Qatar construction sector weathers blockade by streamlining operations
June 28 2017 08:28 PM
Labourers working on a construction site Doha
Labourers working on a construction site Doha

The economic blockade imposed by Gulf neighbours appears to have helped Qatar’s mammoth construction sector in streamlining operations and enhancing efficiency by way of lower inventory costs and faster shipments of raw materials from elsewhere, according to retailers in the sector.

Although the retail traders and distributors of raw materials for the construction sector was “baffled” by the unexpected economic blockade amid fears of shortage, market sources said Qatar “brilliantly executed its alternative plans that never allowed room for panic;” in fact the government and their related entities have now sped up payments for them.

Highlighting that 80 trucks of raw materials used to come from Saudi Arabia and the UAE through Abu Samra border to Doha; they said the companies from those countries that imposed blockade are now in “dire straits” as they might lose an important market in Doha, which has outlined some $200bn investments in its infrastructure, ahead of 2022 FIFA World Cup.

With Qatar Ports Management Company announcing the direct services to Oman, container services are being restored with Doha. Milaha Maritime and Logistics is offering a three times a week feeder service between Hamad Port and Salalah. Maersk Line had announced it was accepting cargo to and from Qatar that will be transshipped through Salalah once in 10 days.

Similarly, Qatar's Ministry of Transport and Communications also launched a new direct maritime line 'India Qatar Express Service', linking the new Hamad Port with Mundra (Gujarat) and Nhava Sheva (Mumbai) ports on a weekly basis.

“We feel the (construction) market is up as it is now payments-based and there is relatively faster sourcing of raw materials,” an official of trading company said.

Earlier, retail traders and distributors of raw materials for the construction sector used to source materials from the UAE and Saudi Arabia on a credit basis, which meant stocking up excessively. But now the situation has changed to ‘pay as you order’ with Oman and Indian firms, multiple sources in the sector confided.

Payments are also not that an issue now since they are done basically through funds transfer, which means instant earnings for those from Oman and India.

The earlier credit-based approach led retail traders and distributors place larger orders, forcing them to stack up the materials in the warehouses and then transport it as and when needed to the project sites; implying higher costs towards inventories and transportation.

Now, the orders are rational and in tandem with expected demand for the existing projects, they said, adding the situation as they see now is not that of shortage of raw materials but lower unwarranted excess stockpiling.

“Of course, the room for bargaining is limited with Oman; but with India, it is possible, considering that for them it is a new market,” said a top official of a trading company, which is into building auxiliary materials.

For the new trade corridor, the sources said, import prices of raw materials are marginally higher but the considerable savings in inventories and the resultant secondary transport, as well as the time taken in bringing them to Qatar, have more than made up for the opportunity costs, hence the (profit) margins have not been impacted, rather they are improving.

“We will like to see it (economic blockade) more as a blessing in disguise,” an official of a trading company, which deals with building materials, said, adding they have been assured of receiving the cargoes in 7-9 days compared to about three weeks earlier.



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