEU with an annual capacity of one million units.
KAP on the rise
The 2.3M TEU handled at the Red Sea Saudi Arabian port of KAP in 2018 compared with 1.7M TEU in 2017, with the increase in volumes largely attributable to MSC using the port for a larger proportion of its Red Sea, Indian Ocean and East African feeder traffic. The world’s second largest liner shipping company also interlined more cargo between its mainline ships at the port. It resulted in KAP’s transhipment traffic rising by 44% in 2018 to 1.85M TEU. This was equivalent to over 80% of its total throughput. TIL is a shareholder in Ports Development Company, which owns the port, and also manages the container terminal.
“King Abdullah Port constitutes a real success story in public-private sector partnerships, in light of the increasingly outstanding figures it achieves year after year,” said Rayan Qutub, CEO of KAP. “The port has become a leading
driver in the maritime shipping and logistics services sector, in terms of building knowledge, launching initiatives and supporting various activities.”
He added: “We are moving forwardwith our development plans to provide best practices in the fields of port development and operation, as well as supporting logistical services. This will increase the Kingdom’s competitive advantage on the logistics services index, and in turn, effectively contribute to achieving the logistical objectives of the Kingdom’s Vision 2030 plan.”
At full build-out, KAP will have facilities, equipment and systems in place to handle 20M TEU, 1.5M CEU (vehicles) and 1.5 Mt of clean bulk (mainly agricultural commodities) annually. It will fully support the development of King Abdullah Economic City and the region’s industrial zones, as well as establishing itself as one of the Red Sea’s largest transhipment ports and cargo processing centres.
Red Sea heating up
Competition in the Red Sea is intensifying, however, and achieving these numbers will be extremely challenging for KAP. Already, Jeddah’s main terminal operators have spare capacity in their facilities, and view the transhipment business as a growth opportunity. Meanwhile, a new integrated city and multimillion TEU port complex is planned for Neom.
But terminal operators in the Middle East Gulf face significant challenges. The withdrawal of the US from the Iran nuclear deal in November and its decision to re-impose economic sanctions on the country, plus recent attacks on
oil and gas tankers in the Gulf of Oman and Strait of Hormuz, which have been blamed on Iran, have escalated tensions between the two nations.
Any direct conflict would have a significant impact on shipping movements in the region particularly on ports located in the upper Gulf sector. In previous conflicts, most notably the Iran-Iraq war of 1980-88, for instance, mines were laid in several navigation channels of the Strait of Hormuz. At its narrowest point, the stretch of waterway is only 34 km wide.
While the US Navy and its allies have vowed to keep open the strategic waterway, through which an estimated 30% of the world’s seaborne trade in oil and associated products are shipped, there could be considerable disruption and
certainly heightened risk of attacks.
Consequently, it is likely that ports lying outside the Strait of Hormuz and on the Red Sea would benefit as ocean carriers revamp their networks to protect their crews, ships and equipment, and
redirect their cargo.