Case study: Khalifa bin Salman Port

10 November 2009

Although built to operate as a trading hub for the upper Gulf, the Bahraini port has been relying on domestic demand since opening in April this year

When Bahrain’s Khalifa bin Salman Port opened for business on 1 April 2009, it was at least six months later than planned. Unfortunately for the port and its operator, Netherlands-based APM Terminals, in those six months the global economy had gone through its most turbulent period in decades.

Trade levels fell sharply as consumers and companies around the world cut back on spending and major economies entered recession. For a port designed to meet not just local demand but also to act as a trading hub for the upper Gulf region, the situation could hardly have been worse.

As a result, establishing the port as a trans-shipment hub for Qatar, Kuwait and parts of Iran, Iraq and Saudi Arabia will take far longer to realise than envisaged.

The port has been built on reclaimed land at Hidd, to the west of Manama. It is designed to initially handle up to 1.1 million 20-foot equivalent units (TEUs) a year, but for now it has had to make do with the 300,000 TEUs of annual demand created by the local economy.

It will be some time before the port will need any extra capacity, but once it does, more cranes could easily be added to the site to take capacity to 2.5 million TEUs a year.

“It can grow incredibly quickly. We have talked to a number of carriers about using Bahrain as a hub for the upper Gulf”

Iain Rawlinson, chief commercial officer, APM

According to Iain Rawlinson, chief commercial officer at APM Terminals, no trans-shipment customers have yet been signed up. But he says that once any shipping lines decide to use the port as a base for the wider region, cargo volumes could rise rapidly.

“It can grow incredibly quickly,” he says. “We have talked to a number of carriers about using Bahrain as a hub for the upper Gulf. This year, I’m not sure we are going to see any. We might see a little towards the end of the year.”

The ships and trading companies already using the port say it is far more advanced than the facilities at Mina Salman port, which it replaced.

At opening, Khalifa bin Salman Port had four post-panamax cranes, able to handle the largest ocean-going ships. There are 1,800 metres of quay wall and a channel depth of 12.8 metres. Channel dredging is ongoing and is due to reach 15 metres in early 2010 to match the 15-metre draft alongside and in the turning basin.

In addition, the new port has a passenger terminal, two roll-on/roll-off ramps and general cargo facilities. There is also a dedicated facility for handling aluminium ingots produced by Aluminium Bahrain, one of the country’s most important industrial firms.

In comparison, the old port, which opened in 1962, had two container berths with just 600 metres of quayside and was only able to accommodate vessels with a draft of up to 10.5 metres. The port also had berths for conventional cargo and a small ramp for roll-on/roll-off vessels of up to 15 metres in width.

Replacing it with the new port has taken 14 years of planning and development. The proposal to build a new port was first mooted in 1995, but it was another five years before the government approved the plan and a design study was started. Since then, there has been a series of delays.

Work began on the port infrastructure, including the reclamation of 900,000 square metres of land, in 2002 and was completed two years later. A joint venture of the US’ Great Lakes Dredge & Dock Company and the local AA Nass Contracting carried out the dredging and reclamation work.

The subsequent bidding process for the contract to develop the port’s infrastructure, including earthworks, pavements, drainage, water supply and other services, was delayed several times in an effort to attract as wide a range of bidders as possible.

Operation contract

The government first requested bids to operate the port in August 2004. By the following summer, APM Terminals had been awarded the contract, beating rival offers from Hong Kong’s Hutchison Port Holdings, the Philippines’ International Container Terminal Services, and the UK’s Mersey Docks & Harbour.

As part of its deal, which was signed in November 2006, APM agreed to take over the operations of the existing Mina Salman port until the new facilities were ready. Following the opening of Khalifa bin Salman Port in April, Mina Salman ceased operating as a commercial port on 1 May. No long-term plan has yet been disclosed for any alternative uses for the old port.

APM Terminals Bahrain, a joint venture of APM and the local YBA Kanoo Holdings, will operate Khalifa bin Salman Port for the next 25 years, and will also provide towage and piloting services for Bahrain’s territorial waters via a sister company, SvitzerWijsmuller.

For APM Terminals to make the most of the port infrastructure now at its disposal, there will need to be a sustained improvement in the economies of Bahrain and the wider Gulf region.

Khalifa Bin Salman port in numbers

1.1 million TEUs a year - Initial capacity

300,000 TEUs - Volume of trade in first year

2.5 million TEUs a year - Maximum possible capacity

TEUs=20-foot-equivalent units.

Source: MEED

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