Abu Dhabi invests in port for the long term

02 November 2010

Emirate is prepared to build up port’s customer base gradually and generate its own demand

After a dismal 2009 for the shipping industry, many began to doubt the viability of the $100bn of ports projects that are under way across the GCC.

As 2010 comes to an end, the Middle East shipping market is now bouncing back, with ports experiencing a pickup in volumes. But questions still remain over whether the Gulf has the traffic to sustain all the new port capacity under construction.

This is particularly the case in the UAE. Abu Dhabi sees the development of its ports sector as a key driver of economic diversification and has embarked on a multibillion-dollar port and industrial zone project. Dubai, meanwhile, is home to the region’s largest trans-shipment port at Jebel Ali. DP World could manage both ports.

Some see a conflict of interest in the ports having the same operator and suggest Mina Khalifa could just become a spill-over port for Jebel Ali. But Abu Dhabi has other plans.

It hopes to attract new industries to set up at the adjoining industrial zone to generate traffic for the port through imports of raw materials and exports of finished and semi-finished products. Its anchor tenant is Emirates Aluminium and it received its first shipment of alumina to its dedicated berth on 3 November.

With this strategy, Abu Dhabi is not setting itself up in direct competition with Jebel Ali and trying to lure business away from its neighbour. Rather it intends to generate its own demand. The plan experienced a major setback with the decision of Abu Dhabi National Chemicals Company not to base itself at the site.

But the emirate’s leaders are taking a long-term approach and are prepared to build up the port’s customer base gradually. Unlike its neighbour, it has the financial means to be patient.

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