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Expanding container volume propels port expansions in the Middle East

Gulf states in the Middle East are expanding capacity and investing billions of dollars in their ports to accommodate booming traffic in the Asia-Europe trade lane.

Projects in Oman, Qatar, the United Arab Emirates and Saudi Arabia are prepared to add an additional 17 million 20-foot-equivalent units per annum to their current capacity, according to a market report from the International Quality & Productivity Center.

The improvements, which range from outfitting existing ports with the latest technology to breaking ground on entirely new terminals, will run the four gulf states roughly $36 billion, IQPC reported. The profits their ports will reap from the world’s busiest trade lane, though, should more than compensate for that big investment.

Oman’s SOHAR port, already one of the fastest-growing port and freezone developments anywhere in the world, plans to expand capacity 650 percent from 800,000 TEUs to 6 million TEUs.

The port has invested $15 billion to date, expanding one terminal at Oman International Container Terminal, with plans to add another as early as 2019. Hutchison Port Holdings, which holds joint ownership of the port with the Sultanate of Oman, expects to invest another $303 million by 2019.

In nearby Qatar, the Hamad Greenfield Port project represents one of the largest infrastructure projects in the country. The $7.4 billion project, strategically located outside the capital city of Doha, is expected to process some 6 million TEUs each year upon completion. Developed in multiple phases, the first of three container terminals should be operational by early 2017, according to IQPC.

Farther east, Dubai’s Jebel Ali port already has capacity for 15 million TEUs per annum after opening its third container terminal in October 2014. The $850 million terminal, however, remains only partially operational. Once Terminal 3 is fully online, United Arab Emirates authorities expect to add another 4 million TEUs to their current capacity.

In neighboring Saudi Arabia, Saudi Global Ports — a joint venture between the country’s Public Investment Fund and Singapore-based terminal operator PSA International — has already started receiving ships at its second container terminal, which opened in April. The terminal, however, is currently undergoing further development stages that will see its total capacity rise to 1.8 million TEUs annually once complete, bringing the total TEU capacity at SGP to 6.8 million.

All of these improvements, upgrades and construction projects will cost Oman, Qatar, the United Arab Emirates and Saudi Arabia billions of dollars, but they are hopeful the profits their ports will reap from the world’s busiest trade lane should more than compensate.

Container volume in the trade has been building since 2014. European Union containerized exports to Asia rose 3 percent last year compared to the same period in 2013, according to World Trade Service, a product of IHS. And WTS projects a 6 percent increase in both EU containerized exports to Asia and Asian exports to the EU this year.

Capacity increases in the lane will largely be tied to upgraded vessel sizes, with ships of 8,000- to 10,000-TEU capacity being replaced by vessels with capacities of 13,800 to 19,000 TEUs. Through partnerships with government, transport and development authorities, the gulf ports are accomplishing their billion-dollar upgrades at lightning speeds in order to be as big as possible as quickly as possible.

Reynolds Hutchins, Associate Editor, JOC
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