9 minute read
New Frontiers
COMING UP ON THE RAILS
DP World’s Jebel Ali port has long been the market leader in the Lower Gulf region for container port calls, but the strength of this position looks to be slowly reducing as other operators come on strong. AJ Keyes reports
DP World’s Jebel Ali container port facilities remain the largest in the entire Mid East region and continue to benefit from a critical mass of volumes and the support of the world’s premier free zone. The port has long been a “must call” on shipping line schedules, with a combination of local cargo and transshipment containers making the deviation from major East-West shipping routes something ocean carriers remained comfortable doing.
However, there may be a new order emerging in the MidEast, with a new slew of challengers threatening to carve-out Jebel Ali’s dominance moving forward.
JEBEL ALI EROSION
Figure 1 provides a summary of the share of total container volumes by port over the past 10 years.
While Jebel Ali has retained a dominance, by some considerable margin, recent trends indicate that its stranglehold on the region is slipping. For example, between 2012 and 2017 the port’s share was around 64 per cent of the total area, but after peaking at 68 per cent in 2018 there has been a decline since, resulting in a share of 62 per cent in 2021.
At the same time, the Port of Khorr Fakkan has seen its 18 per cent share of regional activity in 2013 disappear completely and Bandar Abbas has seen a drop too due to economic and political sanctions.
Of course, the clear winner is Khalifa Port because this facility has seen an increase from under five per cent in 2014 to reach 15 per cent for both 2020 and 2021, clearly highlighting a major regional shift to this rapidly expanding facility. Indeed, a single direct call will replace three regional moves (i.e. two transshipment and one feeder) Jebel Ali remains a competitive port of call in the region, but it is no longer the ‘must-call’ facility on liner shipping schedules.
A CHANGING STATUS QUO
So, what has been behind the rapid emergence of Khalifa Port and what strategies are also being adopted by other regional ports such as Jebel Ali, and will the status quo change further moving forward?
Abu Dhabi Ports (ADP) has a well-defined strategy for its development approach, according to its corporate literature: “Leveraging its unique geographic location, extensive international network and experience, as well as the local expertise of its assets and global partners, Khalifa Port offers customers integrated trade and logistics solutions that enable global opportunity.”
There continues to be success for this port operator. Cosco Shipping Ports (CSP) has signed up to operate the 2nd container terminal as well as the largest freight station in the Middle East, based in Khalifa Port. This strategic partnership will ensure access to over 1000 port-to-port connections worldwide.
Then came a second strategic deal, also announced in Q2 2018, the signing between ADP and Mediterranean Shipping Company (MSC) of a joint-venture agreement that will see a 30-year concession agreement with the possibility of 5 years extension, between the operator and the investment arm of MSC (Terminal Investment Ltd).
As part of the expansion at Port Khalifa (as outlined on p29), the new CMA CGM terminal will also be operational in 2024. Add this to the ramp-up of Cosco and the deal with TIL/MSC and ADP’s strategy of completing terminal deals with major container shipping lines highlights a clear strategy. It is reasonable to assume the share of Lower Gulf container traffic will increase.
QATAR’S PARADIGM SHIFT
Mwani Qatar has stated that the strategy underpinning the development of Hamad Port is to make a “paradigm shift in Qatar’s economic diversification and competitiveness, with a strong focus on the import and re-export of goods.”
While Qatar did previously have some port infrastructure at Doha, it was highly limited in terms of meeting future ambitions and requirements within the Qatar National Vision 2030, which has a strong focus on diversifying the Qatari economy in what Mwani Qatar says will be a “post-hydrocarbon future.”
The commodities supporting the Qatar economy certainly require modern, efficient port infrastructure as explained by Craig Anderson, Managing Partner at information specialist. Data&. “Qatar’s key exports are mineral products, ostensibly petroleum gas and crude petroleum, with over 80 per cent going to Asia. However, for imports major goods are consumer goods, machinery, metals and transportation equipment, all items largely requiring containerisation.”
8 DP World has
long been the leading port operator in the Lower Gulf, but others are coming up on the rails….
Consequently, the need for efficient, modern port facilities is obvious and, unsurprisingly, this is where Mwani Qatar continues to focus its strategy, along with QTerminals, a terminal operating company jointly established by Qatar Ports Management Company (Mwani Qatar 51 per cent stake) and Qatar Navigation (Milaha 49 per cent share). As QTerminals explains, it is “ responsible for enabling Qatar’s imports and exports, its maritime trade flows and stimulating economic growth locally and regionally.” STRAP: MID EAST LOWER GULF FOCUS
The investment in Ruwais in the north further endorses the diversification strategy by offering improved infrastructure COMING UP ON THE RAILS here too.
SOHAR AMBITIONS
The Sultanate of Oman has a vision centred around port and logistics development to meet key aims of its Oman Vision 2040. “A productive and diversified economy, founded on innovation, integration of roles, and equal opportunities; leveraging Oman’s competitive advantages, driven by the private sector towards integration into the world economy and active contribution to international trade,” is a summary of the objectives.
The need for modern, high-quality port facilities is, therefore, crucial and Sohar is regarded as a key component in the process. “The strategic geographic location of the Sultanate is an excellent opportunity to develop and expand trade partnerships with other countries worldwide…. an international trade hub.”
Sohar Port benefits from Hutchison Ports as the operator and a location outside the Straits of Hormuz in the Gulf of Oman, 160km before Dubai. During 2021 Sohar Port and Freezone, along with Hutchison Ports Sohar commissioned a joint feasibility study to generate what is expected to be a “clear roadmap” for future expansion to meet the needs of the local and regional economy. Confirmation of the findings is likely to be part of the subsequent Master plan referenced on p29.
Sohar is clearly in its infancy compared to Jebel Ali and, indeed, compared to Abu Dhabi Ports (ADP). However, the need for economic diversification and the expected investment in Sohar represents a clear strategy in place in the Sultanate. Tapping into shipping activities for local and regional economies is being targeted as the way forward to meet future ambitions.
DUBAI – CROWN REMAINS IN PLACE….AT THE MOMENT
So, what of DP World? The crown remains in place, but there is no doubt there are other ports and operators emerging in
the Lower Gulf region looking to challenge the long-held dominance of Jebel Ali. DP World’s Jebel Ali port has long been the market leader in the Lower Gulf region for container port calls, but the future looks less certain now In one respect, the strategy is business as usual. T4 is an option when needed and DP World has now broken ground as other operators strike out, as AJ Keyes reports on its new Jafza Logistics Park. Scheduled for completion in 2023, the new 46,000m2 site (of which 87 per cent is DP World’s Jebel Ali container port facilities remain the largest in the entire Mid East region and warehousing, the rest is office space) is needed due to continue to benefit from a critical mass of volumes and the support of the world’s premier free zone. growth of logistics demand in Jafza of 14 per cent since 2016.The port has long been a “must call” on shipping line schedules, with a combination of local cargo However, in terms of strategy, it is clear that DP World now views itself as more than a terminal operating company or and transshipment containers making the deviation from major East-West shipping routes specialist in free trade zone activities. Indeed, the company’s something ocean carriers remained comfortable doing. own description is a “leading provider of worldwide smart end-to-end supply chain logistics, enabling the flow of trade However, there may be a new order emerging in the Mid-East, with a new slew of challengers across the globe.” That said, a shortened version also used is, threatening to carve-out Jebel Ali’s dominance moving forward.“a leading global end-to-end logistics provider.” JEBEL ALI STANGEHOLD SHARE SLIPPING This is largely reflected in recent acquisitions and deals, with a 30-year concession for Jeddah South terminal, the 100 per cent acquisition of Imperial Logistics in Africa, investment plans in Indonesia totalling (eventually) US$7.5 billion and the Figure 1 provides a summary of the share of total container volumes by port over the past 10 years. 2018 acquisition of Unifeeder shipping services for US$764 million. While Jebel Ali has retained a dominance, by some considerable margin, recent trends indicate that Yet while some of these deals do directly support Jebel Ali, its stranglehold on the region is slipping. For example, between 2012 and 2017 the port’s share was around 64 per cent of the total area, but such as Unifeeder, the others represent an international after peaking at 68 per cent in 2018 there has been a focus. Of course, within its home market DP World is certainly continuing to invest heavily in e-commerce and greater decline since, resulting in a share of 62 per cent in 2021. digital implementation to support activities too, but even then, the company does not actually control the flow of At the same time, the Port of Khorr Fakkan has seen its 18 per cent share of regional activity in 2013 disappear completely and Bandar Abbas cargo, it remains the facilitator of moving trade. The strategy has seen a drop too due to economic and political sanctions. being adopted clearly remains one in which a DP World company tries to “touch” the cargo as much as possible throughout its logistics flow linking source to final destination. Of course, the clear winner is Khalifa Port because this facility has seen an increase from under five Will the overall value be more than the sum of the parts? Will this strategy work? Well, only time will tell. While ADP, per cent in 2014 reach 15 per cent for both 2020 and 2021, clearly highlighting a major regional shift to this rapidly expanding facility. QTerminals in Doha and Omani ports may not reach the same Indeed, a single direct call will replace three regional moves (i.e. scale as DP World in the Lower Gulf, each one is seeking to two transshipment and one feeder), which has flattered Jebel Ali’s handling totals historically. close the gap on DP World moving forward.
Figure 1: Share of Mid-East Container Traffic by Port, 2012-2021
Source: dataand.com 8 Figure 1: Share of
