On the rails

Oman’s Sohar Port and Freezone’s imminent connection to the Gulf Railway will allow shipping lines use of this new link to tranship cargo at the port, avoiding the Strait of Hormuz and slashing operating costs.

This puts the port in touch with a burgeoning local logistics industry, forecast to grow beyond $12bn by 2017.

“With a multibillion dollar trade surplus in the GCC region, there is certainly room for growth and enough cargo to keep the region’s port and freezone developments busy,” says Edwin Lammers, executive commercial manager of Sohar Port and Freezone. “Sohar’s role is to be the gateway to Oman and the Middle East, the upper Gulf, and Indian Rim.”

He points out that investment in the overall Sohar Port and Freezone project comes from a variety of sources. Oman International Container Terminal, for example, recently completed the $130m expansion of its container terminal at the port. This project doubled quay length, took yard space to 680,000 square metres and added 14 RTGs and three post-panamax ship-to-shore cranes to the existing compliment of heavy lifting equipment. This increased capacity to 1.5m teu, with plans to grow to 4.5m teu by 2018.

Oman Oil Refineries and Petroleum Industries is also scaling up its refinery, from 120,000 to 180,000 barrels a day, while a UK-led consortium will soon begin construction of a $60m rare earth metals plant in the Freezone. Once completed, it will be the largest outside of China.

Atyab Investment and Oman Flour Mills will implement a terminal dedicated to the import and export of agricultural bulk – wheat, rice, barley, and other grains – and a planned sugar refinery that will increase dry bulk volumes to include one million tonnes of raw sugar imports.

In 2013, the port experienced exceptionally strong growth of 37% in dry bulk cargo, rising from 19m tonnes to 26m tonnes, meaning this market segment accounted for over half of all cargo handled in that year.

“This was especially noteworthy given that the contributors to growth – Vale’s 9mt pelletising plant and Jindal Steel & Power’s (India) 1.5mt DRI plant – began operations after the global recession,” says Mr Lammers.

Cluster growth

He notes that Sohar is currently home to logistic, petrochemical, metal, and automotive clusters that feed downstream industries with iron and steel, plastics and rubber, ceramics, chemicals, and other materials.

The three-berth general cargo terminal, operated by C. Steinweg Oman, was the first operational company at the port. Its presence was necessary to allow the import of construction materials for the various industries that have sprung up in and around the port since 2004.

“They began operating three berths from the start, enabling them to receive various types of cargo. With the redevelopment of the container terminal into an agricultural bulk terminal, the opportunity arose to expand their berth capacity. This also benefits their future plans to accommodate the influx of additional cargo from Muscat, and attract organics cargo flows destined for Oman, most of which is handled in UAE,” says Mr Lammers.

As for the OICT box terminal, its main task, he says, is to handle the captive consumption cargo and exports from the north of Oman. However, the scale achieved by merging Muscat and Sohar’s throughput is expected to be sufficient for shipping lines to start calling at Sohar and book cargo destined for Oman directly, rather than transhipping it via neighbouring ports.

“The additional opportunity this presents is that direct calls will bring transhipment cargo to the region, allowing Sohar to be transformed from a feeder port to a hub port. Our location outside the Strait of Hormuz supports this natural progression, especially when considered against ports in the upper Gulf and the Indian subcontinent,” he says.

One of the biggest factors influencing box growth this year will be the relocation of all commercial traffic from Port Sultan Qaboos, in Muscat, to Sohar. The previous traffic of 200,000 teu is projected to grow by 300,000 teu to half a million teu. However, Mr Lammers fully expects to grow into the terminal’s new capacity of 1.5m teu prior to expansion in 2018.

The relocation has also seen 200,000 freight tonnes of cargo and 70,000 cars make the 200km relocation from Muscat.