Bahrain's new port operates below capacity

27 September 2011

Development of the Khalifa bin Salman port was intended to make Bahrain a leading logistics hub in the Middle East, but the timing of its opening has been unfortunate

Key fact

Khalifa bin Salman port can handle 1.1 million TEUs a year, but only had a throughput of 367,589 TEUs in 2010

TEUs=Twenty-foot equivalent units. Source: MEED

The timing of the opening of Bahrain’s Khalifa bin Salman port could not have been more unfortunate. It was intended to operate as a trading hub for the northern Gulf, tapping into the markets of Qatar, Kuwait and parts of Iran, Iraq and Saudi Arabia. When it opened in April 2009, the port, located in Hidd, faced a world in the midst of the global economic downturn.

We have noticed slight improvements as more project cargo arrives … and expect higher volumes in future

Hassan al-Majed, General Organisation of Sea Ports

Since the start of 2011, political violence in Bahrain and around the region has further dented activity at the port. Khalifa bin Salman port is designed to handle up to 1.1 million twenty-foot equivalent units (TEUs) a year, but it is operating at much less than that.

Throughput at the new port during its first year of operation stood at less than 300,000 TEUs. Although this is far less than the full capacity, it is more than the old Mina Salman handled. This throws in to jeopardy future expansion plans and Bahrain’s hope to become a major trading hub.

Upturn hope for Bahrain’s ports

The port is operated by Netherlands-based APM Terminals and, aside from containers, it also handles passengers, general break-bulk and roll-on/roll-off cargo. The port has a total quayside of 1,800 metres.

“We never got hit by the downturn, but we haven’t been hit by the upturn either,” Iain Rawlinson, chief operating officer in Bahrain for APM Terminals, told MEED earlier this year. “Stability is good, of course, but it is a disappointment when we had been hoping for an upturn.”

The number of vessels that called at Khalifa bin Salman port increased from 1,009 in 2009 to 1,023 in 2010. Of this, container traffic accounted for 576 vessels, while general cargo accounted for 380 vessels in 2010. Cruise traffic attracted 67 vessels.

Container throughput increased 31 per cent in 2010 to 367,589 TEUs from 280,060 TEUs in 2009. General cargo throughput reached 478,956 tonnes in 2010, a sharp decline of 55 per cent from the year before.

“Volumes have dropped substantially compared with the record levels seen in 2008 and 2009,” says Hassan al-Majed, director general of Bahrain’s General Organisation of Sea Ports (Gop). “We have noticed slight improvements as more project cargo arrives at Khalifa bin Salman port and expect to reach higher volumes in the near future.”

In terms of trans-shipment, movements saw a 596 per cent increase, from 6,100 moves in 2009 to 42,432 moves in 2010. This growth is attributed, in part, to Bahrain’s strategic geographical position.

In the same year, the Khalifa bin Salman port saw a throughput of about 13-14 liners a month during the peak season, which lasts from November to April. There was an average passenger handling of 2,000 passengers each month.

The passenger sector has been one of the fastest-growing over the past few years, but passenger traffic was impacted by the popular uprising in Bahrain. Having been called off during the protests, cruise lines are expected to return with their passenger vessels at the start of the new season in November, says al-Majed.

The development of Khalifa bin Salman port is just one component of Gop’s mission to develop the maritime and logistics industry potential in line with Bahrain’s Economic Vision for 2030. Gop has its own Strategic Plan 2011-16 that aims to attract further investment in maritime and logistics to boost the sector’s contribution to gross domestic product and provide employment opportunities.

Greater cargo capacity

Signing up new clients has proved difficult. The move away from the city’s old central Mina Salman port to the new facility was intended to capture a greater share of trans-shipment traffic in the northern Gulf.

APM signed up in the first quarter of 2010 to use Khalifa bin Salman port as a trans-shipment hub for the northern Gulf. Since then, no other operators have signed up, although Gop remains optimistic others will seek to do so.

“We are working hard to secure more trans-shipment cargo with our current capacity level at approximately 40 per cent,” says al-Majed.

Plans to increase capacity at Khalifa bin Salman port will take place once it starts to exceed capacity.

“As it is now, we have sufficient capacity to handle all of our business projections for the next three to five years and we are ready to make necessary investments should the business grow beyond current capacities and additional investment is required,” says al-Majed.

For nearly half a century, Mina Salman port was the principal port in Bahrain and one of the main anchorages of the northern Gulf. As such, the construction of Khalifa bin Salman port does not spell the end of activities at Mina Salman.

In December 2010, Gop said land at the old Mina Salman port had been set aside for the development of a construction materials terminal. This would be developed on a build-operate-transfer basis. Most operations ceased at Mina Salman following the opening of the new Khalifa bin Salman port.

Gop has already finalised the masterplan for the new terminal and was initially planning to offer the land to investors in the first half of 2011.

The work will also involve renovating the existing quay wall as well as building cement silos and storage facilities for sand and aggregates. Building a dedicated building materials terminal is Gop’s short-term plan to accommodate the future growth in the import of building materials.

In the long term, the construction of a dedicated port to receive building materials is planned. However, this plan will not be realised for at least another five to 10 years as it involves extensive land reclamation and building superstructures including buildings, a quay wall and roads. The masterplan for this project is also complete.

“The logistics outlook in Bahrain looks very good, as the kingdom is ahead of many of its neighbours in terms of logistics,” says Alessandro Tricoli, senior legal consultant at Fichte & Co.” [It] can further take advantage [of] its geographical location, positioning itself to become a logistics springboard for companies serving the northern Gulf, particularly Kuwait, Saudi Arabia and Iraq.”

Bahrain’s logistical dream

Bahrain has been a trading hub since the 1800s when it traded pearls. Today, it is also seeking to increase its cargo-handling and logistics abilities in other ways.

Bahrain International airport is currently undergoing a $4.8bn expansion, which involves extending its existing passenger terminal with future plans to build two more terminals. By 2015, it is predicted this expansion will result in a 15 per cent increase in the volume of cargo handled at the airport.

Bahrain’s logistics industry is growing fast, responding to growing demand from businesses, and supported by many billions of dollars invested by the government in several large infrastructure projects, mainly the new state-of-the-art port and the development of the logistics zone and industrial investment park to attract foreign investment.

The construction of ground infrastructure for the 1-square-kilometre Bahrain Logistics Zone was completed in 2010 and 2011 is expected to see the next phase of infrastructure development, which involves the construction of pre-built facilities. In 2010, Gop said it expected to see significant future growth at the zone as economic growth in the Gulf returns to normal. Growth would also occur as the Iraqi economy enters the next phase of its post-war development.

Bahrain transport infrastructure projects
 ClientEstimated cost ($m)Status
Bahrain International airport expansionBahrain Airport CompanynaEPC PQ
Bahrain International airport new terminalBahrain Airport CompanynaDesign
Bahrain rail networkBahrain Works Ministry7,900Design
Budaiya airportCivil Aviation Authority200Planning
Khalifa Bin Salman port (Phase II)General Organisation of Sea Ports150Design
Bahrain-Qatar CausewayQatar and Bahrain Causeway Foundation4,000On Hold
na=Not available; EPC=Engineering, procurement and construction; PQ=Prequalification. Source: MEED Projects

While the King Fahd Causeway, linking Bahrain with Saudi Arabia, is already in place, plans for a rail and road bridge linking Qatar with Bahrain are on hold. Future plans for a GCC-wide railway will also assist the transportation of freight around the region and beyond.

Bahrain’s part of the rail plans is significantly behind those of its neighbours in the UAE, Qatar and Saudi Arabia. Up to 30 million TEUs of new container capacity is scheduled to be added to the Gulf ports by 2015.  In the northern Gulf, Qatar, Kuwait and Saudi Arabia’s second container port at Dammam are all pressing ahead with plans to build new ports or to expand on their existing facilities.

With particularly ambitious port developments taking place in Abu Dhabi in the form of the Khalifa Port and Industrial Zone and the New Doha port in Qatar, Bahrain must try and continue to attract trans-shipment if it is to compete regionally.

Stiff competition for Bahrain

“Bahrain faces stiff competition from its neighbours, hence it is very likely that its [push to become] a logistics hub may remain confined to the gateway to the northern part of the Gulf,” says Tricoli. “It is not to be underestimated that Bahrain has the shortest travel time between its seaport, airport and the logistics processing zone of anywhere in the Gulf, enabling more efficient and faster processing of trade goods.”

Almost 95 per cent of global trade is carried by sea. Being an island, Bahrain is heavily dependent on the import and export of almost all goods and products through its seaports. If new shipping lines can be enticed to use Bahrain as a base for shipments around the northern Gulf, business at Khalifa bin Salman port will increase swiftly going forward. 

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications