Multibillion dollar investment into the region’s ports and plans for GCC-wide multimodal transportation systems are well underway, however the immediate challenge of logistics management seems occupying the minds of regional port owners and operators as trade demand outpaces physical expansion.
According to the Agility Logistics Emerging Markets Index 2014, the GCC (Gulf Co-operation Council) countries, along with Jordan, are riding high in the table of international locations offering favourable conditions for business and trade. In this year’s index, Saudi Arabia climbed one place to third spot, with the UAE at number six followed by Qatar, Oman, Kuwait and Bahrain at 12, 13, 18 and 22 respectively.
This has been achieved as a result of ongoing committed infrastructure spend, with the index also noting that Qatar and Oman, joined by Chile, make up an ‘elite’ group as small economies that are outperforming both their peers and larger emerging economies based on the strength of their accessibility, vibrant service sectors and world-class transportation infrastructure.
The “tightrope” between booming trade demand and current overall port capacity in the region, as witnessed by growth of 15.4% since 2013, will headline a panel discussion at the Seatrade Middle East Maritime conference, to be held under the patronage of Sheikh Hamdan bin Mohamed bin Rashid al-Maktoum, Crown Prince of Dubai.
“The GCC has at least 35 major ports and is pursuing an ambitious expansion strategy as the logistics sector, and burgeoning non-oil trade, continue their growth trajectory to further position the region, and its key ports, as a global hub for trade between Europe, Africa and Asia,” said Chris Hayman, chairman, Seatrade, organiser of Seatrade Middle East Maritime, which is participating in the Dubai Maritime Week, hosted by Dubai Maritime City Authority (DMCA) in Dubai from October 28-30.
In 2013, the UAE’s non-oil trade grew by 5% to $435bn with the Federal Customs Authority (FCA) reporting total trade exports registering around $50bn in 2013 with re-exports growing by 11% to touch $121bn.
“Petrochemicals aside, the region is seeing huge movement in gold, automotive, precious gems, telecommunications hardware, crude aluminium, copper products, iron scrap and a wide array of items both for import and export, and so its ports play a pivotal role in global trade movement,” said Hayman.
“Global container movements are not slowing down and the order book for ultra-large container vessels is also growing, so this is where regional infrastructure investment has had to rewrite the book in terms of new operational requirements and the development of an integrated network of next generation facilities in order to handle the estimated $35bn value of the GCC logistics sector,” he added.
In addition to approximately $36bn worth of sector investment, regional economies are set to benefit from the proposed GCC rail network, which will connect key locations from Saudi Arabia to Oman.
Industry estimates suggest that with port expansion programmes reportedly set to increase regional capacity to more than 65mn TEU (twenty-foot equivalent unit) by 2016, new industrials zones such as the $7.2bn phased Khalifa Industrial Zone Abu Dhabi (KIZAD) and Jebel Ali’s recently debuted Terminal 3, with its connectivity to the Dubai World Central super-hub, already providing welcome relief and much-needed facilities.
The expansion tally includes Abu Dhabi’s Khalifa Port, with its $5mn terminal scheduled to open in 2015; Oman’s $4bn Sohar Industrial Zone which will be linked to the GCC rail network, and the $143mn sea-air hub expansion at Salalah.
Saudi Arabia is active with a series of ongoing projects including the $750mn second terminal at Dammam’s King Abdulaziz Port; two further terminals totalling $40mn for King Fahd Industrial Port in Al Jubail; and the soon-to-be-unveiled Portside Logistics Facility at Jubail Commercial Port.
In Qatar, the new $7bn mega-port located close to Mesaieed Industrial Zone will be up and running in 2016 while Kuwait’s contentious $1.2bn, 60-berth Mubarak al-Kabir seaport (Boubyan) is reportedly set to be privatised according to a Kuwait Financial Center (Markaz) report.
