Posted on April 20, 2017
By Turloch Mooney, Fairplay
Smaller-sized ports in the Gulf region of the Middle East are likely to undergo a round of consolidation that will leave only five or six major players to compete in the market, according to Mark Geilenkirchen, CEO of Oman’s Sohar port and freezone.
Competition among ports in the region is heating up as operators chase larger shares of the Gulf’s growing logistics sector, he said.
“The Gulf region’s logistics market has reached a value of more than USD70 billion and is continuing to expand,” said Geilenkirchen. “The UAE, for instance, has overtaken countries such as the UK, Germany, Italy, Spain, and Belgium, with more than 20 million teu of container traffic.”
Large-scale infrastructure projects, a booming retail sector, and ongoing efforts by the Gulf countries to diversify from dependence on oil are key drivers of logistics growth. The region’s location in the middle of the Asia-Europe trade lane and its high reliance on international trade are important additional drivers of port throughput and infrastructure projects.
Dubai’s Jebel Ali is the largest container facility in a region that is brimming with large-scale port projects. Jebel Ali’s capacity is set to rise to more than 21 million teu by 2018 following completion of its terminal 3 and phase one of its container terminal 4 projects.
In nearby Qatar, the new Hamad port plans to offer capacity of 6 million teu a year. The port is being built on a 20 km2 site at Mesaieed, an industrial city in Al Wakrah municipality about 50 km south of Doha. In addition to container facilities, the project includes terminals for general cargo, grain, ro-ro, and livestock.
Other major Gulf region projects include expansion at Oman’s Duqm port and its associated economic zone and at Saudi Arabia’s King Abdullah Economic City, where projects are under way to expand container capacity to 10.7 million teu and new ro-ro and bulk terminals.
Elsewhere there are big plans for expansion at the Iranian port of Chabahar that sits just across the Gulf of Oman, where India has committed to invest. Movement on the project is slow and subject to the constant risk of a stall in sanctions relief should the new US administration take a harder line on Iran than its predecessor.
According to Geilenkirchen, Sohar is likely to add a billion dollars’ worth of new projects this year between its port and free zone, increasing its perception as an upstart rival to dominant players.
When the dust from projects and consolidation settles, a half-dozen or so large players will be left standing to serve the growing Gulf market, he told Fairplay.
“SOHAR is really positioning itself as a challenger brand to the region’s more established set-ups.
“We do believe the region’s smaller ports will still go through a round of consolidation leaving maybe five or six major players in the market.”
An equal-share joint venture with the Port of Rotterdam, Sohar port has enjoyed a run of double-digit throughput growth for more than a decade and figures for the early part of 2017 indicate that this will likely continue this year. Dry bulk volumes through the terminal operated by Brazilian mining giant Vale, for instance, are up by 40% so far this year compared with the same period in 2016.
One of the largest expansion projects currently under way is a major land reclamation known as SOHAR Port South.
Oman’s national refining and petrochemicals company, Orpic, started building a USD6 billion polyethylene and polypropylene plant that is expected to help position the port as a large supply chain hub for downstream plastics industries.
Perhaps the most high-profile project is the Innovation Zone being developed in conjunction with the Port of Rotterdam. The focus of the zone is on innovative ways to solve logistical problems such as including new ways to track containers, the use of 3D metal printing for creation of high-quality industrial parts, and reducing energy consumption and waste in supply-chain operations.
The zone will not be connected to the national power grid and will draw all of its electricity needs from renewable sources and all waste will be recycled.
In an era of rapidly rising competition, the goal of the project is to find competitive edge through innovation and application of new technologies.
“Instead of being really good at doing just one particular thing as a company, today it’s more important that we become really good at learning how to do new things, and doing that faster and better than ever before.”
Source: Fairplay
