Regional ports follow expansion plan

DUBAI - REGIONAL ports are in a constant state of development and expansion due to booming trade and significant negligence in the past, reports the Middle East Economic Digest.

By A Staff Reporter

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Published: Fri 9 Sep 2005, 1:04 PM

Last updated: Thu 2 Apr 2015, 5:47 PM

These regional investments in expansions and developments extending from the Atlantic ports to those on the Indian Ocean are worth billions of dollars.

As a result of the recent upward jolt in oil prices, there has been a significant increase in petrochemical, aluminium and free zone derivative product exports. Ports are now trying to facilitate this increase but are finding it difficult.

Even Jebel Ali's port, the 10th largest in the world with a capacity of almost 6.5 million 20-foot equivalent units (TEUs), has made ships wait for space this year.

Between 1999 and 2003 non-oil exports in the UAE increased 69 per cent bolting from $22.9 billion (Dh84 billion) to $38.7 billion (Dh142 billion). In the same time period, imports expanded from $27.9 billion to $41.7 billion, an increase of 49 per cent.

After the Far East and Eastern Europe, the Middle East has the fastest growing market in the world with an average increase of 18.4 per cent in the last two years in container activity.

In 2004, 19 million TEUs came through regional ports, almost two times the number that was handled 7 years ago. Container ships import and export more than 90 per cent of the region's world-wide trade.

For the most part, regional ports have suffered from years of neglect and underinvestment due to the fact that they are capital intensive and rarely profitable. Their maritime infrastructure has aged and, often times, become obsolete.

Thus ports, in terms of development, have lingered behind as opposed to the shipping industry. With alongside draught depths of up to 19 metres, container ships sizes have significantly expanded, becoming bigger and wider.

However, handling times and capacity are not the only issues at hand for underdeveloped ports, there also has been a shift in the way freight and cargo is being transported. Originally, most of the regions ports were designed to handle general bulk goods.

"Over the past 20 years, there has been a switch from traditional bulk to container transport services," says Eleanor Hadland, head of ports at Drewry Shipping Consultants (UK).

"This has necessitated investment in port facilities, as equipment, berth lengths and draught depths have to be adapted to cope with this conversion."

In order to address critical investment demands, regional governments have turned to the private sector to facilitate the necessary roles.

Governments have been outsourcing port management and operations to independent operators. One of the last remaining government operated ports in the GCC was outsourced in July when APM Terminals, part of Maersk, was selected as the preferred bidder by the Bahraini Ministry of Finance for the 25 year contract to operate Mina Salman port and the new Khalifa bin Salman port.

However, the main priority for most ports, it seems, is to increase capacity. This is seen by the number of greenfield developments already underway. There is the $1.2 billion (Dh4.4 billion), 2.5 million TEU Bubiyan seaport project in Kuwait, and the all new 1 million TEU port in Doha, both set for completion in 2008.

Along with the greenfield developments, there are a series of expansions, most notably being the 5 million TEU expansion of Jebel Ali port worth about $1.362 billion (Dh5 billion). Also, Salalah port is expanding with two new container terminals and a quay.

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