Middle Eastern ports strive for growth despite tough shipping market

13 March 2013

Oversupply remains issue for shipping lines across the Middle East

Most ports in the Middle East are reporting growth in cargo and container throughput, despite operating in a tough shipping market.

The global shipping market continues to tackle problems of oversupply. According to a new report by shipping analysts at UK-based Drewry Maritime, owners of very large crude carriers (VLCCs) are struggling in the Middle East with overcapacity and low freight rates. The Drewry tanker earning index fell by 27 per cent to 50.3 in January, while VLCC earnings fell by 16 per cent on the Gulf-Far East route.

Shipping lines are also struggling with a lack of access to finance, with bankers saying there has been a dramatic reduction in the number of global financial institutions ready to lend.

Given this backdrop, ports in the Middle East might have anticipated a decline in demand. Yet, data from 2012 and for the first few months of this year suggests Middle Eastern ports are generally seeing increased demand for their facilities.

Port operator DP World, which oversees Dubai’s Jebel Ali port, still dominates the regional market. Its UAE ports handled 13,280,000 twenty-foot equivalent units (TEUs) of containers in 2012. This is an increase of 2 per cent on the previous year.

Other ports are recording heightened demand. Abu Dhabi Ports Company (ADPC) saw increased throughput from all its ports in the Emirate, due in part to the opening of its new 2.5-million-TEU-capacity Khalifa Port last year.

Total throughput across ADPC’s ports for 2012 rose by 2.5 per cent to 786,048 TEUs, from 767,713 TEUs. General and bulk cargo grew at an even faster rate of 8.7 per cent, from 8,638,766 tonnes to 9,393,265 tonnes.

Such is the growth in demand, most ports are expanding their capacity.  

The New Doha Port project in Mesaieed selected a contractor to build a container terminal at the port in early March. With the existing port in Doha running at overcapacity, the completion of the new port cannot come soon enough for contractors looking to import raw materials needed to for Qatar’s infrastructure programme. The Saudi Port Authority reports that its ports handled a total of 6.63 million TEUs in 2012, an increase of 0.93 million TEUs on the previous year.

Saudi ports have started 2013 with strong throughput figures as well, with Jeddah Islamic Port recording a 1.8 per cent increase in January compared with the same month the previous year. In response to increasing demand, the Saudi Port Authority is increasing its container capacity, building a new terminal at King Abdulaziz Port.

Oman’s ports are also in expansion-mode, as traffic increases at both Sohar and Salalah ports.

Salalah Port recorded 3.6 million TEUs by the end of last year, a rise from 3.2 million TEUs and the port is overseeing a new cargo terminal and liquid jetty to further boost capacity.  

A contract for the construction of a new terminal at Sohar port was awarded in January. The port saw container business increase by 83 per cent in 2012 from the previous year, reaching 198,817 TEUs.

Overall port capacity in Oman will be further expanded this year with Duqm Port to partially open some operations this month.  

Port of Beirut is due to complete the construction of a new terminal in the middle of this year; a well-timed development given the port’s increasing traffic.

In January, it handled a total of 56,239 TEUs. This is an increase of almost 29 per cent compared with the same month in 2012, and is one of the biggest growth rates recorded at the port since 2009.  

In part, this growth has been put down to traffic being diverted from Syrian ports affected by the country’s ongoing conflict.  

One of the reasons Middle Eastern ports continue to see demand is their geographic position. As demand in Europe dwindles, ports are still able to capitalise on the growing trade flows between the Middle East, Africa and Asia.

Middle Eastern ports themselves have strengthened relations with ports in other emerging markets. DP World has just announced that shipping line Simatech will begin a new container ship service between Jebel Ali Port and Mogadishu in Somalia.

Abu Dhabi Terminals (ADT), which manages and operates the new Khalifa Port, has strengthened its ties with Asia. Last month, it signed an agreement with a consortium of shipping lines to start direct services between Khalifa Port and the ports of Mundra and Nhava Sheve on the west coast of India.

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