Optimistic mood in Gulf ports for breakbulk business despite challenges

Although oil & gas development has slowed, infrastructural related projects have picked up the trade slack.  Ports in the Gulf are, generally, optimistic about the breakbulk business, which has been recording strong growth in most ports despite the challenges as oil and gas prices tumble. Indeed, many ports are also overhauling and upgrading their existing infrastructure to keep pace with the growing demand in general cargo and breakbulk handling and shipping.  Ports and Terminals  Take the case of Abu Dhabi Ports (ADP), the company which develops ports and industrial zones in the Emirate, and which expects general cargo volumes at the ports under its management to grow between 15 and 20% in 2016; ADP has made huge investment in equipment modernization and a terminal operating system.  A spokesperson of ADP told American Journal of Transportation that general cargo volumes, including bulk and breakbulk, had surged 19% year-on-year to reach 11.28 million tonnes in the first three quarters of 2015. Breakbulk cargo represents about 15% of that total. General cargo, according to ADP, is growing faster than the other cargo segments. Despite the sharply falling oil and gas prices, the ADP claims its business is growing.  These were revealed at the 1st Annual Breakbulk Middle East Conference & Exhibition hosted by ADP in Abu Dhabi from October 25 to 28, 2015.  The event, held under the theme “Projects Meet Logistics”, attracted some 2,000 logistics specialists from around the world.   Mohamed Juma Al-Shamsi, ADP’s CEO, attributed the ADP’s increased general and bulk cargo volumes during the first three quarters of 2015 to the organization’s “strategy to invest in innovative technologies, state-of-the-art infrastructure and customer-focused services”.  Zayed Port, Abu Dhabi’s oldest commercial port, handled the vast majority of steel passing through the Emirate. Zayed Port also witnessed a 13% growth in general and bulk cargo volumes in the first nine months of this year compared to the year-earlier period. 

New modern cranes and other equipment, and implementation of new technologies like Jade Master Terminal a terminal operating system as part of an ongoing upgrade have helped Abu Dhabi Ports optimize productivity across the ports. The surge in general and bulk cargo volumes across Abu Dhabi Ports results from rising import-export traffic related to industrial and infrastructure development projects in the Emirate. Middle East Projects  The Abu Dhabi event also provided a platform for country-specific discussions on the intricacies of doing business in the Gulf. Corey Henry, a senior logistics specialist at CB&I Oil & Gas, who moderated a panel discussion on doing business in Saudi Arabia, spoke of the “unique challenges” in that country for logistics operations; he said it was important to comply with local laws in Saudi Arabia because making mistakes more than once could harm business, with the authorities holding up cargo for six months, if necessary.  One learned the rules very quickly, he said, adding that trust-building with the authorities makes business a “lot less painful”.  As in the United Arab Emirates, which has its own version of “Emiratization”, Saudi Arabia was also emphasizing on what is described as “Saudiazation”, which was aimed at giving preference to employing Saudis.  DHL representatives at the event described this as “challenging”, though they said that this was, in itself, a “great vision”.  This challenge was, however, “not insurmountable”. “The fact is that Saudi Arabia is a market of opportunities for the logistics sector,” one logistics expert said.   “The country has budgeted US$385 billion on roads, airports and energy projects over a five-year period with another US$30 billion worth of contracts under way or at the bidding stage for infrastructure projects,” he said.  Abdulla Bin Damithan, director (commercial) for DP World U.A.E. region, underscored in his address at the inauguration ceremony of the Breakbulk Middle East Conference & Exhibition the need to have an annual breakbulk event in the region. While acknowledging that 2015 had been a challenging year and the outlook for 2016 remained uncertain, resulting from the drop in global oil and commodity prices which, in turn, impacted infrastructure development and energy-related projects, he maintained an overall positive tone about the future “…  we must remain positive for the future and remain focused on growing our breakbulk sector,” he said.  The Khalifa Industrial Zone Abu Dhabi (Kizad), the industrial and logistics hub of Khalifa Port, has also remained active, with foreign investors, particularly from the Indian subcontinent flocking here to set up business operations and benefit from the incentives given to these companies.  Breakbulk cargo traffic, with the influx of foreign companies, is also expected to further grow because many of these companies are involved in infrastructure projects The Khalifa Port Container Terminal, which is operated by Abu Dhabi Terminals, has witnessed a 41% rise in container volumes in the first seven months of 2015 over the year-earlier period.  More than 772,000 TEUs were handled in the first seven months of 2015, up from 549,000 TEU in the same period in 2014.  In the same period, general and bulk cargo saw growth of 21% to 8.71 million tonnes.  In 2015, all roll-on-roll-off (RORO) operations were transferred to Khalifa Port from Zayed Port in light of the growing UAE market for the automotive sector. This transition to Khalifa Port saw volume increase by 11%, given the improved efficiencies and quicker turnaround times in port.  Today, Khalifa Port offers a capacity of about 350,000 vehicles a year. At Khalifa Industrial Zone (Kizad), Abu Dhabi Ports saw a total of 19 Standard Musataha Agreements (SMAs) signed this year with national and international investors including Schmidt ME Logistics, Bin Ali Safecare Medical, Adearest – Polar, and SIDDCO Group. These projects will represent one million square meters plot size.  Other notable investments as part of Abu Dhabi Ports’ efforts include the completion of the halfway mark of Stage-1 implementation of Maqta Gateway, a new port community system interlinking all of the relevant parties involved in Abu Dhabi’s growing import and export trade business. This will significantly enhance processing times and communication procedures, as well as other investments in equipment and software upgrades, improving the productivity and efficiency of services dedicated to customers. The ultimate effect of this upgrading will be facilitating quicker handling of breakbulk and general cargo shipments.  Neighboring Qatar, meanwhile, re-affirmed its resolve to move ahead with its $40 billion worth of infrastructure/transport projects, notwithstanding the falling oil prices. Qatar’s capital Doha presents an awesome visual sight of the construction boom that still continues, with new rising buildings, transport projects such as the expressway project, the ongoing implementation of the massive domestic rail project, and the long distance passenger and freight network.  These projects will entail a massive inflow of steel, iron and other breakbulk items.  The projects include the expressway program, expansion of Hamad International Airport (HIA) and Hamad Port, the Doha Metro and long-distance passenger and freight network.

These projects were intensely discussed at the recent Qatar Transport Forum, held in Doha, one of the highlights was the unveiling of plans for the estimated $8 billion expansion of Hamad International Airport (HIA). Other plans include setting up of two additional container terminals at Hamad Port that would increase the $7.3 billion project’s handling capacity to 6 million TEUs by 2020. This port’s added facilities, experts say, will bolster handling of breakbulk and other types of cargo.  The first phase of the megaproject is due to open end 2016, Aecom’s program director Tim Verdon said. The Doha Metro project has a world record of 21 tunnel boring machines being used which to date, have completed almost 50 kilometers of tunnels, according to Qatar Rail’s chief of service delivery Andrew Tailor. Qatar’s $20 billion-plus integrated transport plan has a total of 26,000 workers working on the project.  Tailor outlined that work on the Lusail tram scheme has four of the five at grade stations completed, while the tender for the first phase design and build of the long-distance freight and rail network will be issued to contractors early next year. Eng. Nasser al-Kuwari, manager of Highway Projects department at Ashghal, presented an overview of $10.8 billion expressway program, which involves 1,000 km of new or upgraded roads, 240 major interchanges and 360 bridges. With the breakbulk sector in Qatar, UAE, Saudi Arabia poised to grow, a number of logistics and other companies are already positioning themselves in the region with an eye on tapping the huge business potential in this particular segment.  AAL, a leading multipurpose shipping operator, for example, is opening a new office in Dubai, thus positioning the company through its associate AAL Middle East to be in the heart of an emerging and strategically important region for the shipping sector, with local governments and private companies pouring investments into new infrastructure and energy development projects.  A spokesperson said AAL Middle East will rely on its fleet of seven classes of multi-purpose heavy-lift vessels, ranging from 12,000 dwt to 31,000 dwt.  Namir Khanbabi, managing director of AAL’s global Tramp- & Project Division, said the Middle East and Gulf markets continued to experience significant capital expenditure and development in its infrastructure.  It has also seen investment in construction and now growth in nuclear energy, besides being a major hub for oil and gas projects.