Predicting growth is difficult in today’s volatile markets and Salalah’s expansion needs to strike a balance between gauging market demand and adding capacity for the future. Between 2003 and 2008, double-digit growth in throughput put capacity at ports across the Middle East under extreme pressure. This triggered major government and private investment in port expansions across the Gulf.
But in the past year, more than 5 million TEUs of new capacity has come on stream through expansion at Jebel Ali in Dubai and Bahrain’s Khalifa bin Salman Port. But even as these were coming on stream, global container volumes were falling.
Ports from Jebel Ali to Morocco’s Tanger-Med are now delaying further expansion until the market recovers. Salalah’s decision to hold back on Terminal Two – even though two berths will be built for an existing customer, APL – makes sense in today’s volatile markets.
It also makes sense for Salalah to reduce its dependence on the volatile container market and to diversify its cargo base.
Here, however, success will also depend on the ability of Salalah Free Zone to attract export-oriented industries that will anchor cargo at the port. The free zone has entered its second development phase, aiming to attract $6bn of new investment and raising the chances of SPS successfully diversifying its cargo base.