Port development concerns

According to Drewry’s latest report, the Middle East has a reputation for “vanity port projects – with governments building shiny new ports just because they can”, but utilisation levels are high and new capacity is need in the region. Despite this, there’s no guarantee these new ports will even be used, since the existing, old ports often have better proximity to their hinterlands.

The solution adopted by many Middle Eastern governments therefore is to order the closure of the old ports and the transfer of their volumes to the new ones, says Drewry. A recent example of this is Oman’s old Port of Muscat, which was closed for container handling this month and its 350,000 teu traffic is being moved to Sohar, 230km away. Muscat port will be subject to redevelopment for tourism and leisure.

But, the Middle East is the exception rather than the rule. In most other locations, governments and port authorities look to the market to decide which ports to use, relying on the fact that newer terminals offer better facilities, deeper water and higher service levels, according to the report.

In some locations, the authorities have promised to ensure that old facilities will be closed down, but that hasn’t always been the case. In Vietnam for example, a number of international terminal operators have invested in new deep water facilities in the Cai Mep area, downriver from the older Ho Chi Ming City facilities which are draught restricted and suffer congestion.

The report also revealed the development of terminals at Cai Mep was motivated partly by Vietnam’s booming trade growth, but also on the understanding that some of the Ho Chi Minh City terminals would close down. This hasn’t happened and now the river approach to Ho Chi Minh City has recently been dredged to allow larger vessel access. Drewry says the reasons for this are many, but vested interests are high on the list – both from the local municipalities in each location and from the Vietnamese Navy which gains revenue from the upriver terminals.

Drewry concluded that despite letting a free market rule, experience shows that habits die hard in shipping, “so external encouragement for change is often required”.