There is a risk that the continued expansion of cargo and container terminals in ports across the GCC will affect their long-term profitability.

“There has been, in the past, an almost irrational behaviour when it comes to the construction of ports across the region,” a source tells MEED.

According to the source, the port owners in the region should learn from the global shipping industry, which struggled to fill capacities of vessels after focusing on building large vessels.

“More terminals with expanded capacities will keep driving prices down,” the source tells MEED. “Everyone thinks they can generate traffic to match the available capacity but increased competition means some ports will be less attractive and unprofitable.”

Multibillion-dollars-worth of port projects are planned in the GCC. They include under-construction Mubarak al-Kabeer Port in Kuwait and the $1.6bn fourth terminal at Jebel Ali Port. Terminals at these ports could come online over the next four to five years.

In addition, ports in UAE’s northern emirates are undergoing an expansion and Qatar is expected to award the design and masterplan package for the second phase of Hamad Port soon.

Apart from intra-regional competition, some of the GCC ports are expected to face additional challenge from ports in Pakistan and Iran, in addition to the planned revival of the rail-based Silk Road route that envisages connecting China to Eastern Europe via Iran.

Regional port capacity and investment

Location

Port

Capacity (TEUs a year)

Capital investment (current or planned)

Kuwait

Mubarak al-Kabeer

Not yet open

$1.14bn (phase 1)

Kuwait

Shuwaikh

850,000

 

Kuwait

Shuaiba

350,000

 

Bahrain

Khalifa bin Salman port

1 million

 

Qatar

Hamad Port

2 million

$2bn (phase 2)

UAE (Abu Dhabi)

Khalifa port

2.5 million

 

UAE (Dubai)

Jebel Ali port

18 million*

$1.6bn (Terminal 4)

UAE (Sharjah)

Port Khalid

750,000

not available

UAE (Sharjah)

Khor Fakkan

5 million

not available

UAE (Fujairah)

 

1 million

not available

Oman (Sohar)

OICT

1.2 million

$303m

Oman (Salalah()

 

5 million

$120m

Saudi Arabia

Jeddah

7.2 million

 

Saudi Arabia

Dammam

2.4 million

 

*=Additional 1.3 million TEUs to be added to Terminal 3 by end 2017; OICT=Oman International Container Terminal Source: MEED