GPCA: Ports seek to boost throughput

22 November 2012 16:25  [Source: ICB]

In recent months, the governments of Qatar, United Arab Emirates (UAE) and Saudi Arabia have committed billions of dollars to shipping investments and construction projects to improve port experience in the region. The projects include the construction of new ports and terminals and upgrading of existing infrastructure. The commitment to spend valuable resources on such projects is timely given the current challenges facing the Middle East shipping industry.

Port Rex Features

 Rex Features

Governments place great importance on infrastructure

Gulf countries such as Saudi Arabia and the UAE now handle large volumes of chemical and non-chemical shipments due to increased trade flows. According to ports operator DP World, the Jebel Ali port in Dubai handled 6.6m twenty-foot equivalent units (TEU) in the first six months of 2012, approximately 7.3% more than the same period last year. Saudi Arabian ports also handled more container volume for most parts of the year with an estimated 15-20% jump in July compared to the same period in 2011.

On occasions, such high trade volumes lead to port bottlenecks and delays. In mid-October, shipments of key petrochemicals such as polyethylene (PE) and polypropylene (PP) in Saudi Arabia were delayed at ports such as Dammam, Jubail and Jeddah. According to market players, port delays are costly for shipowners, who lose valuable revenue and potential profits by waiting several days before docking. They may sometimes be forced to divert cargoes to a neighbouring port or find other alternative arrangements.

"With large volumes of cargoes, delays in the Middle East can be severe. It can be quite costly for us," one charterer notes.

So how should port authorities manage increased frequency of port bottlenecks and a higher number of shipments? Market players say governments in the Middle East understand the need to balance high trade volumes with aggressive infrastructure expansion. The Middle East governments, they say, see the investments as necessary for the long term success of the region. "The governments want to be on the frontier of global trade. They want to lead the way with new infrastructure," comments a charterer.

The global shipping community has welcomed the emergence of such new facilities, as it looks to expand further into the Middle East. Industry players maintain that more world-class ports in the region will only bring about more competition, increased quality and expanded opportunities for consumers and businesses. With the new facilities, current busy ports in the Middle East can also gradually undergo a process of decongestion, promising shorter turnaround time for charterers.

"Though ports will not be immediately decongested, the infrastructure will in one way or another help to ease bottlenecks bit by bit," a charterer explains.

As a key part in any supply chain, ports assist in the procurement, delivery and distribution of upstream or downstream goods and services. The soon-to-be completed infrastructure projects also boast technologically advanced machinery such as tugboats, cranes and trucks for moving goods more quickly and efficiently. "The Middle East is spending a lot of money on hardware. Everything is brand new and advanced. Very world-class. And everything will move faster," a charterer says.

Furthermore, the new port infrastructure allows for the consolidation of various functions within a single location. With large space available for distribution and warehousing facilities, charterers and distributors can better manage and control their throughput of containers. Such "industrial zones" allow customers to concentrate their resources within a delimited area to reduce expenses.

In fact, the success of the Jebel Ali Free Zone of Jafza in Dubai, home to more than 6,400 companies, is spurring more port operators to consider an integrated approach. Established in 1985, Jafza provides customers with sustainable industrial and logistics solutions, and contributes to at least 25% of Dubai's gross domestic product (GDP) on a year-to-year basis.

"Jebel Ali authorities take supply chain issues very seriously. They are very helpful for stakeholders. More port authorities may adopt the Jebel Ali model for their own benefits," a charterer notes.

Though hinterland size, geography and world-class physical infrastructure are important to the success of any port, market players say port operators in the Middle East will need to continue to focus on providing good customer service. According to the market players, port operators should actively cater to the changing operational and contractual needs of their customers.

CUSTOMER FIRST

The Mesaieed port in Qatar is cited as an example of a key transhipment hub in the Middle East focusing on a "customer-first" approach. According to one shipbroker, Mesaieed port authorities offer fast, efficient service to charterers, making it a port of choice for vessels docking in Qatar.

"Mesaieed is a good example of a low-key port with good service standards. We rarely have problems docking in Mesaieed. More ports should learn to pay more attention to detail like Mesaieed," a charterer says.

Among other initiatives, one or two market players say they hope for a region-wide shipping website in the Middle East to help manage port cargo operations. Market players believe an integrated web system in the Middle East will help to streamline and simplify supply chain processes.

"It will definitely be challenging to integrate such information in the Middle East. Very challenging indeed. But real time information is always welcomed as it reduces barriers of entry," a charterer notes.

By spending valuable resources on new port projects, Middle East authorities are looking to offer their stakeholders quality and world-class infrastructure. According to stakeholders, the return on investments on the port infrastructure projects is still unclear at this point, but, better shipping logistics can only lead to reduced prices for importing and exporting goods and services in the coming years.

The new shipping infrastructure in the Middle East, when completed and fully operational in the next few years, will improve overall port operations, leading not only to tangible but also intangible benefits for the region.

NEW PORT INFRASTRUCTURE PROJECTS IN THE MIDDLE EAST

  • New Port Project (Qatar)

The New Port in Qatar aims to serve the expanding trade needs of the country and drive its export industry. The New Port will comprise three terminals with a combined annual capacity of 6m containers. The Qatari riyals 19bn ($5bn, €4bn) project will not only cater to the expected growth in container traffic in the region, but also accommodate general cargo traffic and offshore support vessels. The New Port, strategically located outside the capital city of Doha, is expected to be operationally ready by 2016.

  • Jebel Ali New Mega Terminal (Dubai, UAE)

Port AR Al Hashemi 

 AR Al Hashemi

Jebel Ali will be extending facilities in 2014

Ports operator DP World is working to construct a massive new container terminal at the Jebel Ali port in Dubai. In September, DP World signed an agreement to expand capacity at the flagship port by 4m TEUs. The new terminal will be constructed as a modern, state-of-the-art facility with a quay length of 1,860m, a draft of 17m and a 70ha storage yard. Operations at the new terminal are expected to fully start in 2014, bringing total capacity at the Jebel Ali port to 19m TEUs.

  • Khalifa Port (Abu Dhabi, UAE)

Khalifa Port boasts the first semi-automated container terminal in the region and offers port facilities and direct port access for all companies setting up in the Khalifa Industrial Zone. The port, designed with a 16m draft and a 4km quay wall, is able to accommodate large container ships. The initial annual capacity of the port is 2.5m TEUs of container traffic and 12m tonnes of general cargo. Khalifa Port will handle all of Abu Dhabi's container traffic once container traffic transition from Mina Zayed is completed in early 2013.

  • King Abdul Aziz Port (Dammam, Saudi Arabia)

Saudi Arabian authorities broke ground in early October in Dammam to mark the construction of the second container terminal in the King Abdul Aziz Port. Saudi authorities will work with Singapore-based ports operator PSA International to complete the project. Dammam is PSA's first port infrastructure project in Saudi Arabia and the Arabian Gulf. The terminal is expected to boast a quay length of 1,200m with a capacity of 1.8m TEUs/year.


Author: Mohamed Fahdil



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