Leadership race

The Middle East has largely been immune to the meltdown experienced by the world’s container industry over the past two years. With the notable exception of Dubai, most major regional ports continue to report growth. However, a series of massive expansion projects coming on stream look to be out of all proportion to projected mid-term capacity demand. So, is anybody building the “Goldilocks Port”, with features “just right” for becoming the regional port
superpower?

Prior to the collapse in Dubai’s property market, the huge Jebel Ali complex looked to be the Gulf’s transhipment market of choice. While a 6% drop in 2009 traffic was by no means a disaster, it did prove to be a massive reality check, suggesting that, in the long term, Goldilocks might want to consider her options.

In the meantime, ports in Iraq and Iran, not to mention those in Bahrain, Oman, Abu Dhabi, Kuwait, Saudi Arabia and Qatar, are threatening to seize the initiative, as they announce major expansion plans that could rob Dubai of much of its valued transhipment traffic.

Surprisingly, the most audacious project is that announced by Iraq. The so-called “Big Port” at al-Faw will be the largest infrastructure development in Iraq for 30 years, costing €4.3bn ($5.94bn). Once completed in 2030, it will be amongst the 10 largest ports in the world, capable of handling 99m tonnes across its projected 100 berths.

Transport minister Amer Abdul Jabbar pulls no punches when he says: “It will change the world transport policy road map.” Placed at the head of the Gulf, al-Faw “Big Port” will be able cost-effectively to rotate boxes out by feeder to other regional ports – and a planned rail link with Turkey will enable the complex to act as a terminus for a new overland route northwards to rival the Suez Canal. “This dry canal will be shorter, cheaper and a safer alternative,” says Mr Jabbar.
A contract was awarded to an Italian consortium headed by Technital in April this year, with Phase I of the port’s construction to be implemented over the next four years. When it opens in its entirety in 2030, it will cover an area of 14.673m m². Over 7,000 m of quay will be given over exclusively to container handling and a further 3,500 m will be used for general cargo. Draught will be 17 m.

Industry observers remain cautious in respect of this project, pointing out that sources of funding have yet to be identified. Gulftainer’s commercial manager, Keith Nuttall, adds that, even given the most optimum conditions, it will be years before al-Faw makes a major stamp on the region.

In the meantime, Umm Qasr, currently the only deepwater option in Iraq, remains crucial and the main focus for short-term development, following extensive renovation work, although possibly not Goldilocks’ long-term port of choice.

Gulftainer was quick to grasp the port’s mid-term potential, being awarded two concessions this year to operate three container berths. In February, multipurpose Berth 8 was ceded to the UAE-based operator; this will be followed by Berths 10 and 11, to be known as Iraq Container Terminal (ICT), in the second half of 2011. Two Gottwald mobile harbour cranes are being deployed Berth 8 – Berths 10 and 11 will benefit from a full gantry crane operation over the next 12 months.

“Clearly there are challenges still to be overcome in Iraq but we are confident that considerable progress is being made and many companies are now starting to invest,” says Mr Nuttall.

CMA CGM, which operates a twice-weekly feeder service to the port from Khorfakkan, has become the concessionaire of Berth 4 – it will invest $20m over the next three years, to bring operations up to internationally accepted standards.

Longer-term plans for Umm Qasr are even more ambitious. Nine new berths are planned and a project exists to increase the draught. Of particular interest is a proposed four-berth terminal on an adjacent greenfield site, for which a 30-year concession is believed to be on offer. DP World has shown particular interest in this project, which would nevertheless take several years to be implemented.

Iraq’s rejoining of the international community has rather poignantly coincided with Iran steadily losing influence. Despite this, its leading port of Bandar Abbas reported throughput growth last year of 11%, with traffic of 2.2m teu. In the first eight months of 2010, traffic had risen by a further 32%, suggesting end-of-year throughput could top 3m teu – an astonishing feat when considering that the port registered 2m teu for the first time in 2008.

Yet, in many respects, this is a port in crisis.

An agreement was signed in January between concessionaire Tidewater Middle East Marine Services and Hamburg Port Consulting to set up a joint venture management company to operate the port’s two container terminals, SRCT1 and SRCT2; however, this agreement was dissolved shortly afterwards following diplomatic pressure from the Israeli government, which argued that a merchant vessel outbound from Bandar Abbas had been caught by its security forces trying to smuggle weapons to proscribed organisations in the Lebanon and Gaza Strip.

The Israeli ambassador to Germany said that the HPC contract could be seen as “German assistance to an Iranian arms deal with terror organisations, and a violation of UN Security Council resolutions”.

Tidewater needs to secure foreign investment and a global management partner as part of a deal struck with the Iranian Port and Maritime Organisation (PMO) to provide matching finance for future development.

Although Phase I of SRCT2 has recently opened, the even more ambitious Phase II has stalled for want of finance. Currently, there are 850 m of quay with alongside draught of 17 m and eight super post-panamax gantries. Indeed, it is because of the availability of this facility that the port’s throughput has rocketed in recent years, claims the port authority. Phase II will add a further 2,000 m of quay and boost capacity towards the 6m teu mark.

Understandably, foreign investors are now reluctant to be associated with the project – while the PMO argues that, without an international operator in place capable of attracting much needed transhipment traffic, it would be folly to underwrite expansion of the port using its own resources.

Bandar Abbas, it would seem, lacks the Goldilocks seal of approval for the time being.  

The leaders of the pack