A market in waiting
With short quays and limited handling equipment, Umm Qasr's state-owned berths are in desperate need of modernisation
Iraq's long-awaited reconstruction boom has yet to materialise, as Karen Thomas discovers
Ever since US-led forces toppled president Saddam Hussein in April 2003, shipping lines have expected Iraq to generate significant volume. Iraq’s infrastructure and buildings are ageing and were badly damaged during the upheaval that followed western intervention. But while port development is considered crucial to Iraqi reconstruction, progress has been halting.
In 2008, the Ministry of Transport halted plans to privatise Umm Qasr, Iraq’s only commercial deepwater port. However, in the last two years, it has invited three overseas port operators to upgrade and manage berths at the port that serves the southern city of Basra.
In May 2009, French shipping and port company CMA CGM won the concession to upgrade and manage berth four at Umm Qasr South. The renovated berth opened in spring 2010, introducing the first modern reefer equipment in Iraq. Last year, it handled 59,000 teu for CMA CGM and its partners, two feeder vessels a week arriving from Khorfakkan Container Terminal in Sharjah.
In May 2010, the Iraqi Port Authority awarded a concession to Kuwait’s Global Logistics Services & Warehousing Company (GLOW) to manage berth five at Umm Qasr.
Then, in August 2010, Sharjah-based port management company Gulftainer took over three berths at the port. Gulftainer is extending berths ten and 11 to create Iraq Container Terminal, launching this year with a quay length of 1,000 metres.
Umm Qasr desperately needs modernisation. Its short quays and lack of handling equipment limit state-run berths to the smallest self-geared vessels. The government has pledged to expand Umm Qasr. But its proposal to build a four-berth terminal on a greenfield site has not moved forward.
Gulftainer installed mobile harbour cranes in October 2010, raising handling capability to 25 moves an hour. United Arab Shipping Company (UASC) and Mediterranean Shipping Company (MSC) now call direct at Umm Qasr with vessels of up to 2,500 teu.
“Before, draft was restricted and the port couldn’t handle deepsea vessels,” says Peter Richards, Gulftainer managing director. “Feeder ships struggled to get pilots alongside and often spent three to five days in port… There is demand in Iraq: the difficulties are all about logistics – about getting the cargo in.”
Iraqi consumer demand has been stifled by years of political turbulence. Unlike its Gulf neighbours, Iraq has few shopping malls stacked with designer clothes, or luxury car dealerships or supermarkets piled high with western food brands. The world’s leading brand owners are anxious to enter the market.
But Iraq’s revival is taking longer than observers would have hoped. In the last year, the market has proved volatile.
“In 2010, US troops withdrew from Iraq, and the US operation had generated significant volume,” says Hans Ole Madsen, vice president regional business development at APM Terminals. “And for ten months, Iraq had no functioning government.
“Because the political situation was so uncertain, the import market became uncertain. Major importers held down levels of stock. Now, Iraq has a government in place and 2011 cargo volumes reflect that.”
Iraq has port development plans beyond Umm Qasr. The government planned to open a $6bn megaport at Faw by 2013. In 2009, it awarded the initial design contract to an Italian consortium led by Impregilo.
But new conflict with Kuwait could scupper Iraq’s plans. Kuwait plans its own megaport, Mubarak Al Kabir, on Bubiyan Island. The two countries dispute access to the Khor Abdullah waterway. Iraq claims that Bubiyan Island would restrict access to Faw Port.
Analysts question whether the Gulf can support two new northern megaports.
Cargo bound for Iraq from the Far East and Indian Ocean markets travels by feeder to Umm Qasr via Jebel Ali or Khorfakkan. Cargo from the US and Europe docks in Syria or Jordan and is trucked overland. It is unlikely that either port, lying far north in the Gulf, could persuade shipping lines to call direct.
But it will take more time for Iraq’s port development needs to become clear.
“Iraq has not attracted the volumes that many observers expected,” says MG Maghani, chairman of Dubai feeder operator, Simatech. “There is demand for significant quantities of construction materials and consumer goods into Iraq. When reconstruction really starts, there is definitely room to grow. But reconstruction has not started properly yet.”
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