Shipping sector faces challenges

02 April 2012

New shipping lines and port expansions plans highlight the need for effective co-ordination

The Gulf’s shipping industry and regional governments both face several challenges as they seek to expand shipping lines and port capacities.

Shipping companies will have to coordinate expansion efforts to ensure that new lines do not create overcapacity in the market. The growing strength of the Far East’s logistics sector and rising fuel costs have already put a squeeze on margins for the region’s shipping firms. An abundance of new shipping lines without effective co-ordination could result in supply outstripping demand.

Meanwhile, Gulf states will have to be careful that their multi-billion port projects do not outstrip demand. The combined capacity of the Gulf’s ports is about 25 million TEUs (20-foot equivalent units) and this could rise to 60 million TEUs if all planned schemes go ahead.

The UAE’s ports currently constitute more than 50 per cent of the total GCC capacity. Additionally, Qatar, Kuwait and Oman are building new ports and expanding existing facilities in an attempt to emulate the success of the UAE’s logistics sector in recent years.

As China consolidates its position as the world’s biggest export market, the central position of the Gulf ensures it can play an important role in global trade. But while the shipping and ports sector will continue to offer a lot of new opportunities in the future, it is important that the shipping industry and government can work together.

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